Finding 2023-002 – SF-425 Financial Reporting Criteria: The code of federal regulations requires that grantees submit accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements, set forth in § 200.328 and 200.329. Questioned Costs: None Condition: The City's internal controls over required reporting requirements were not accurately monitored and reviewed to prevent, or detect and correct the current year's actual federal spending. Cause and Effect: The City transitioned into a city manager type of government during fiscal year 2023. In connection with the change in political term, a significant change in personnel occurred during the time of transition affecting the City's internal controls. As a result, expenditures reported in the SF-425 financial reports submitted were understated by a total of approximately $209,000. Recommendation: We recommend that the City implement policies and procedures to ensure accurate reports are submitted to its respective agencies. Management Response: The City agrees with the recommendation. Although inaccuracies are mostly due to change in personnel, management will make a greater effort to submit complete and accurate reports.
2023-003 – Reporting – Significant Deficiency in Internal Controls over Compliance Department of Education Federal Assistance Listing Number: 84.425E, 84.425F Federal Program Name: Higher Education Emergency Relief Funds (HEERF) Student Aid Portion, Higher Education Emergency Relief Funds (HEERF) Institutional Portion Criteria – Under the Coronavirus Aid, Relief, and Economic Security Act 18004(e) and the Coronavirus Response and Relief Supplemental Appropriations Act 314(e) institutions that received funds under HEERF I and HEERF II are required to submit a report to the secretary on how the school used its HEERF funds. While the American Rescue Plan did not explicitly identify procedures by which institutions must report on their uses of HEERF grant funds, the Department of Education exercises this reporting authority under 2 CFR section 200.328 and 2 CFR section 200.329. Condition/context – A sample of 4 special reports from the population of 4 special reports was selected. For the three quarterly reports selected, the College could not provide support that the reports were published timely. In addition, the College could not provide consistent institutional records for the data included in the three quarterly reports or annual report. Three of the four quarterly reports were corrected based on the audit procedures performed, the College did not properly identify these as “corrected” upon posting to the College website. Our sample was not, and was not intended to be, statistically valid. Questioned costs – None. Cause/effect – Due to the lack of controls, the College did not maintain support that quarterly reports were posted timely and was unable to provide consistent institutional records for the data included in the reports. Repeat finding – Yes, 2022-005 Recommendation – We recommend the College update previously posted reports to accurately reflect the actual expenditures during the time period covered by the report, note the reports as “corrected” and ensure institutional records are maintained that clearly support the data reported. We also recommend the College implement a process to ensure evidence of submission dates and publication dates are maintained to ensure compliance with the reporting due dates. Views of responsible officials and planned corrective actions – 93 Responsible Individuals: Dr. Lorelle Davies, Chief Financial Officer Courtney Judah, Executive Director of Institutional Effectiveness Corrective Action Plan: The college will continue to apply a detailed reporting process for timely collection and reporting of grants. Reporting to include the following: Accurate and regular collection of data needed to report outcomes and service populations. Cross verify data with Institutional Effectiveness and Institutional Research. Post in accordance with grant requirements including documentation to record posting and submission dates. Anticipated Completion Date: Completed April 30, 2024
2023-003 – Reporting – Significant Deficiency in Internal Controls over Compliance Department of Education Federal Assistance Listing Number: 84.425E, 84.425F Federal Program Name: Higher Education Emergency Relief Funds (HEERF) Student Aid Portion, Higher Education Emergency Relief Funds (HEERF) Institutional Portion Criteria – Under the Coronavirus Aid, Relief, and Economic Security Act 18004(e) and the Coronavirus Response and Relief Supplemental Appropriations Act 314(e) institutions that received funds under HEERF I and HEERF II are required to submit a report to the secretary on how the school used its HEERF funds. While the American Rescue Plan did not explicitly identify procedures by which institutions must report on their uses of HEERF grant funds, the Department of Education exercises this reporting authority under 2 CFR section 200.328 and 2 CFR section 200.329. Condition/context – A sample of 4 special reports from the population of 4 special reports was selected. For the three quarterly reports selected, the College could not provide support that the reports were published timely. In addition, the College could not provide consistent institutional records for the data included in the three quarterly reports or annual report. Three of the four quarterly reports were corrected based on the audit procedures performed, the College did not properly identify these as “corrected” upon posting to the College website. Our sample was not, and was not intended to be, statistically valid. Questioned costs – None. Cause/effect – Due to the lack of controls, the College did not maintain support that quarterly reports were posted timely and was unable to provide consistent institutional records for the data included in the reports. Repeat finding – Yes, 2022-005 Recommendation – We recommend the College update previously posted reports to accurately reflect the actual expenditures during the time period covered by the report, note the reports as “corrected” and ensure institutional records are maintained that clearly support the data reported. We also recommend the College implement a process to ensure evidence of submission dates and publication dates are maintained to ensure compliance with the reporting due dates. Views of responsible officials and planned corrective actions – 93 Responsible Individuals: Dr. Lorelle Davies, Chief Financial Officer Courtney Judah, Executive Director of Institutional Effectiveness Corrective Action Plan: The college will continue to apply a detailed reporting process for timely collection and reporting of grants. Reporting to include the following: Accurate and regular collection of data needed to report outcomes and service populations. Cross verify data with Institutional Effectiveness and Institutional Research. Post in accordance with grant requirements including documentation to record posting and submission dates. Anticipated Completion Date: Completed April 30, 2024
2023-01 - Internal Control over Compliance and Compliance with Reporting (Preparation of the Schedule of Expenditures of Federal Awards) Information on the Federal Program: United States Department of Health and Human Services Assistance Listing Numbers: 93.650 Accountable Health Communities 93.391 Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises 93.558 Temporary Assistance for Needy Families 93.667 Social Services Block Grant 93.738 Racial & Ethnic Approaches to Community Health; Program Solely Funded by Public Prevention Health Funds 93.044 Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers 93.052 National Family Caregiver Support 93.268 Immunization Cooperative Agreements United States Department of Housing and Urban Development Assistance Listing Number: 14.218 Community Development Block Grants United States Department of Homeland Security Assistance Listing Number: 97.024 Emergency Food and Shelter Criteria: The Code of Federal Regulation (CFR) Section §200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section §200.502 Basis for determining Federal awards expended.” The schedule must provide total Federal awards expended for each individual Federal program. In accordance with CFR §200.302 Financial Management, a non-federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system of each non-Federal agency provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial Reporting and §200.329 Monitoring and Reporting Program Performance. Records that identify adequately the source and application of funds for federally funded activities. Effective control over, and accountability for, all funds, property, and other assets.Condition: During management’s preparation of the Schedule of Expenditures of Federal Awards (SEFA), the finance team of the Organization used a combination of cost center reports that identify Federal dollars spent throughout the year, reporting done by program management, and invoices billed to Federal agencies. The SEFA preparation and review process did not appropriately reflect total Federal Expenditures for the period covered. During our major program grant population completeness procedures, we identified expenditures of federal awards that had been excluded from the SEFA prepared by management. The SEFA, as presented in these financial statements has been adjusted to include an additional $13,012 of expenditures incurred for AL 93.391 versus what had been previously presented. Cause: Subsequent to June 30, 2023, United Way of Greater Cleveland experienced turnover in certain program management positions with the responsibility for submission and preparation of data for completion of the schedule of expenditures of federal awards (SEFA). As a result of these changes in staffing, management was unable to fully execute on its documented internal control policies regarding SEFA preparation. Accordingly, internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed due to personnel changes in the programmatic areas, responsible for submission of costs incurred for the SEFA. Effect: The SEFA provided for the audit was inaccurate for the reasons outlined in the condition section above. Failure to accurately report expenditures and programs on the SEFA result in audit adjustments. Questioned Costs: There are no questioned costs related to the items described above. Context: The conditions outlined above are based on our testing of the United Way of Greater Cleveland’s major programs and our overall testing of the accuracy of the SEFA. The nature of this finding is detailed in the condition section above. Repeat Finding: This is a repeat finding. Recommendation: We recommend management address the staffing considerations to ensure the documented policies and procedures can be performed as prescribed, and that policies and procedures are followed on a consistent basis. This will ensure that Federal funds are reported accurately on the SEFA.Views of Responsible Officials: United Way of Greater Cleveland’s management agrees with the finding and recommendations set forth within and has developed a corrective action. The Organization’s corrective action plan is described in Management’s Corrective Action Plan included at page __ of this reporting package.
2023-01 - Internal Control over Compliance and Compliance with Reporting (Preparation of the Schedule of Expenditures of Federal Awards) Information on the Federal Program: United States Department of Health and Human Services Assistance Listing Numbers: 93.650 Accountable Health Communities 93.391 Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises 93.558 Temporary Assistance for Needy Families 93.667 Social Services Block Grant 93.738 Racial & Ethnic Approaches to Community Health; Program Solely Funded by Public Prevention Health Funds 93.044 Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers 93.052 National Family Caregiver Support 93.268 Immunization Cooperative Agreements United States Department of Housing and Urban Development Assistance Listing Number: 14.218 Community Development Block Grants United States Department of Homeland Security Assistance Listing Number: 97.024 Emergency Food and Shelter Criteria: The Code of Federal Regulation (CFR) Section §200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section §200.502 Basis for determining Federal awards expended.” The schedule must provide total Federal awards expended for each individual Federal program. In accordance with CFR §200.302 Financial Management, a non-federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system of each non-Federal agency provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial Reporting and §200.329 Monitoring and Reporting Program Performance. Records that identify adequately the source and application of funds for federally funded activities. Effective control over, and accountability for, all funds, property, and other assets.Condition: During management’s preparation of the Schedule of Expenditures of Federal Awards (SEFA), the finance team of the Organization used a combination of cost center reports that identify Federal dollars spent throughout the year, reporting done by program management, and invoices billed to Federal agencies. The SEFA preparation and review process did not appropriately reflect total Federal Expenditures for the period covered. During our major program grant population completeness procedures, we identified expenditures of federal awards that had been excluded from the SEFA prepared by management. The SEFA, as presented in these financial statements has been adjusted to include an additional $13,012 of expenditures incurred for AL 93.391 versus what had been previously presented. Cause: Subsequent to June 30, 2023, United Way of Greater Cleveland experienced turnover in certain program management positions with the responsibility for submission and preparation of data for completion of the schedule of expenditures of federal awards (SEFA). As a result of these changes in staffing, management was unable to fully execute on its documented internal control policies regarding SEFA preparation. Accordingly, internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed due to personnel changes in the programmatic areas, responsible for submission of costs incurred for the SEFA. Effect: The SEFA provided for the audit was inaccurate for the reasons outlined in the condition section above. Failure to accurately report expenditures and programs on the SEFA result in audit adjustments. Questioned Costs: There are no questioned costs related to the items described above. Context: The conditions outlined above are based on our testing of the United Way of Greater Cleveland’s major programs and our overall testing of the accuracy of the SEFA. The nature of this finding is detailed in the condition section above. Repeat Finding: This is a repeat finding. Recommendation: We recommend management address the staffing considerations to ensure the documented policies and procedures can be performed as prescribed, and that policies and procedures are followed on a consistent basis. This will ensure that Federal funds are reported accurately on the SEFA.Views of Responsible Officials: United Way of Greater Cleveland’s management agrees with the finding and recommendations set forth within and has developed a corrective action. The Organization’s corrective action plan is described in Management’s Corrective Action Plan included at page __ of this reporting package.
2023-01 - Internal Control over Compliance and Compliance with Reporting (Preparation of the Schedule of Expenditures of Federal Awards) Information on the Federal Program: United States Department of Health and Human Services Assistance Listing Numbers: 93.650 Accountable Health Communities 93.391 Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises 93.558 Temporary Assistance for Needy Families 93.667 Social Services Block Grant 93.738 Racial & Ethnic Approaches to Community Health; Program Solely Funded by Public Prevention Health Funds 93.044 Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers 93.052 National Family Caregiver Support 93.268 Immunization Cooperative Agreements United States Department of Housing and Urban Development Assistance Listing Number: 14.218 Community Development Block Grants United States Department of Homeland Security Assistance Listing Number: 97.024 Emergency Food and Shelter Criteria: The Code of Federal Regulation (CFR) Section §200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section §200.502 Basis for determining Federal awards expended.” The schedule must provide total Federal awards expended for each individual Federal program. In accordance with CFR §200.302 Financial Management, a non-federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system of each non-Federal agency provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial Reporting and §200.329 Monitoring and Reporting Program Performance. Records that identify adequately the source and application of funds for federally funded activities. Effective control over, and accountability for, all funds, property, and other assets.Condition: During management’s preparation of the Schedule of Expenditures of Federal Awards (SEFA), the finance team of the Organization used a combination of cost center reports that identify Federal dollars spent throughout the year, reporting done by program management, and invoices billed to Federal agencies. The SEFA preparation and review process did not appropriately reflect total Federal Expenditures for the period covered. During our major program grant population completeness procedures, we identified expenditures of federal awards that had been excluded from the SEFA prepared by management. The SEFA, as presented in these financial statements has been adjusted to include an additional $13,012 of expenditures incurred for AL 93.391 versus what had been previously presented. Cause: Subsequent to June 30, 2023, United Way of Greater Cleveland experienced turnover in certain program management positions with the responsibility for submission and preparation of data for completion of the schedule of expenditures of federal awards (SEFA). As a result of these changes in staffing, management was unable to fully execute on its documented internal control policies regarding SEFA preparation. Accordingly, internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed due to personnel changes in the programmatic areas, responsible for submission of costs incurred for the SEFA. Effect: The SEFA provided for the audit was inaccurate for the reasons outlined in the condition section above. Failure to accurately report expenditures and programs on the SEFA result in audit adjustments. Questioned Costs: There are no questioned costs related to the items described above. Context: The conditions outlined above are based on our testing of the United Way of Greater Cleveland’s major programs and our overall testing of the accuracy of the SEFA. The nature of this finding is detailed in the condition section above. Repeat Finding: This is a repeat finding. Recommendation: We recommend management address the staffing considerations to ensure the documented policies and procedures can be performed as prescribed, and that policies and procedures are followed on a consistent basis. This will ensure that Federal funds are reported accurately on the SEFA.Views of Responsible Officials: United Way of Greater Cleveland’s management agrees with the finding and recommendations set forth within and has developed a corrective action. The Organization’s corrective action plan is described in Management’s Corrective Action Plan included at page __ of this reporting package.
2023-01 - Internal Control over Compliance and Compliance with Reporting (Preparation of the Schedule of Expenditures of Federal Awards) Information on the Federal Program: United States Department of Health and Human Services Assistance Listing Numbers: 93.650 Accountable Health Communities 93.391 Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises 93.558 Temporary Assistance for Needy Families 93.667 Social Services Block Grant 93.738 Racial & Ethnic Approaches to Community Health; Program Solely Funded by Public Prevention Health Funds 93.044 Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers 93.052 National Family Caregiver Support 93.268 Immunization Cooperative Agreements United States Department of Housing and Urban Development Assistance Listing Number: 14.218 Community Development Block Grants United States Department of Homeland Security Assistance Listing Number: 97.024 Emergency Food and Shelter Criteria: The Code of Federal Regulation (CFR) Section §200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section §200.502 Basis for determining Federal awards expended.” The schedule must provide total Federal awards expended for each individual Federal program. In accordance with CFR §200.302 Financial Management, a non-federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system of each non-Federal agency provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial Reporting and §200.329 Monitoring and Reporting Program Performance. Records that identify adequately the source and application of funds for federally funded activities. Effective control over, and accountability for, all funds, property, and other assets.Condition: During management’s preparation of the Schedule of Expenditures of Federal Awards (SEFA), the finance team of the Organization used a combination of cost center reports that identify Federal dollars spent throughout the year, reporting done by program management, and invoices billed to Federal agencies. The SEFA preparation and review process did not appropriately reflect total Federal Expenditures for the period covered. During our major program grant population completeness procedures, we identified expenditures of federal awards that had been excluded from the SEFA prepared by management. The SEFA, as presented in these financial statements has been adjusted to include an additional $13,012 of expenditures incurred for AL 93.391 versus what had been previously presented. Cause: Subsequent to June 30, 2023, United Way of Greater Cleveland experienced turnover in certain program management positions with the responsibility for submission and preparation of data for completion of the schedule of expenditures of federal awards (SEFA). As a result of these changes in staffing, management was unable to fully execute on its documented internal control policies regarding SEFA preparation. Accordingly, internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed due to personnel changes in the programmatic areas, responsible for submission of costs incurred for the SEFA. Effect: The SEFA provided for the audit was inaccurate for the reasons outlined in the condition section above. Failure to accurately report expenditures and programs on the SEFA result in audit adjustments. Questioned Costs: There are no questioned costs related to the items described above. Context: The conditions outlined above are based on our testing of the United Way of Greater Cleveland’s major programs and our overall testing of the accuracy of the SEFA. The nature of this finding is detailed in the condition section above. Repeat Finding: This is a repeat finding. Recommendation: We recommend management address the staffing considerations to ensure the documented policies and procedures can be performed as prescribed, and that policies and procedures are followed on a consistent basis. This will ensure that Federal funds are reported accurately on the SEFA.Views of Responsible Officials: United Way of Greater Cleveland’s management agrees with the finding and recommendations set forth within and has developed a corrective action. The Organization’s corrective action plan is described in Management’s Corrective Action Plan included at page __ of this reporting package.
2023-01 - Internal Control over Compliance and Compliance with Reporting (Preparation of the Schedule of Expenditures of Federal Awards) Information on the Federal Program: United States Department of Health and Human Services Assistance Listing Numbers: 93.650 Accountable Health Communities 93.391 Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises 93.558 Temporary Assistance for Needy Families 93.667 Social Services Block Grant 93.738 Racial & Ethnic Approaches to Community Health; Program Solely Funded by Public Prevention Health Funds 93.044 Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers 93.052 National Family Caregiver Support 93.268 Immunization Cooperative Agreements United States Department of Housing and Urban Development Assistance Listing Number: 14.218 Community Development Block Grants United States Department of Homeland Security Assistance Listing Number: 97.024 Emergency Food and Shelter Criteria: The Code of Federal Regulation (CFR) Section §200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section §200.502 Basis for determining Federal awards expended.” The schedule must provide total Federal awards expended for each individual Federal program. In accordance with CFR §200.302 Financial Management, a non-federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system of each non-Federal agency provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial Reporting and §200.329 Monitoring and Reporting Program Performance. Records that identify adequately the source and application of funds for federally funded activities. Effective control over, and accountability for, all funds, property, and other assets.Condition: During management’s preparation of the Schedule of Expenditures of Federal Awards (SEFA), the finance team of the Organization used a combination of cost center reports that identify Federal dollars spent throughout the year, reporting done by program management, and invoices billed to Federal agencies. The SEFA preparation and review process did not appropriately reflect total Federal Expenditures for the period covered. During our major program grant population completeness procedures, we identified expenditures of federal awards that had been excluded from the SEFA prepared by management. The SEFA, as presented in these financial statements has been adjusted to include an additional $13,012 of expenditures incurred for AL 93.391 versus what had been previously presented. Cause: Subsequent to June 30, 2023, United Way of Greater Cleveland experienced turnover in certain program management positions with the responsibility for submission and preparation of data for completion of the schedule of expenditures of federal awards (SEFA). As a result of these changes in staffing, management was unable to fully execute on its documented internal control policies regarding SEFA preparation. Accordingly, internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed due to personnel changes in the programmatic areas, responsible for submission of costs incurred for the SEFA. Effect: The SEFA provided for the audit was inaccurate for the reasons outlined in the condition section above. Failure to accurately report expenditures and programs on the SEFA result in audit adjustments. Questioned Costs: There are no questioned costs related to the items described above. Context: The conditions outlined above are based on our testing of the United Way of Greater Cleveland’s major programs and our overall testing of the accuracy of the SEFA. The nature of this finding is detailed in the condition section above. Repeat Finding: This is a repeat finding. Recommendation: We recommend management address the staffing considerations to ensure the documented policies and procedures can be performed as prescribed, and that policies and procedures are followed on a consistent basis. This will ensure that Federal funds are reported accurately on the SEFA.Views of Responsible Officials: United Way of Greater Cleveland’s management agrees with the finding and recommendations set forth within and has developed a corrective action. The Organization’s corrective action plan is described in Management’s Corrective Action Plan included at page __ of this reporting package.
2023-01 - Internal Control over Compliance and Compliance with Reporting (Preparation of the Schedule of Expenditures of Federal Awards) Information on the Federal Program: United States Department of Health and Human Services Assistance Listing Numbers: 93.650 Accountable Health Communities 93.391 Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises 93.558 Temporary Assistance for Needy Families 93.667 Social Services Block Grant 93.738 Racial & Ethnic Approaches to Community Health; Program Solely Funded by Public Prevention Health Funds 93.044 Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers 93.052 National Family Caregiver Support 93.268 Immunization Cooperative Agreements United States Department of Housing and Urban Development Assistance Listing Number: 14.218 Community Development Block Grants United States Department of Homeland Security Assistance Listing Number: 97.024 Emergency Food and Shelter Criteria: The Code of Federal Regulation (CFR) Section §200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section §200.502 Basis for determining Federal awards expended.” The schedule must provide total Federal awards expended for each individual Federal program. In accordance with CFR §200.302 Financial Management, a non-federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system of each non-Federal agency provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial Reporting and §200.329 Monitoring and Reporting Program Performance. Records that identify adequately the source and application of funds for federally funded activities. Effective control over, and accountability for, all funds, property, and other assets.Condition: During management’s preparation of the Schedule of Expenditures of Federal Awards (SEFA), the finance team of the Organization used a combination of cost center reports that identify Federal dollars spent throughout the year, reporting done by program management, and invoices billed to Federal agencies. The SEFA preparation and review process did not appropriately reflect total Federal Expenditures for the period covered. During our major program grant population completeness procedures, we identified expenditures of federal awards that had been excluded from the SEFA prepared by management. The SEFA, as presented in these financial statements has been adjusted to include an additional $13,012 of expenditures incurred for AL 93.391 versus what had been previously presented. Cause: Subsequent to June 30, 2023, United Way of Greater Cleveland experienced turnover in certain program management positions with the responsibility for submission and preparation of data for completion of the schedule of expenditures of federal awards (SEFA). As a result of these changes in staffing, management was unable to fully execute on its documented internal control policies regarding SEFA preparation. Accordingly, internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed due to personnel changes in the programmatic areas, responsible for submission of costs incurred for the SEFA. Effect: The SEFA provided for the audit was inaccurate for the reasons outlined in the condition section above. Failure to accurately report expenditures and programs on the SEFA result in audit adjustments. Questioned Costs: There are no questioned costs related to the items described above. Context: The conditions outlined above are based on our testing of the United Way of Greater Cleveland’s major programs and our overall testing of the accuracy of the SEFA. The nature of this finding is detailed in the condition section above. Repeat Finding: This is a repeat finding. Recommendation: We recommend management address the staffing considerations to ensure the documented policies and procedures can be performed as prescribed, and that policies and procedures are followed on a consistent basis. This will ensure that Federal funds are reported accurately on the SEFA.Views of Responsible Officials: United Way of Greater Cleveland’s management agrees with the finding and recommendations set forth within and has developed a corrective action. The Organization’s corrective action plan is described in Management’s Corrective Action Plan included at page __ of this reporting package.
2023-01 - Internal Control over Compliance and Compliance with Reporting (Preparation of the Schedule of Expenditures of Federal Awards) Information on the Federal Program: United States Department of Health and Human Services Assistance Listing Numbers: 93.650 Accountable Health Communities 93.391 Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises 93.558 Temporary Assistance for Needy Families 93.667 Social Services Block Grant 93.738 Racial & Ethnic Approaches to Community Health; Program Solely Funded by Public Prevention Health Funds 93.044 Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers 93.052 National Family Caregiver Support 93.268 Immunization Cooperative Agreements United States Department of Housing and Urban Development Assistance Listing Number: 14.218 Community Development Block Grants United States Department of Homeland Security Assistance Listing Number: 97.024 Emergency Food and Shelter Criteria: The Code of Federal Regulation (CFR) Section §200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section §200.502 Basis for determining Federal awards expended.” The schedule must provide total Federal awards expended for each individual Federal program. In accordance with CFR §200.302 Financial Management, a non-federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system of each non-Federal agency provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial Reporting and §200.329 Monitoring and Reporting Program Performance. Records that identify adequately the source and application of funds for federally funded activities. Effective control over, and accountability for, all funds, property, and other assets.Condition: During management’s preparation of the Schedule of Expenditures of Federal Awards (SEFA), the finance team of the Organization used a combination of cost center reports that identify Federal dollars spent throughout the year, reporting done by program management, and invoices billed to Federal agencies. The SEFA preparation and review process did not appropriately reflect total Federal Expenditures for the period covered. During our major program grant population completeness procedures, we identified expenditures of federal awards that had been excluded from the SEFA prepared by management. The SEFA, as presented in these financial statements has been adjusted to include an additional $13,012 of expenditures incurred for AL 93.391 versus what had been previously presented. Cause: Subsequent to June 30, 2023, United Way of Greater Cleveland experienced turnover in certain program management positions with the responsibility for submission and preparation of data for completion of the schedule of expenditures of federal awards (SEFA). As a result of these changes in staffing, management was unable to fully execute on its documented internal control policies regarding SEFA preparation. Accordingly, internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed due to personnel changes in the programmatic areas, responsible for submission of costs incurred for the SEFA. Effect: The SEFA provided for the audit was inaccurate for the reasons outlined in the condition section above. Failure to accurately report expenditures and programs on the SEFA result in audit adjustments. Questioned Costs: There are no questioned costs related to the items described above. Context: The conditions outlined above are based on our testing of the United Way of Greater Cleveland’s major programs and our overall testing of the accuracy of the SEFA. The nature of this finding is detailed in the condition section above. Repeat Finding: This is a repeat finding. Recommendation: We recommend management address the staffing considerations to ensure the documented policies and procedures can be performed as prescribed, and that policies and procedures are followed on a consistent basis. This will ensure that Federal funds are reported accurately on the SEFA.Views of Responsible Officials: United Way of Greater Cleveland’s management agrees with the finding and recommendations set forth within and has developed a corrective action. The Organization’s corrective action plan is described in Management’s Corrective Action Plan included at page __ of this reporting package.
2023-01 - Internal Control over Compliance and Compliance with Reporting (Preparation of the Schedule of Expenditures of Federal Awards) Information on the Federal Program: United States Department of Health and Human Services Assistance Listing Numbers: 93.650 Accountable Health Communities 93.391 Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises 93.558 Temporary Assistance for Needy Families 93.667 Social Services Block Grant 93.738 Racial & Ethnic Approaches to Community Health; Program Solely Funded by Public Prevention Health Funds 93.044 Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers 93.052 National Family Caregiver Support 93.268 Immunization Cooperative Agreements United States Department of Housing and Urban Development Assistance Listing Number: 14.218 Community Development Block Grants United States Department of Homeland Security Assistance Listing Number: 97.024 Emergency Food and Shelter Criteria: The Code of Federal Regulation (CFR) Section §200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section §200.502 Basis for determining Federal awards expended.” The schedule must provide total Federal awards expended for each individual Federal program. In accordance with CFR §200.302 Financial Management, a non-federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system of each non-Federal agency provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial Reporting and §200.329 Monitoring and Reporting Program Performance. Records that identify adequately the source and application of funds for federally funded activities. Effective control over, and accountability for, all funds, property, and other assets.Condition: During management’s preparation of the Schedule of Expenditures of Federal Awards (SEFA), the finance team of the Organization used a combination of cost center reports that identify Federal dollars spent throughout the year, reporting done by program management, and invoices billed to Federal agencies. The SEFA preparation and review process did not appropriately reflect total Federal Expenditures for the period covered. During our major program grant population completeness procedures, we identified expenditures of federal awards that had been excluded from the SEFA prepared by management. The SEFA, as presented in these financial statements has been adjusted to include an additional $13,012 of expenditures incurred for AL 93.391 versus what had been previously presented. Cause: Subsequent to June 30, 2023, United Way of Greater Cleveland experienced turnover in certain program management positions with the responsibility for submission and preparation of data for completion of the schedule of expenditures of federal awards (SEFA). As a result of these changes in staffing, management was unable to fully execute on its documented internal control policies regarding SEFA preparation. Accordingly, internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed due to personnel changes in the programmatic areas, responsible for submission of costs incurred for the SEFA. Effect: The SEFA provided for the audit was inaccurate for the reasons outlined in the condition section above. Failure to accurately report expenditures and programs on the SEFA result in audit adjustments. Questioned Costs: There are no questioned costs related to the items described above. Context: The conditions outlined above are based on our testing of the United Way of Greater Cleveland’s major programs and our overall testing of the accuracy of the SEFA. The nature of this finding is detailed in the condition section above. Repeat Finding: This is a repeat finding. Recommendation: We recommend management address the staffing considerations to ensure the documented policies and procedures can be performed as prescribed, and that policies and procedures are followed on a consistent basis. This will ensure that Federal funds are reported accurately on the SEFA.Views of Responsible Officials: United Way of Greater Cleveland’s management agrees with the finding and recommendations set forth within and has developed a corrective action. The Organization’s corrective action plan is described in Management’s Corrective Action Plan included at page __ of this reporting package.
2023-01 - Internal Control over Compliance and Compliance with Reporting (Preparation of the Schedule of Expenditures of Federal Awards) Information on the Federal Program: United States Department of Health and Human Services Assistance Listing Numbers: 93.650 Accountable Health Communities 93.391 Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises 93.558 Temporary Assistance for Needy Families 93.667 Social Services Block Grant 93.738 Racial & Ethnic Approaches to Community Health; Program Solely Funded by Public Prevention Health Funds 93.044 Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers 93.052 National Family Caregiver Support 93.268 Immunization Cooperative Agreements United States Department of Housing and Urban Development Assistance Listing Number: 14.218 Community Development Block Grants United States Department of Homeland Security Assistance Listing Number: 97.024 Emergency Food and Shelter Criteria: The Code of Federal Regulation (CFR) Section §200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section §200.502 Basis for determining Federal awards expended.” The schedule must provide total Federal awards expended for each individual Federal program. In accordance with CFR §200.302 Financial Management, a non-federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system of each non-Federal agency provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial Reporting and §200.329 Monitoring and Reporting Program Performance. Records that identify adequately the source and application of funds for federally funded activities. Effective control over, and accountability for, all funds, property, and other assets.Condition: During management’s preparation of the Schedule of Expenditures of Federal Awards (SEFA), the finance team of the Organization used a combination of cost center reports that identify Federal dollars spent throughout the year, reporting done by program management, and invoices billed to Federal agencies. The SEFA preparation and review process did not appropriately reflect total Federal Expenditures for the period covered. During our major program grant population completeness procedures, we identified expenditures of federal awards that had been excluded from the SEFA prepared by management. The SEFA, as presented in these financial statements has been adjusted to include an additional $13,012 of expenditures incurred for AL 93.391 versus what had been previously presented. Cause: Subsequent to June 30, 2023, United Way of Greater Cleveland experienced turnover in certain program management positions with the responsibility for submission and preparation of data for completion of the schedule of expenditures of federal awards (SEFA). As a result of these changes in staffing, management was unable to fully execute on its documented internal control policies regarding SEFA preparation. Accordingly, internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed due to personnel changes in the programmatic areas, responsible for submission of costs incurred for the SEFA. Effect: The SEFA provided for the audit was inaccurate for the reasons outlined in the condition section above. Failure to accurately report expenditures and programs on the SEFA result in audit adjustments. Questioned Costs: There are no questioned costs related to the items described above. Context: The conditions outlined above are based on our testing of the United Way of Greater Cleveland’s major programs and our overall testing of the accuracy of the SEFA. The nature of this finding is detailed in the condition section above. Repeat Finding: This is a repeat finding. Recommendation: We recommend management address the staffing considerations to ensure the documented policies and procedures can be performed as prescribed, and that policies and procedures are followed on a consistent basis. This will ensure that Federal funds are reported accurately on the SEFA.Views of Responsible Officials: United Way of Greater Cleveland’s management agrees with the finding and recommendations set forth within and has developed a corrective action. The Organization’s corrective action plan is described in Management’s Corrective Action Plan included at page __ of this reporting package.
2023-01 - Internal Control over Compliance and Compliance with Reporting (Preparation of the Schedule of Expenditures of Federal Awards) Information on the Federal Program: United States Department of Health and Human Services Assistance Listing Numbers: 93.650 Accountable Health Communities 93.391 Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises 93.558 Temporary Assistance for Needy Families 93.667 Social Services Block Grant 93.738 Racial & Ethnic Approaches to Community Health; Program Solely Funded by Public Prevention Health Funds 93.044 Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers 93.052 National Family Caregiver Support 93.268 Immunization Cooperative Agreements United States Department of Housing and Urban Development Assistance Listing Number: 14.218 Community Development Block Grants United States Department of Homeland Security Assistance Listing Number: 97.024 Emergency Food and Shelter Criteria: The Code of Federal Regulation (CFR) Section §200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section §200.502 Basis for determining Federal awards expended.” The schedule must provide total Federal awards expended for each individual Federal program. In accordance with CFR §200.302 Financial Management, a non-federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system of each non-Federal agency provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial Reporting and §200.329 Monitoring and Reporting Program Performance. Records that identify adequately the source and application of funds for federally funded activities. Effective control over, and accountability for, all funds, property, and other assets.Condition: During management’s preparation of the Schedule of Expenditures of Federal Awards (SEFA), the finance team of the Organization used a combination of cost center reports that identify Federal dollars spent throughout the year, reporting done by program management, and invoices billed to Federal agencies. The SEFA preparation and review process did not appropriately reflect total Federal Expenditures for the period covered. During our major program grant population completeness procedures, we identified expenditures of federal awards that had been excluded from the SEFA prepared by management. The SEFA, as presented in these financial statements has been adjusted to include an additional $13,012 of expenditures incurred for AL 93.391 versus what had been previously presented. Cause: Subsequent to June 30, 2023, United Way of Greater Cleveland experienced turnover in certain program management positions with the responsibility for submission and preparation of data for completion of the schedule of expenditures of federal awards (SEFA). As a result of these changes in staffing, management was unable to fully execute on its documented internal control policies regarding SEFA preparation. Accordingly, internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed due to personnel changes in the programmatic areas, responsible for submission of costs incurred for the SEFA. Effect: The SEFA provided for the audit was inaccurate for the reasons outlined in the condition section above. Failure to accurately report expenditures and programs on the SEFA result in audit adjustments. Questioned Costs: There are no questioned costs related to the items described above. Context: The conditions outlined above are based on our testing of the United Way of Greater Cleveland’s major programs and our overall testing of the accuracy of the SEFA. The nature of this finding is detailed in the condition section above. Repeat Finding: This is a repeat finding. Recommendation: We recommend management address the staffing considerations to ensure the documented policies and procedures can be performed as prescribed, and that policies and procedures are followed on a consistent basis. This will ensure that Federal funds are reported accurately on the SEFA.Views of Responsible Officials: United Way of Greater Cleveland’s management agrees with the finding and recommendations set forth within and has developed a corrective action. The Organization’s corrective action plan is described in Management’s Corrective Action Plan included at page __ of this reporting package.
2023-01 - Internal Control over Compliance and Compliance with Reporting (Preparation of the Schedule of Expenditures of Federal Awards) Information on the Federal Program: United States Department of Health and Human Services Assistance Listing Numbers: 93.650 Accountable Health Communities 93.391 Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises 93.558 Temporary Assistance for Needy Families 93.667 Social Services Block Grant 93.738 Racial & Ethnic Approaches to Community Health; Program Solely Funded by Public Prevention Health Funds 93.044 Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers 93.052 National Family Caregiver Support 93.268 Immunization Cooperative Agreements United States Department of Housing and Urban Development Assistance Listing Number: 14.218 Community Development Block Grants United States Department of Homeland Security Assistance Listing Number: 97.024 Emergency Food and Shelter Criteria: The Code of Federal Regulation (CFR) Section §200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section §200.502 Basis for determining Federal awards expended.” The schedule must provide total Federal awards expended for each individual Federal program. In accordance with CFR §200.302 Financial Management, a non-federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system of each non-Federal agency provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial Reporting and §200.329 Monitoring and Reporting Program Performance. Records that identify adequately the source and application of funds for federally funded activities. Effective control over, and accountability for, all funds, property, and other assets.Condition: During management’s preparation of the Schedule of Expenditures of Federal Awards (SEFA), the finance team of the Organization used a combination of cost center reports that identify Federal dollars spent throughout the year, reporting done by program management, and invoices billed to Federal agencies. The SEFA preparation and review process did not appropriately reflect total Federal Expenditures for the period covered. During our major program grant population completeness procedures, we identified expenditures of federal awards that had been excluded from the SEFA prepared by management. The SEFA, as presented in these financial statements has been adjusted to include an additional $13,012 of expenditures incurred for AL 93.391 versus what had been previously presented. Cause: Subsequent to June 30, 2023, United Way of Greater Cleveland experienced turnover in certain program management positions with the responsibility for submission and preparation of data for completion of the schedule of expenditures of federal awards (SEFA). As a result of these changes in staffing, management was unable to fully execute on its documented internal control policies regarding SEFA preparation. Accordingly, internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed due to personnel changes in the programmatic areas, responsible for submission of costs incurred for the SEFA. Effect: The SEFA provided for the audit was inaccurate for the reasons outlined in the condition section above. Failure to accurately report expenditures and programs on the SEFA result in audit adjustments. Questioned Costs: There are no questioned costs related to the items described above. Context: The conditions outlined above are based on our testing of the United Way of Greater Cleveland’s major programs and our overall testing of the accuracy of the SEFA. The nature of this finding is detailed in the condition section above. Repeat Finding: This is a repeat finding. Recommendation: We recommend management address the staffing considerations to ensure the documented policies and procedures can be performed as prescribed, and that policies and procedures are followed on a consistent basis. This will ensure that Federal funds are reported accurately on the SEFA.Views of Responsible Officials: United Way of Greater Cleveland’s management agrees with the finding and recommendations set forth within and has developed a corrective action. The Organization’s corrective action plan is described in Management’s Corrective Action Plan included at page __ of this reporting package.
2023-002 - Internal Control over Compliance and Compliance with Reporting Information on the Federal Program: United States Department of Health and Human Services Assistance Listing Numbers: 93.650 Accountable Health Communities 93.391 Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises 93.558 Temporary Assistance for Needy Families 93.667 Social Services Block Grant 93.738 Racial & Ethnic Approaches to Community Health; Program Solely Funded by Public Prevention Health Funds 93.044 Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers 93.052 National Family Caregiver Support 93.268 Immunization Cooperative Agreements United States Department of Housing and Urban Development Assistance Listing Number: 14.218 Community Development Block Grants United States Department of Homeland Security Assistance Listing Number: 97.024 Emergency Food and Shelter Criteria: In accordance with CFR §200.303(a), Internal Controls, the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)…”Additionally, in accordance with CFR §200.303(a), Monitoring and reporting program performance, the non-Federal entity is responsible for oversight of the operations of the Federal award supported activities. The non-Federal entity must monitor its activities under Federal awards to assure compliance with applicable Federal requirements and performance expectations are being achieved. Monitoring by the non-Federal entity must cover each program, function or activity…”CFR Section §200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section §200.502 Basis for determining Federal awards expended.” The schedule must provide total Federal awards expended for each individual Federal program. In accordance with CFR §200.302 Financial Management, a non-federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system of each non-Federal provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial Reporting and §200.329 Monitoring and Reporting Program Performance.Records that identify adequately the source and application of funds for federally funded activities. Effective control over, and accountability for, all funds, property, and other assets. United Way of Greater Cleveland is required to submit its Single Audit Report to the Federal Audit Clearinghouse within 30 calendar days after the receipt of the Auditor’s report, or within nine months after the close of the Auditee’s fiscal year, whichever is earlier. Condition: Therefore, the submission to the Federal Audit Clearing House is subsequent to both 30 days from the date of the receipt of the financial statements and nine months after year end and is therefore considered a late submission. Cause: During the year ended June 30, 2023, United way of Greater Cleveland migrated general ledger financial reporting systems, which caused delays in the closing and financial audit process. Subsequent to June 30, 2023, United Way of Greater Cleveland experienced turnover in certain programmatic staff, which further delayed certain procedures related to ensuring sufficiency and accuracy of the SEFA, thus causing delays in the audit process. Effect: There was no effect due to the late submission of the report. Questioned Costs: There are no questioned costs related to the items described above. Context: The conditions outlined above are based on our testing of the United Way of Greater Cleveland’s major programs and our overall testing of the accuracy of the SEFA. The nature of this finding is detailed in the condition section above.Repeat Finding: his is not a repeat finding. Recommendation:We recommend management address the staffing considerations to ensure the documented policies and procedures can be performed as prescribed and on a timely basis to allow for prompt submission to the FAC. Views of Responsible Officials: United Way of Greater Cleveland’s management agrees with the finding and recommendations set forth within and has developed a corrective action.
2023-002 - Internal Control over Compliance and Compliance with Reporting Information on the Federal Program: United States Department of Health and Human Services Assistance Listing Numbers: 93.650 Accountable Health Communities 93.391 Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises 93.558 Temporary Assistance for Needy Families 93.667 Social Services Block Grant 93.738 Racial & Ethnic Approaches to Community Health; Program Solely Funded by Public Prevention Health Funds 93.044 Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers 93.052 National Family Caregiver Support 93.268 Immunization Cooperative Agreements United States Department of Housing and Urban Development Assistance Listing Number: 14.218 Community Development Block Grants United States Department of Homeland Security Assistance Listing Number: 97.024 Emergency Food and Shelter Criteria: In accordance with CFR §200.303(a), Internal Controls, the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)…”Additionally, in accordance with CFR §200.303(a), Monitoring and reporting program performance, the non-Federal entity is responsible for oversight of the operations of the Federal award supported activities. The non-Federal entity must monitor its activities under Federal awards to assure compliance with applicable Federal requirements and performance expectations are being achieved. Monitoring by the non-Federal entity must cover each program, function or activity…”CFR Section §200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section §200.502 Basis for determining Federal awards expended.” The schedule must provide total Federal awards expended for each individual Federal program. In accordance with CFR §200.302 Financial Management, a non-federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system of each non-Federal provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial Reporting and §200.329 Monitoring and Reporting Program Performance.Records that identify adequately the source and application of funds for federally funded activities. Effective control over, and accountability for, all funds, property, and other assets. United Way of Greater Cleveland is required to submit its Single Audit Report to the Federal Audit Clearinghouse within 30 calendar days after the receipt of the Auditor’s report, or within nine months after the close of the Auditee’s fiscal year, whichever is earlier. Condition: Therefore, the submission to the Federal Audit Clearing House is subsequent to both 30 days from the date of the receipt of the financial statements and nine months after year end and is therefore considered a late submission. Cause: During the year ended June 30, 2023, United way of Greater Cleveland migrated general ledger financial reporting systems, which caused delays in the closing and financial audit process. Subsequent to June 30, 2023, United Way of Greater Cleveland experienced turnover in certain programmatic staff, which further delayed certain procedures related to ensuring sufficiency and accuracy of the SEFA, thus causing delays in the audit process. Effect: There was no effect due to the late submission of the report. Questioned Costs: There are no questioned costs related to the items described above. Context: The conditions outlined above are based on our testing of the United Way of Greater Cleveland’s major programs and our overall testing of the accuracy of the SEFA. The nature of this finding is detailed in the condition section above.Repeat Finding: his is not a repeat finding. Recommendation:We recommend management address the staffing considerations to ensure the documented policies and procedures can be performed as prescribed and on a timely basis to allow for prompt submission to the FAC. Views of Responsible Officials: United Way of Greater Cleveland’s management agrees with the finding and recommendations set forth within and has developed a corrective action.
2023-002 - Internal Control over Compliance and Compliance with Reporting Information on the Federal Program: United States Department of Health and Human Services Assistance Listing Numbers: 93.650 Accountable Health Communities 93.391 Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises 93.558 Temporary Assistance for Needy Families 93.667 Social Services Block Grant 93.738 Racial & Ethnic Approaches to Community Health; Program Solely Funded by Public Prevention Health Funds 93.044 Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers 93.052 National Family Caregiver Support 93.268 Immunization Cooperative Agreements United States Department of Housing and Urban Development Assistance Listing Number: 14.218 Community Development Block Grants United States Department of Homeland Security Assistance Listing Number: 97.024 Emergency Food and Shelter Criteria: In accordance with CFR §200.303(a), Internal Controls, the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)…”Additionally, in accordance with CFR §200.303(a), Monitoring and reporting program performance, the non-Federal entity is responsible for oversight of the operations of the Federal award supported activities. The non-Federal entity must monitor its activities under Federal awards to assure compliance with applicable Federal requirements and performance expectations are being achieved. Monitoring by the non-Federal entity must cover each program, function or activity…”CFR Section §200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section §200.502 Basis for determining Federal awards expended.” The schedule must provide total Federal awards expended for each individual Federal program. In accordance with CFR §200.302 Financial Management, a non-federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system of each non-Federal provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial Reporting and §200.329 Monitoring and Reporting Program Performance.Records that identify adequately the source and application of funds for federally funded activities. Effective control over, and accountability for, all funds, property, and other assets. United Way of Greater Cleveland is required to submit its Single Audit Report to the Federal Audit Clearinghouse within 30 calendar days after the receipt of the Auditor’s report, or within nine months after the close of the Auditee’s fiscal year, whichever is earlier. Condition: Therefore, the submission to the Federal Audit Clearing House is subsequent to both 30 days from the date of the receipt of the financial statements and nine months after year end and is therefore considered a late submission. Cause: During the year ended June 30, 2023, United way of Greater Cleveland migrated general ledger financial reporting systems, which caused delays in the closing and financial audit process. Subsequent to June 30, 2023, United Way of Greater Cleveland experienced turnover in certain programmatic staff, which further delayed certain procedures related to ensuring sufficiency and accuracy of the SEFA, thus causing delays in the audit process. Effect: There was no effect due to the late submission of the report. Questioned Costs: There are no questioned costs related to the items described above. Context: The conditions outlined above are based on our testing of the United Way of Greater Cleveland’s major programs and our overall testing of the accuracy of the SEFA. The nature of this finding is detailed in the condition section above.Repeat Finding: his is not a repeat finding. Recommendation:We recommend management address the staffing considerations to ensure the documented policies and procedures can be performed as prescribed and on a timely basis to allow for prompt submission to the FAC. Views of Responsible Officials: United Way of Greater Cleveland’s management agrees with the finding and recommendations set forth within and has developed a corrective action.
2023-002 - Internal Control over Compliance and Compliance with Reporting Information on the Federal Program: United States Department of Health and Human Services Assistance Listing Numbers: 93.650 Accountable Health Communities 93.391 Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises 93.558 Temporary Assistance for Needy Families 93.667 Social Services Block Grant 93.738 Racial & Ethnic Approaches to Community Health; Program Solely Funded by Public Prevention Health Funds 93.044 Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers 93.052 National Family Caregiver Support 93.268 Immunization Cooperative Agreements United States Department of Housing and Urban Development Assistance Listing Number: 14.218 Community Development Block Grants United States Department of Homeland Security Assistance Listing Number: 97.024 Emergency Food and Shelter Criteria: In accordance with CFR §200.303(a), Internal Controls, the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)…”Additionally, in accordance with CFR §200.303(a), Monitoring and reporting program performance, the non-Federal entity is responsible for oversight of the operations of the Federal award supported activities. The non-Federal entity must monitor its activities under Federal awards to assure compliance with applicable Federal requirements and performance expectations are being achieved. Monitoring by the non-Federal entity must cover each program, function or activity…”CFR Section §200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section §200.502 Basis for determining Federal awards expended.” The schedule must provide total Federal awards expended for each individual Federal program. In accordance with CFR §200.302 Financial Management, a non-federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system of each non-Federal provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial Reporting and §200.329 Monitoring and Reporting Program Performance.Records that identify adequately the source and application of funds for federally funded activities. Effective control over, and accountability for, all funds, property, and other assets. United Way of Greater Cleveland is required to submit its Single Audit Report to the Federal Audit Clearinghouse within 30 calendar days after the receipt of the Auditor’s report, or within nine months after the close of the Auditee’s fiscal year, whichever is earlier. Condition: Therefore, the submission to the Federal Audit Clearing House is subsequent to both 30 days from the date of the receipt of the financial statements and nine months after year end and is therefore considered a late submission. Cause: During the year ended June 30, 2023, United way of Greater Cleveland migrated general ledger financial reporting systems, which caused delays in the closing and financial audit process. Subsequent to June 30, 2023, United Way of Greater Cleveland experienced turnover in certain programmatic staff, which further delayed certain procedures related to ensuring sufficiency and accuracy of the SEFA, thus causing delays in the audit process. Effect: There was no effect due to the late submission of the report. Questioned Costs: There are no questioned costs related to the items described above. Context: The conditions outlined above are based on our testing of the United Way of Greater Cleveland’s major programs and our overall testing of the accuracy of the SEFA. The nature of this finding is detailed in the condition section above.Repeat Finding: his is not a repeat finding. Recommendation:We recommend management address the staffing considerations to ensure the documented policies and procedures can be performed as prescribed and on a timely basis to allow for prompt submission to the FAC. Views of Responsible Officials: United Way of Greater Cleveland’s management agrees with the finding and recommendations set forth within and has developed a corrective action.
2023-002 - Internal Control over Compliance and Compliance with Reporting Information on the Federal Program: United States Department of Health and Human Services Assistance Listing Numbers: 93.650 Accountable Health Communities 93.391 Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises 93.558 Temporary Assistance for Needy Families 93.667 Social Services Block Grant 93.738 Racial & Ethnic Approaches to Community Health; Program Solely Funded by Public Prevention Health Funds 93.044 Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers 93.052 National Family Caregiver Support 93.268 Immunization Cooperative Agreements United States Department of Housing and Urban Development Assistance Listing Number: 14.218 Community Development Block Grants United States Department of Homeland Security Assistance Listing Number: 97.024 Emergency Food and Shelter Criteria: In accordance with CFR §200.303(a), Internal Controls, the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)…”Additionally, in accordance with CFR §200.303(a), Monitoring and reporting program performance, the non-Federal entity is responsible for oversight of the operations of the Federal award supported activities. The non-Federal entity must monitor its activities under Federal awards to assure compliance with applicable Federal requirements and performance expectations are being achieved. Monitoring by the non-Federal entity must cover each program, function or activity…”CFR Section §200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section §200.502 Basis for determining Federal awards expended.” The schedule must provide total Federal awards expended for each individual Federal program. In accordance with CFR §200.302 Financial Management, a non-federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system of each non-Federal provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial Reporting and §200.329 Monitoring and Reporting Program Performance.Records that identify adequately the source and application of funds for federally funded activities. Effective control over, and accountability for, all funds, property, and other assets. United Way of Greater Cleveland is required to submit its Single Audit Report to the Federal Audit Clearinghouse within 30 calendar days after the receipt of the Auditor’s report, or within nine months after the close of the Auditee’s fiscal year, whichever is earlier. Condition: Therefore, the submission to the Federal Audit Clearing House is subsequent to both 30 days from the date of the receipt of the financial statements and nine months after year end and is therefore considered a late submission. Cause: During the year ended June 30, 2023, United way of Greater Cleveland migrated general ledger financial reporting systems, which caused delays in the closing and financial audit process. Subsequent to June 30, 2023, United Way of Greater Cleveland experienced turnover in certain programmatic staff, which further delayed certain procedures related to ensuring sufficiency and accuracy of the SEFA, thus causing delays in the audit process. Effect: There was no effect due to the late submission of the report. Questioned Costs: There are no questioned costs related to the items described above. Context: The conditions outlined above are based on our testing of the United Way of Greater Cleveland’s major programs and our overall testing of the accuracy of the SEFA. The nature of this finding is detailed in the condition section above.Repeat Finding: his is not a repeat finding. Recommendation:We recommend management address the staffing considerations to ensure the documented policies and procedures can be performed as prescribed and on a timely basis to allow for prompt submission to the FAC. Views of Responsible Officials: United Way of Greater Cleveland’s management agrees with the finding and recommendations set forth within and has developed a corrective action.
2023-002 - Internal Control over Compliance and Compliance with Reporting Information on the Federal Program: United States Department of Health and Human Services Assistance Listing Numbers: 93.650 Accountable Health Communities 93.391 Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises 93.558 Temporary Assistance for Needy Families 93.667 Social Services Block Grant 93.738 Racial & Ethnic Approaches to Community Health; Program Solely Funded by Public Prevention Health Funds 93.044 Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers 93.052 National Family Caregiver Support 93.268 Immunization Cooperative Agreements United States Department of Housing and Urban Development Assistance Listing Number: 14.218 Community Development Block Grants United States Department of Homeland Security Assistance Listing Number: 97.024 Emergency Food and Shelter Criteria: In accordance with CFR §200.303(a), Internal Controls, the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)…”Additionally, in accordance with CFR §200.303(a), Monitoring and reporting program performance, the non-Federal entity is responsible for oversight of the operations of the Federal award supported activities. The non-Federal entity must monitor its activities under Federal awards to assure compliance with applicable Federal requirements and performance expectations are being achieved. Monitoring by the non-Federal entity must cover each program, function or activity…”CFR Section §200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section §200.502 Basis for determining Federal awards expended.” The schedule must provide total Federal awards expended for each individual Federal program. In accordance with CFR §200.302 Financial Management, a non-federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system of each non-Federal provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial Reporting and §200.329 Monitoring and Reporting Program Performance.Records that identify adequately the source and application of funds for federally funded activities. Effective control over, and accountability for, all funds, property, and other assets. United Way of Greater Cleveland is required to submit its Single Audit Report to the Federal Audit Clearinghouse within 30 calendar days after the receipt of the Auditor’s report, or within nine months after the close of the Auditee’s fiscal year, whichever is earlier. Condition: Therefore, the submission to the Federal Audit Clearing House is subsequent to both 30 days from the date of the receipt of the financial statements and nine months after year end and is therefore considered a late submission. Cause: During the year ended June 30, 2023, United way of Greater Cleveland migrated general ledger financial reporting systems, which caused delays in the closing and financial audit process. Subsequent to June 30, 2023, United Way of Greater Cleveland experienced turnover in certain programmatic staff, which further delayed certain procedures related to ensuring sufficiency and accuracy of the SEFA, thus causing delays in the audit process. Effect: There was no effect due to the late submission of the report. Questioned Costs: There are no questioned costs related to the items described above. Context: The conditions outlined above are based on our testing of the United Way of Greater Cleveland’s major programs and our overall testing of the accuracy of the SEFA. The nature of this finding is detailed in the condition section above.Repeat Finding: his is not a repeat finding. Recommendation:We recommend management address the staffing considerations to ensure the documented policies and procedures can be performed as prescribed and on a timely basis to allow for prompt submission to the FAC. Views of Responsible Officials: United Way of Greater Cleveland’s management agrees with the finding and recommendations set forth within and has developed a corrective action.
2023-002 - Internal Control over Compliance and Compliance with Reporting Information on the Federal Program: United States Department of Health and Human Services Assistance Listing Numbers: 93.650 Accountable Health Communities 93.391 Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises 93.558 Temporary Assistance for Needy Families 93.667 Social Services Block Grant 93.738 Racial & Ethnic Approaches to Community Health; Program Solely Funded by Public Prevention Health Funds 93.044 Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers 93.052 National Family Caregiver Support 93.268 Immunization Cooperative Agreements United States Department of Housing and Urban Development Assistance Listing Number: 14.218 Community Development Block Grants United States Department of Homeland Security Assistance Listing Number: 97.024 Emergency Food and Shelter Criteria: In accordance with CFR §200.303(a), Internal Controls, the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)…”Additionally, in accordance with CFR §200.303(a), Monitoring and reporting program performance, the non-Federal entity is responsible for oversight of the operations of the Federal award supported activities. The non-Federal entity must monitor its activities under Federal awards to assure compliance with applicable Federal requirements and performance expectations are being achieved. Monitoring by the non-Federal entity must cover each program, function or activity…”CFR Section §200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section §200.502 Basis for determining Federal awards expended.” The schedule must provide total Federal awards expended for each individual Federal program. In accordance with CFR §200.302 Financial Management, a non-federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system of each non-Federal provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial Reporting and §200.329 Monitoring and Reporting Program Performance.Records that identify adequately the source and application of funds for federally funded activities. Effective control over, and accountability for, all funds, property, and other assets. United Way of Greater Cleveland is required to submit its Single Audit Report to the Federal Audit Clearinghouse within 30 calendar days after the receipt of the Auditor’s report, or within nine months after the close of the Auditee’s fiscal year, whichever is earlier. Condition: Therefore, the submission to the Federal Audit Clearing House is subsequent to both 30 days from the date of the receipt of the financial statements and nine months after year end and is therefore considered a late submission. Cause: During the year ended June 30, 2023, United way of Greater Cleveland migrated general ledger financial reporting systems, which caused delays in the closing and financial audit process. Subsequent to June 30, 2023, United Way of Greater Cleveland experienced turnover in certain programmatic staff, which further delayed certain procedures related to ensuring sufficiency and accuracy of the SEFA, thus causing delays in the audit process. Effect: There was no effect due to the late submission of the report. Questioned Costs: There are no questioned costs related to the items described above. Context: The conditions outlined above are based on our testing of the United Way of Greater Cleveland’s major programs and our overall testing of the accuracy of the SEFA. The nature of this finding is detailed in the condition section above.Repeat Finding: his is not a repeat finding. Recommendation:We recommend management address the staffing considerations to ensure the documented policies and procedures can be performed as prescribed and on a timely basis to allow for prompt submission to the FAC. Views of Responsible Officials: United Way of Greater Cleveland’s management agrees with the finding and recommendations set forth within and has developed a corrective action.
2023-002 - Internal Control over Compliance and Compliance with Reporting Information on the Federal Program: United States Department of Health and Human Services Assistance Listing Numbers: 93.650 Accountable Health Communities 93.391 Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises 93.558 Temporary Assistance for Needy Families 93.667 Social Services Block Grant 93.738 Racial & Ethnic Approaches to Community Health; Program Solely Funded by Public Prevention Health Funds 93.044 Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers 93.052 National Family Caregiver Support 93.268 Immunization Cooperative Agreements United States Department of Housing and Urban Development Assistance Listing Number: 14.218 Community Development Block Grants United States Department of Homeland Security Assistance Listing Number: 97.024 Emergency Food and Shelter Criteria: In accordance with CFR §200.303(a), Internal Controls, the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)…”Additionally, in accordance with CFR §200.303(a), Monitoring and reporting program performance, the non-Federal entity is responsible for oversight of the operations of the Federal award supported activities. The non-Federal entity must monitor its activities under Federal awards to assure compliance with applicable Federal requirements and performance expectations are being achieved. Monitoring by the non-Federal entity must cover each program, function or activity…”CFR Section §200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section §200.502 Basis for determining Federal awards expended.” The schedule must provide total Federal awards expended for each individual Federal program. In accordance with CFR §200.302 Financial Management, a non-federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system of each non-Federal provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial Reporting and §200.329 Monitoring and Reporting Program Performance.Records that identify adequately the source and application of funds for federally funded activities. Effective control over, and accountability for, all funds, property, and other assets. United Way of Greater Cleveland is required to submit its Single Audit Report to the Federal Audit Clearinghouse within 30 calendar days after the receipt of the Auditor’s report, or within nine months after the close of the Auditee’s fiscal year, whichever is earlier. Condition: Therefore, the submission to the Federal Audit Clearing House is subsequent to both 30 days from the date of the receipt of the financial statements and nine months after year end and is therefore considered a late submission. Cause: During the year ended June 30, 2023, United way of Greater Cleveland migrated general ledger financial reporting systems, which caused delays in the closing and financial audit process. Subsequent to June 30, 2023, United Way of Greater Cleveland experienced turnover in certain programmatic staff, which further delayed certain procedures related to ensuring sufficiency and accuracy of the SEFA, thus causing delays in the audit process. Effect: There was no effect due to the late submission of the report. Questioned Costs: There are no questioned costs related to the items described above. Context: The conditions outlined above are based on our testing of the United Way of Greater Cleveland’s major programs and our overall testing of the accuracy of the SEFA. The nature of this finding is detailed in the condition section above.Repeat Finding: his is not a repeat finding. Recommendation:We recommend management address the staffing considerations to ensure the documented policies and procedures can be performed as prescribed and on a timely basis to allow for prompt submission to the FAC. Views of Responsible Officials: United Way of Greater Cleveland’s management agrees with the finding and recommendations set forth within and has developed a corrective action.
2023-002 - Internal Control over Compliance and Compliance with Reporting Information on the Federal Program: United States Department of Health and Human Services Assistance Listing Numbers: 93.650 Accountable Health Communities 93.391 Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises 93.558 Temporary Assistance for Needy Families 93.667 Social Services Block Grant 93.738 Racial & Ethnic Approaches to Community Health; Program Solely Funded by Public Prevention Health Funds 93.044 Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers 93.052 National Family Caregiver Support 93.268 Immunization Cooperative Agreements United States Department of Housing and Urban Development Assistance Listing Number: 14.218 Community Development Block Grants United States Department of Homeland Security Assistance Listing Number: 97.024 Emergency Food and Shelter Criteria: In accordance with CFR §200.303(a), Internal Controls, the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)…”Additionally, in accordance with CFR §200.303(a), Monitoring and reporting program performance, the non-Federal entity is responsible for oversight of the operations of the Federal award supported activities. The non-Federal entity must monitor its activities under Federal awards to assure compliance with applicable Federal requirements and performance expectations are being achieved. Monitoring by the non-Federal entity must cover each program, function or activity…”CFR Section §200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section §200.502 Basis for determining Federal awards expended.” The schedule must provide total Federal awards expended for each individual Federal program. In accordance with CFR §200.302 Financial Management, a non-federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system of each non-Federal provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial Reporting and §200.329 Monitoring and Reporting Program Performance.Records that identify adequately the source and application of funds for federally funded activities. Effective control over, and accountability for, all funds, property, and other assets. United Way of Greater Cleveland is required to submit its Single Audit Report to the Federal Audit Clearinghouse within 30 calendar days after the receipt of the Auditor’s report, or within nine months after the close of the Auditee’s fiscal year, whichever is earlier. Condition: Therefore, the submission to the Federal Audit Clearing House is subsequent to both 30 days from the date of the receipt of the financial statements and nine months after year end and is therefore considered a late submission. Cause: During the year ended June 30, 2023, United way of Greater Cleveland migrated general ledger financial reporting systems, which caused delays in the closing and financial audit process. Subsequent to June 30, 2023, United Way of Greater Cleveland experienced turnover in certain programmatic staff, which further delayed certain procedures related to ensuring sufficiency and accuracy of the SEFA, thus causing delays in the audit process. Effect: There was no effect due to the late submission of the report. Questioned Costs: There are no questioned costs related to the items described above. Context: The conditions outlined above are based on our testing of the United Way of Greater Cleveland’s major programs and our overall testing of the accuracy of the SEFA. The nature of this finding is detailed in the condition section above.Repeat Finding: his is not a repeat finding. Recommendation:We recommend management address the staffing considerations to ensure the documented policies and procedures can be performed as prescribed and on a timely basis to allow for prompt submission to the FAC. Views of Responsible Officials: United Way of Greater Cleveland’s management agrees with the finding and recommendations set forth within and has developed a corrective action.
2023-002 - Internal Control over Compliance and Compliance with Reporting Information on the Federal Program: United States Department of Health and Human Services Assistance Listing Numbers: 93.650 Accountable Health Communities 93.391 Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises 93.558 Temporary Assistance for Needy Families 93.667 Social Services Block Grant 93.738 Racial & Ethnic Approaches to Community Health; Program Solely Funded by Public Prevention Health Funds 93.044 Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers 93.052 National Family Caregiver Support 93.268 Immunization Cooperative Agreements United States Department of Housing and Urban Development Assistance Listing Number: 14.218 Community Development Block Grants United States Department of Homeland Security Assistance Listing Number: 97.024 Emergency Food and Shelter Criteria: In accordance with CFR §200.303(a), Internal Controls, the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)…”Additionally, in accordance with CFR §200.303(a), Monitoring and reporting program performance, the non-Federal entity is responsible for oversight of the operations of the Federal award supported activities. The non-Federal entity must monitor its activities under Federal awards to assure compliance with applicable Federal requirements and performance expectations are being achieved. Monitoring by the non-Federal entity must cover each program, function or activity…”CFR Section §200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section §200.502 Basis for determining Federal awards expended.” The schedule must provide total Federal awards expended for each individual Federal program. In accordance with CFR §200.302 Financial Management, a non-federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system of each non-Federal provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial Reporting and §200.329 Monitoring and Reporting Program Performance.Records that identify adequately the source and application of funds for federally funded activities. Effective control over, and accountability for, all funds, property, and other assets. United Way of Greater Cleveland is required to submit its Single Audit Report to the Federal Audit Clearinghouse within 30 calendar days after the receipt of the Auditor’s report, or within nine months after the close of the Auditee’s fiscal year, whichever is earlier. Condition: Therefore, the submission to the Federal Audit Clearing House is subsequent to both 30 days from the date of the receipt of the financial statements and nine months after year end and is therefore considered a late submission. Cause: During the year ended June 30, 2023, United way of Greater Cleveland migrated general ledger financial reporting systems, which caused delays in the closing and financial audit process. Subsequent to June 30, 2023, United Way of Greater Cleveland experienced turnover in certain programmatic staff, which further delayed certain procedures related to ensuring sufficiency and accuracy of the SEFA, thus causing delays in the audit process. Effect: There was no effect due to the late submission of the report. Questioned Costs: There are no questioned costs related to the items described above. Context: The conditions outlined above are based on our testing of the United Way of Greater Cleveland’s major programs and our overall testing of the accuracy of the SEFA. The nature of this finding is detailed in the condition section above.Repeat Finding: his is not a repeat finding. Recommendation:We recommend management address the staffing considerations to ensure the documented policies and procedures can be performed as prescribed and on a timely basis to allow for prompt submission to the FAC. Views of Responsible Officials: United Way of Greater Cleveland’s management agrees with the finding and recommendations set forth within and has developed a corrective action.
2023-002 - Internal Control over Compliance and Compliance with Reporting Information on the Federal Program: United States Department of Health and Human Services Assistance Listing Numbers: 93.650 Accountable Health Communities 93.391 Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises 93.558 Temporary Assistance for Needy Families 93.667 Social Services Block Grant 93.738 Racial & Ethnic Approaches to Community Health; Program Solely Funded by Public Prevention Health Funds 93.044 Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers 93.052 National Family Caregiver Support 93.268 Immunization Cooperative Agreements United States Department of Housing and Urban Development Assistance Listing Number: 14.218 Community Development Block Grants United States Department of Homeland Security Assistance Listing Number: 97.024 Emergency Food and Shelter Criteria: In accordance with CFR §200.303(a), Internal Controls, the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)…”Additionally, in accordance with CFR §200.303(a), Monitoring and reporting program performance, the non-Federal entity is responsible for oversight of the operations of the Federal award supported activities. The non-Federal entity must monitor its activities under Federal awards to assure compliance with applicable Federal requirements and performance expectations are being achieved. Monitoring by the non-Federal entity must cover each program, function or activity…”CFR Section §200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section §200.502 Basis for determining Federal awards expended.” The schedule must provide total Federal awards expended for each individual Federal program. In accordance with CFR §200.302 Financial Management, a non-federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system of each non-Federal provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial Reporting and §200.329 Monitoring and Reporting Program Performance.Records that identify adequately the source and application of funds for federally funded activities. Effective control over, and accountability for, all funds, property, and other assets. United Way of Greater Cleveland is required to submit its Single Audit Report to the Federal Audit Clearinghouse within 30 calendar days after the receipt of the Auditor’s report, or within nine months after the close of the Auditee’s fiscal year, whichever is earlier. Condition: Therefore, the submission to the Federal Audit Clearing House is subsequent to both 30 days from the date of the receipt of the financial statements and nine months after year end and is therefore considered a late submission. Cause: During the year ended June 30, 2023, United way of Greater Cleveland migrated general ledger financial reporting systems, which caused delays in the closing and financial audit process. Subsequent to June 30, 2023, United Way of Greater Cleveland experienced turnover in certain programmatic staff, which further delayed certain procedures related to ensuring sufficiency and accuracy of the SEFA, thus causing delays in the audit process. Effect: There was no effect due to the late submission of the report. Questioned Costs: There are no questioned costs related to the items described above. Context: The conditions outlined above are based on our testing of the United Way of Greater Cleveland’s major programs and our overall testing of the accuracy of the SEFA. The nature of this finding is detailed in the condition section above.Repeat Finding: his is not a repeat finding. Recommendation:We recommend management address the staffing considerations to ensure the documented policies and procedures can be performed as prescribed and on a timely basis to allow for prompt submission to the FAC. Views of Responsible Officials: United Way of Greater Cleveland’s management agrees with the finding and recommendations set forth within and has developed a corrective action.
Reference Number: 2023-002 Prior Year Finding: No Federal Agency: U.S. Department of Treasury Federal Program: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Number and Year: ARP17SL1 (5/23/2021 - 12/31/2026) Compliance Requirement: Earmarking and Reporting Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance (Modified Opinion) Criteria or specific requirement: Compliance: Earmarking – Under Treasury’s Final Rule that became effective on April 1, 2022, recipients can calculate lost revenue for the years 2020, 2021, 2022, and 2023 based on the formula provided in the Final Rule to determine the amount of State and Local Fiscal Recovery Funds (SLFRF) that can be used for the “provision of government services.” To calculate revenue loss at each of these dates, recipients must follow a four-step process which includes: a. Calculate revenues collected in the most recent full fiscal year prior to the public health emergency (i.e., last full fiscal year before January 27, 2020), called the base year revenue. b. Estimate counterfactual revenue, which is equal to the following formula, where n is the number of months elapsed since the end of the base year to the calculation date: base year revenue x (1 + growth adjustment) n/12. The growth adjustment is the greater of either a standard growth rate—5.2 percent—or the recipient’s average annual revenue growth in the last full three fiscal years prior to the COVID-19 public health emergency. c. Identify actual revenue, which equals revenues collected over the twelve months immediately preceding the calculation date. d. Revenue loss for the calculation date is equal to counterfactual revenue minus actual revenue (adjusted for tax changes) for the twelve-month period. Further, the Final Rule defines the term general revenue to include revenues collected by a recipient and generated from its underlying economy and would capture a range of different types of tax revenues, as well as other types of revenue that are available to support government services. In calculating revenue, recipients should sum across all revenue streams covered as general revenue. Reporting – Per 2 CFR 200.328 and 31 CFR section 35.4(c), States, territories, metropolitan cities, counties, and Tribal governments were required to submit one interim report and quarterly Project and Expenditure reports thereafter. A Key Line Item containing critical information, as defined by Treasury, in these reports is the Revenue Replacement section. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Prince George’s County (the County) did not calculate their revenue loss in accordance with the Final Rule. As a result, amounts reported under the Revenue Replacement section of the Project and Expenditure reports were inaccurate for all quarters within the fiscal year ended June 30, 2023 Context: The County used incorrect base year revenues in their revenue loss calculation. Only general fund revenue was used in the calculation instead of summing across all revenue streams as defined by the Final Rule. Further, the County used an incorrect growth rate of 4.0% instead of 5.2% as required by the Final Rule. The Revenue Replacement section of the Project and Expenditure reports were inaccurate due to these errors. Cause: The County’s policies and procedures were not sufficient to ensure that their revenue loss calculation was in accordance with the Final Rule and that accurate information was reported in their Project and Expenditure reports under the Revenue Replacement section. Effect: The County was not in compliance with federal requirements, and failure to comply with those requirements could jeopardize future funding. Questioned costs: Undetermined. Recommendation: We recommend that the County revise the revenue loss calculation to be in accordance with the U.S. Treasury’s guidance as outlined by the Final Rule and submit a revised Project and Expenditure report to the U.S. Treasury’s SLFRF portal. Views of responsible officials: At the time that the Office of Management and Budget (OMB) calculated the revenue loss it was unclear whether it applied to only general funds or all funds. Guidance from the U.S. Treasury Department was updated frequently following enactment of the American Rescue Plan Act of 2021. Based on the finding of the audit that revenue loss calculation is not in accord with the Final Rule, OMB staff re-calculated the data using all funds.
Reference Number: 2023-002 Prior Year Finding: No Federal Agency: U.S. Department of Treasury Federal Program: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Number and Year: ARP17SL1 (5/23/2021 - 12/31/2026) Compliance Requirement: Earmarking and Reporting Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance (Modified Opinion) Criteria or specific requirement: Compliance: Earmarking – Under Treasury’s Final Rule that became effective on April 1, 2022, recipients can calculate lost revenue for the years 2020, 2021, 2022, and 2023 based on the formula provided in the Final Rule to determine the amount of State and Local Fiscal Recovery Funds (SLFRF) that can be used for the “provision of government services.” To calculate revenue loss at each of these dates, recipients must follow a four-step process which includes: a. Calculate revenues collected in the most recent full fiscal year prior to the public health emergency (i.e., last full fiscal year before January 27, 2020), called the base year revenue. b. Estimate counterfactual revenue, which is equal to the following formula, where n is the number of months elapsed since the end of the base year to the calculation date: base year revenue x (1 + growth adjustment) n/12. The growth adjustment is the greater of either a standard growth rate—5.2 percent—or the recipient’s average annual revenue growth in the last full three fiscal years prior to the COVID-19 public health emergency. c. Identify actual revenue, which equals revenues collected over the twelve months immediately preceding the calculation date. d. Revenue loss for the calculation date is equal to counterfactual revenue minus actual revenue (adjusted for tax changes) for the twelve-month period. Further, the Final Rule defines the term general revenue to include revenues collected by a recipient and generated from its underlying economy and would capture a range of different types of tax revenues, as well as other types of revenue that are available to support government services. In calculating revenue, recipients should sum across all revenue streams covered as general revenue. Reporting – Per 2 CFR 200.328 and 31 CFR section 35.4(c), States, territories, metropolitan cities, counties, and Tribal governments were required to submit one interim report and quarterly Project and Expenditure reports thereafter. A Key Line Item containing critical information, as defined by Treasury, in these reports is the Revenue Replacement section. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Prince George’s County (the County) did not calculate their revenue loss in accordance with the Final Rule. As a result, amounts reported under the Revenue Replacement section of the Project and Expenditure reports were inaccurate for all quarters within the fiscal year ended June 30, 2023 Context: The County used incorrect base year revenues in their revenue loss calculation. Only general fund revenue was used in the calculation instead of summing across all revenue streams as defined by the Final Rule. Further, the County used an incorrect growth rate of 4.0% instead of 5.2% as required by the Final Rule. The Revenue Replacement section of the Project and Expenditure reports were inaccurate due to these errors. Cause: The County’s policies and procedures were not sufficient to ensure that their revenue loss calculation was in accordance with the Final Rule and that accurate information was reported in their Project and Expenditure reports under the Revenue Replacement section. Effect: The County was not in compliance with federal requirements, and failure to comply with those requirements could jeopardize future funding. Questioned costs: Undetermined. Recommendation: We recommend that the County revise the revenue loss calculation to be in accordance with the U.S. Treasury’s guidance as outlined by the Final Rule and submit a revised Project and Expenditure report to the U.S. Treasury’s SLFRF portal. Views of responsible officials: At the time that the Office of Management and Budget (OMB) calculated the revenue loss it was unclear whether it applied to only general funds or all funds. Guidance from the U.S. Treasury Department was updated frequently following enactment of the American Rescue Plan Act of 2021. Based on the finding of the audit that revenue loss calculation is not in accord with the Final Rule, OMB staff re-calculated the data using all funds.
Reference Number: 2023-002 Prior Year Finding: No Federal Agency: U.S. Department of Treasury Federal Program: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Number and Year: ARP17SL1 (5/23/2021 - 12/31/2026) Compliance Requirement: Earmarking and Reporting Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance (Modified Opinion) Criteria or specific requirement: Compliance: Earmarking – Under Treasury’s Final Rule that became effective on April 1, 2022, recipients can calculate lost revenue for the years 2020, 2021, 2022, and 2023 based on the formula provided in the Final Rule to determine the amount of State and Local Fiscal Recovery Funds (SLFRF) that can be used for the “provision of government services.” To calculate revenue loss at each of these dates, recipients must follow a four-step process which includes: a. Calculate revenues collected in the most recent full fiscal year prior to the public health emergency (i.e., last full fiscal year before January 27, 2020), called the base year revenue. b. Estimate counterfactual revenue, which is equal to the following formula, where n is the number of months elapsed since the end of the base year to the calculation date: base year revenue x (1 + growth adjustment) n/12. The growth adjustment is the greater of either a standard growth rate—5.2 percent—or the recipient’s average annual revenue growth in the last full three fiscal years prior to the COVID-19 public health emergency. c. Identify actual revenue, which equals revenues collected over the twelve months immediately preceding the calculation date. d. Revenue loss for the calculation date is equal to counterfactual revenue minus actual revenue (adjusted for tax changes) for the twelve-month period. Further, the Final Rule defines the term general revenue to include revenues collected by a recipient and generated from its underlying economy and would capture a range of different types of tax revenues, as well as other types of revenue that are available to support government services. In calculating revenue, recipients should sum across all revenue streams covered as general revenue. Reporting – Per 2 CFR 200.328 and 31 CFR section 35.4(c), States, territories, metropolitan cities, counties, and Tribal governments were required to submit one interim report and quarterly Project and Expenditure reports thereafter. A Key Line Item containing critical information, as defined by Treasury, in these reports is the Revenue Replacement section. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Prince George’s County (the County) did not calculate their revenue loss in accordance with the Final Rule. As a result, amounts reported under the Revenue Replacement section of the Project and Expenditure reports were inaccurate for all quarters within the fiscal year ended June 30, 2023 Context: The County used incorrect base year revenues in their revenue loss calculation. Only general fund revenue was used in the calculation instead of summing across all revenue streams as defined by the Final Rule. Further, the County used an incorrect growth rate of 4.0% instead of 5.2% as required by the Final Rule. The Revenue Replacement section of the Project and Expenditure reports were inaccurate due to these errors. Cause: The County’s policies and procedures were not sufficient to ensure that their revenue loss calculation was in accordance with the Final Rule and that accurate information was reported in their Project and Expenditure reports under the Revenue Replacement section. Effect: The County was not in compliance with federal requirements, and failure to comply with those requirements could jeopardize future funding. Questioned costs: Undetermined. Recommendation: We recommend that the County revise the revenue loss calculation to be in accordance with the U.S. Treasury’s guidance as outlined by the Final Rule and submit a revised Project and Expenditure report to the U.S. Treasury’s SLFRF portal. Views of responsible officials: At the time that the Office of Management and Budget (OMB) calculated the revenue loss it was unclear whether it applied to only general funds or all funds. Guidance from the U.S. Treasury Department was updated frequently following enactment of the American Rescue Plan Act of 2021. Based on the finding of the audit that revenue loss calculation is not in accord with the Final Rule, OMB staff re-calculated the data using all funds.
2023-001 U.S. Department of Treasury & Passed through the Commonwealth of Massachusetts Executive Office of Public Safety and Homeland Security COVID-19 – Coronavirus State and Local Fiscal Recovery Funds – AL# 21.027 Criteria: Per 2 CFR section 200.328 of the Uniform Guidance, each recipient must report program outlays and program income on a cash or accrual basis, as prescribed by the federal awarding agency. The compliance supplement identifies four Key Line Items required to be reported to the federal awarding agency which include (1) current period obligation, (2) cumulative obligation, (3) current period expenditure and (4) cumulative expenditure. Condition: As of the June 30, 2023 reporting date, the City’s Project and Expenditure Reports understated expenditures by $629,040. Also, obligations were overstated by approximately $15,000,000. Cause: The City did not reconcile the Project and Expenditure report with the City’s general ledger before submitting. The City also considered City departments as subrecipients which caused them to report departmental agreements as obligations. Effect: The City did not properly report grant expenditures and obligations in the Project and Expenditure reporting. Questioned Costs: None Repeat Finding from Prior Year: Yes; Finding 2022-002 Recommendation: The City should implement procedures to reconcile the financial information in the Project and Expenditure reports to the City’s general ledger and contract files before submission. Views of Responsible Official: Management agrees with the finding, but notes that there was confusion with the US Treasury portal and the City reached out to the US Treasury and received clarification on reporting obligations moving forward. Additionally, the US Treasury issued in November 2023 the Obligation Interim Final Rule to address questions and comments regarding the definition of obligation by recipients. In addition, it revises the definition of “obligation” in US Treasury’s SLFRF program. Anticipated completion date of the corrective action is April 30, 2024.
2023-001 U.S. Department of Treasury & Passed through the Commonwealth of Massachusetts Executive Office of Public Safety and Homeland Security COVID-19 – Coronavirus State and Local Fiscal Recovery Funds – AL# 21.027 Criteria: Per 2 CFR section 200.328 of the Uniform Guidance, each recipient must report program outlays and program income on a cash or accrual basis, as prescribed by the federal awarding agency. The compliance supplement identifies four Key Line Items required to be reported to the federal awarding agency which include (1) current period obligation, (2) cumulative obligation, (3) current period expenditure and (4) cumulative expenditure. Condition: As of the June 30, 2023 reporting date, the City’s Project and Expenditure Reports understated expenditures by $629,040. Also, obligations were overstated by approximately $15,000,000. Cause: The City did not reconcile the Project and Expenditure report with the City’s general ledger before submitting. The City also considered City departments as subrecipients which caused them to report departmental agreements as obligations. Effect: The City did not properly report grant expenditures and obligations in the Project and Expenditure reporting. Questioned Costs: None Repeat Finding from Prior Year: Yes; Finding 2022-002 Recommendation: The City should implement procedures to reconcile the financial information in the Project and Expenditure reports to the City’s general ledger and contract files before submission. Views of Responsible Official: Management agrees with the finding, but notes that there was confusion with the US Treasury portal and the City reached out to the US Treasury and received clarification on reporting obligations moving forward. Additionally, the US Treasury issued in November 2023 the Obligation Interim Final Rule to address questions and comments regarding the definition of obligation by recipients. In addition, it revises the definition of “obligation” in US Treasury’s SLFRF program. Anticipated completion date of the corrective action is April 30, 2024.
2023-001 U.S. Department of Treasury & Passed through the Commonwealth of Massachusetts Executive Office of Public Safety and Homeland Security COVID-19 – Coronavirus State and Local Fiscal Recovery Funds – AL# 21.027 Criteria: Per 2 CFR section 200.328 of the Uniform Guidance, each recipient must report program outlays and program income on a cash or accrual basis, as prescribed by the federal awarding agency. The compliance supplement identifies four Key Line Items required to be reported to the federal awarding agency which include (1) current period obligation, (2) cumulative obligation, (3) current period expenditure and (4) cumulative expenditure. Condition: As of the June 30, 2023 reporting date, the City’s Project and Expenditure Reports understated expenditures by $629,040. Also, obligations were overstated by approximately $15,000,000. Cause: The City did not reconcile the Project and Expenditure report with the City’s general ledger before submitting. The City also considered City departments as subrecipients which caused them to report departmental agreements as obligations. Effect: The City did not properly report grant expenditures and obligations in the Project and Expenditure reporting. Questioned Costs: None Repeat Finding from Prior Year: Yes; Finding 2022-002 Recommendation: The City should implement procedures to reconcile the financial information in the Project and Expenditure reports to the City’s general ledger and contract files before submission. Views of Responsible Official: Management agrees with the finding, but notes that there was confusion with the US Treasury portal and the City reached out to the US Treasury and received clarification on reporting obligations moving forward. Additionally, the US Treasury issued in November 2023 the Obligation Interim Final Rule to address questions and comments regarding the definition of obligation by recipients. In addition, it revises the definition of “obligation” in US Treasury’s SLFRF program. Anticipated completion date of the corrective action is April 30, 2024.
2023-001 U.S. Department of Treasury & Passed through the Commonwealth of Massachusetts Executive Office of Public Safety and Homeland Security COVID-19 – Coronavirus State and Local Fiscal Recovery Funds – AL# 21.027 Criteria: Per 2 CFR section 200.328 of the Uniform Guidance, each recipient must report program outlays and program income on a cash or accrual basis, as prescribed by the federal awarding agency. The compliance supplement identifies four Key Line Items required to be reported to the federal awarding agency which include (1) current period obligation, (2) cumulative obligation, (3) current period expenditure and (4) cumulative expenditure. Condition: As of the June 30, 2023 reporting date, the City’s Project and Expenditure Reports understated expenditures by $629,040. Also, obligations were overstated by approximately $15,000,000. Cause: The City did not reconcile the Project and Expenditure report with the City’s general ledger before submitting. The City also considered City departments as subrecipients which caused them to report departmental agreements as obligations. Effect: The City did not properly report grant expenditures and obligations in the Project and Expenditure reporting. Questioned Costs: None Repeat Finding from Prior Year: Yes; Finding 2022-002 Recommendation: The City should implement procedures to reconcile the financial information in the Project and Expenditure reports to the City’s general ledger and contract files before submission. Views of Responsible Official: Management agrees with the finding, but notes that there was confusion with the US Treasury portal and the City reached out to the US Treasury and received clarification on reporting obligations moving forward. Additionally, the US Treasury issued in November 2023 the Obligation Interim Final Rule to address questions and comments regarding the definition of obligation by recipients. In addition, it revises the definition of “obligation” in US Treasury’s SLFRF program. Anticipated completion date of the corrective action is April 30, 2024.
Federal Awarding Agency: U.S. Department of Transportation (USDOT) Impact: Significant Deficiency, Noncompliance AL Number and Title: 20.106 Airport Improvement Program (AIP) Federal Award Number: Indeterminate Applicable Compliance Requirement: Reporting Condition: One of four randomly selected (25 percent) and two of three judgmentally selected (67 percent) 5100-126 reports tested did not tie to support, resulting in an overstatement of expenditures. One of three judgmentally selected 5100-127 reports tested (33 percent) had multiple lines in error, resulting in overstatements of revenue and net assets. Context: Commercial service airports that enplane 2,500 or more passengers in a calendar year and provided commercial service in the preceding calendar year are required to annually file financial reports with the Federal Aviation Administration (FAA). Each commercial service airport must file: (1) The Financial Government Payment Report, FAA Form 5100-126. The form reports payments the airport makes to government entities, the service the airport performs for governmental entities, and the land and facilities that the airport provides to such entities. (2) The Operating and Financial Summary, FAA Form 5100-127. The form reports airport revenues, expenses, and other financial information. The State of Alaska filed multiple 5100-126 reports for each airport that met the criteria above for payments to governmental entities. Errors on the tested 5100-126 reports included overstatements of expenditures as shown in the table below. [See Schedule of Findings and Questioned Costs for chart/table.] The State of Alaska filed 5100-127 reports for Anchorage International Airport, Fairbanks International Airport, Lake Hood Airport, and an Alaska Consolidated report encompassing all other State-owned airports that met the above criteria. All FY 23 5100-127 reports were tested, except for Lake Hood Airport. Errors were identified on the 5100-127 Alaska Consolidated report as shown below. [See Schedule of Findings and Questioned Costs for chart/table.] Cause: The Alaska Consolidated 5100-126 report expenditure overstatement was due to a clerical error when DOTPF staff added information for an airport that was not previously reported. Supervisory review procedures were insufficient to detect and correct the error. According to Alaska International Airport (AIA) management, a lack of written procedures for the preparation and review of the annual 5100-126 reports and staff turnover resulted in the overreporting of expenditures for the Anchorage and Fairbanks International Airport 5100-126 reports. Additionally, AIA management lacked written procedures for the preparation and review of the annual 5100-127 report. The Alaska Consolidated 5100-127 report overstatement errors were due to insufficient review procedures by DOTPF staff of information provided from an external source for the Ketchikan and Sitka airports, which are State-owned. Criteria: Title 2 CFR 200.328 requires states to report financial information on the forms approved by the federal Office of Management and Budget (OMB), with the frequency required by the terms and conditions of the federal award. Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Effect: The ineffective internal controls resulted in inaccurate federal reporting. Inaccurate federal reporting may impair federal decision-making and may result in the federal awarding agency imposing additional conditions or taking corrective action, including additional reporting requirements or withholding/terminating funding. Questioned Costs: None Recommendation: DOTPF’s DAS director should ensure report preparation procedures are followed and updated to include supervisory review of documentation prior to report submission. AIA’s controller should develop and implement written procedures for the 5100 126 and 5100-127 reports. View of Responsible Officials: Management agrees with this finding. [See Schedule of Findings and Questioned Costs for footnote.]
Federal Awarding Agency: U.S. Department of Transportation (USDOT) Impact: Significant Deficiency, Noncompliance AL Number and Title: 20.106 Airport Improvement Program (AIP) Federal Award Number: Indeterminate Applicable Compliance Requirement: Reporting Condition: One of four randomly selected (25 percent) and two of three judgmentally selected (67 percent) 5100-126 reports tested did not tie to support, resulting in an overstatement of expenditures. One of three judgmentally selected 5100-127 reports tested (33 percent) had multiple lines in error, resulting in overstatements of revenue and net assets. Context: Commercial service airports that enplane 2,500 or more passengers in a calendar year and provided commercial service in the preceding calendar year are required to annually file financial reports with the Federal Aviation Administration (FAA). Each commercial service airport must file: (1) The Financial Government Payment Report, FAA Form 5100-126. The form reports payments the airport makes to government entities, the service the airport performs for governmental entities, and the land and facilities that the airport provides to such entities. (2) The Operating and Financial Summary, FAA Form 5100-127. The form reports airport revenues, expenses, and other financial information. The State of Alaska filed multiple 5100-126 reports for each airport that met the criteria above for payments to governmental entities. Errors on the tested 5100-126 reports included overstatements of expenditures as shown in the table below. [See Schedule of Findings and Questioned Costs for chart/table.] The State of Alaska filed 5100-127 reports for Anchorage International Airport, Fairbanks International Airport, Lake Hood Airport, and an Alaska Consolidated report encompassing all other State-owned airports that met the above criteria. All FY 23 5100-127 reports were tested, except for Lake Hood Airport. Errors were identified on the 5100-127 Alaska Consolidated report as shown below. [See Schedule of Findings and Questioned Costs for chart/table.] Cause: The Alaska Consolidated 5100-126 report expenditure overstatement was due to a clerical error when DOTPF staff added information for an airport that was not previously reported. Supervisory review procedures were insufficient to detect and correct the error. According to Alaska International Airport (AIA) management, a lack of written procedures for the preparation and review of the annual 5100-126 reports and staff turnover resulted in the overreporting of expenditures for the Anchorage and Fairbanks International Airport 5100-126 reports. Additionally, AIA management lacked written procedures for the preparation and review of the annual 5100-127 report. The Alaska Consolidated 5100-127 report overstatement errors were due to insufficient review procedures by DOTPF staff of information provided from an external source for the Ketchikan and Sitka airports, which are State-owned. Criteria: Title 2 CFR 200.328 requires states to report financial information on the forms approved by the federal Office of Management and Budget (OMB), with the frequency required by the terms and conditions of the federal award. Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Effect: The ineffective internal controls resulted in inaccurate federal reporting. Inaccurate federal reporting may impair federal decision-making and may result in the federal awarding agency imposing additional conditions or taking corrective action, including additional reporting requirements or withholding/terminating funding. Questioned Costs: None Recommendation: DOTPF’s DAS director should ensure report preparation procedures are followed and updated to include supervisory review of documentation prior to report submission. AIA’s controller should develop and implement written procedures for the 5100 126 and 5100-127 reports. View of Responsible Officials: Management agrees with this finding. [See Schedule of Findings and Questioned Costs for footnote.]
2023-030 The Office of Financial Management did not have adequate internal controls over and did not comply with reporting requirements for the Coronavirus State and Local Fiscal Recovery Funds. Assistance Listing Number and Title: 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: None Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Reporting Known Questioned Cost Amount: None Prior Year Audit Finding: Yes, Finding 2022-020 Background The Coronavirus State and Local Fiscal Recovery Funds (SLFRF), as part of the American Rescue Plan Act of 2021, delivered $350 billion to state, local, and tribal governments to support the response to and recovery from the COVID-19 public health emergency. The program also provides resources to fight the pandemic, address economic impacts, maintain vital public services, and build a strong, resilient, and equitable recovery. Washington received about $4.4 billion of SLFRF money from the U.S. Department of the Treasury, which the state’s Office of Financial Management allocated to state agencies for various programs. In fiscal year 2023, Washington spent more than $1.8 billion in federal program funds. Under the SLFRF program, recipients are required to submit Project and Expenditure Reports during the covered period, which began March 3, 2021, and ends December 31, 2024. Treasury identified the following key line items that contain critical information: 1. Obligations and Expenditures a. Current period obligation b. Cumulative obligation c. Current period expenditure d. Cumulative expenditure 2. Revenue loss calculation validation 3. Capital Expenditures The Office was responsible for compiling information from state agencies and submitting the reports no later than the last day of the month following the end of each reporting period. The Office was also responsible for calculating and reporting the state’s revenue losses from the pandemic, as well as identifying SLFRF projects with capital expenditures that required written justifications. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. In the prior audit, we reported the Office did not have adequate internal controls over and did not comply with reporting requirements for the SLFRF program. The prior finding number was 2022-020. Description of Condition The Office did not have adequate internal controls over and did not comply with reporting requirements for the SLFRF program. During the audit period, the Office submitted four quarterly Project and Expenditure Reports: • Report No. 4 (covering activity from July 1, 2022, through September 30, 2022) • Report No. 5 (covering activity from October 1, 2022, through December 31, 2022) • Report No. 6 (covering activity from January 1, 2023, through March 31, 2023) • Report No. 7 (covering activity from April 1, 2023, through June 30, 2023) Office staff prepared the reports by collecting and compiling reporting information from each state agency. For all four reports, we found that the Office did not have adequate supporting documentation for amounts reported under current period and cumulative obligations. We also found the Office did not have adequate internal controls to ensure material compliance with the capital expenditure requirement. We identified 14 out of 95 projects for which the Office did not follow up to determine whether there were capital expenditures incurred. Eight projects had expenditures greater than $1 million during fiscal year 2023, and two of those projects required written justifications. We found the Office did not have the required written justifications for two out of eight (25 percent) projects. We consider these internal control deficiencies to be a material weakness, which led to material noncompliance. Cause of Condition The Office did not require state agencies to include supporting documentation when they reported their obligations at the end of each reporting period. Instead, the Office relied on self-reporting by agencies without ensuring supporting documentation was provided and retained. In addition, management did not ensure that information provided by agencies was reviewed to ensure the project and expenditure reports are complete, accurate, and adequately supported. In addition, the Office was unable to confirm all information reported for capital expenditures was adequately supported. Effect of Condition We focused our review on the obligation and expenditure key line items for the Department of Commerce (Commerce) and Department of Social and Health Services (DSHS). Combined, these two agencies accounted for about 57 percent of total SLFRF expenditures during fiscal year 2023. We determined that both agencies’ current period and cumulative expenditures were accurate and supported, and any variances were not material to the overall reporting. However, we were unable to confirm whether the supporting documentation for both agencies’ reported obligations accounted for all activity during each reporting period. Therefore, our estimates of overreported and underreported obligations for both agencies in the tables below are based on the agency reports for obligations available at the time of the audit. Commerce We found that the current period obligations for Commerce in all four reports did not have adequate supporting documentation. We also found that cumulative obligations for Commerce in all four reports did not have adequate supporting documentation. As of the final fiscal year 2023 report, Commerce’s cumulative obligations totaled $985,274,734 and cumulative expenditures totaled $783,360,809. Because Commerce’s expenditures were accurate and supported, we calculated the variance to be the net of the unsupported obligations minus supported expenditures, or $201,913,924 (difference due to rounding). DSHS In two reports, we identified reporting variances for current period obligations reported for DSHS, including $7,158,350 in overreported obligations in Report No. 7. DSHS reported $17,781,970 in current obligations for Report No. 7. We also found that cumulative obligations were underreported by $1,445,556 compared to estimated expected obligations of $363,451,530. To determine the magnitude of the reporting variances, we totaled the largest current period obligation variance for DSHS with the net unsupported obligations for Commerce. This totaled $209,081,184, or about 11 percent of total SLFRF expenditures during fiscal year 2023. Our determination of the variance is an estimate because documentation necessary to calculate accurate obligation amounts for each reporting period was not available. By not establishing adequate internal controls, the Office cannot ensure that information reported to the federal grantor is complete and accurate. Without complete supporting documentation for obligations, management is not able to demonstrate that amounts reported to the federal grantor are complete and accurate. Recommendations We recommend the Office: • Establish internal controls to ensure reported obligations are supported by source documentation, which should be retained and available for review • Improve internal controls to ensure staff continue to follow up with agencies that report incomplete information • Ensure that management verifies reporting information is adequately supported before certifying and submitting the report Office’s Response The Office will continue to communicate to agencies the importance of maintaining adequate source supporting documentation for future project and expenditure reports. Although a complete cumulative obligations report as of the report date was not maintained supporting the project and expenditure report, all obligations are supported by grant agreements, contracts, and purchase orders. Additionally, the Office was able to provide the auditor a current report including all obligations to date which exceeded the cumulative obligations during the reporting period. The Office continues to improve the reporting template used to collect the required information from agencies and frequently meets with agencies to discuss the reporting requirements to ensure the quarterly Project and Expenditure Reports are complete, accurate, and supported. The Office will continue its review and verification process to ensure information is adequately supported before certifying and submitting the report. As noted in the U.S. Treasury reporting guidance, corrections or any changes to the report need to be reflected in the next Project and Expenditure report. As a result, the supporting documentation for the quarter may not align with the quarterly reports. Auditor’s Remarks We thank the Office for its cooperation and assistance throughout the audit. We will review the status of the Office’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200, Uniform Guidance, section 516, Audit findings, establishes reporting requirements for audit findings. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Office of Management and Budget, 2 CFR Part 200, Appendix XI, 2023 Compliance Supplement, for Assistance Listing 21.027 Coronavirus State and Local Fiscal Recovery Funds, states in part: L. Reporting 2. Performance Reporting Title of Report: Project and Expenditure Report PRA Number: 1505-0271 Reporting Cycle: Quarterly and Annual Authoritative Requirement: 2 CFR 200.328 and 31 CFR section 35.4(c) Reporting and requests for other information Blank Copy of the Report: https://home.treasury.gov/policyissues/coronavirus/assistance-for-state-local-and-tribal-governments/state-andlocal-fiscal-recovery-funds/recipient-compliance-and-reporting-responsibilities – See pages 17 through 34. Report Instructions: https://home.treasury.gov/policyissues/coronavirus/assistance-for-state-local-and-tribal-governments/state-andlocal-fiscal-recovery-funds/recipient-compliance-and-reporting-responsibilities – See pages 17 through 34. Report Corrections: Recipients will have an opportunity to reopen and provide edits to their submitted Project and Expenditure Reports any time before the reporting deadline. Recipients will then be required to re-certify and submit the report again to properly reflect any edits made. After the reporting deadline, unless prompted by Treasury staff, recipients will not be able to edit their submitted report, any changes or revisions will need to be reflected in the next Project and Expenditure report. The Office of Recovery Program’s (ORP) reporting portal has built-in functionality to reopen a report and allow recipients to make edits after the reporting deadline. However, it is ORP’s policy that recipients may only make revisions if authorized by Treasury staff for a period of up to 60 days after the reporting deadline. After the revision period ends, the report is final. A resubmitted report becomes a recipient’s final report within ORP’s reporting portal. Recipients can generate PDFs of this reports at any time. Key Line Item(s)- The following line items contain critical information: 1. Obligations and Expenditures- Quantifiable Objective Criteria: Reported obligations and expenditures. (See pages 16 and 17 of the above links.) a. Current period obligation b. Cumulative obligation c. Current period expenditure d. Cumulative expenditure Revenue loss calculation validation- Note- Recipients may elect a “standard allowance” of up to $10 million to spend on government services through the period of performance instead of using the full formula specified in the final rule. The standard allowance is available to all recipients. See page 30 for when recipients may modify their revenue loss election. Quantifiable Objective Criteria: Recipient’s application of the revenue loss calculation is accurate if they did not elect the standard allowance. Specific information regarding the revenue loss formula can be found in paragraph (d)(2) of 31 CFR § 35.6 at 31 CFR § 35.6(d)(2)(d)(2). Capital Expenditures- Quantifiable Objective Criteria: The recipient has the required written justification in their grant file if the total of the capital expenditures costs in a project is greater than or equal to $1 million and less than $10 million; or, the recipient submitted the required justification to Treasury if (1) a project has total capital expenditures costs greater than $10 million for capital expenditures enumerated by Treasury in the final rule; or (2) the total of a project’s capital expenditures costs is greater than $1 million for capital expenditures not enumerated by Treasury in the final rule. Note: Capital expenditures paid for using revenue replacement funds are not subject to this requirement. Tribal governments are not required to complete the written justification. (See 31 CFR section 35.6(b)(4))
2023-030 The Office of Financial Management did not have adequate internal controls over and did not comply with reporting requirements for the Coronavirus State and Local Fiscal Recovery Funds. Assistance Listing Number and Title: 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: None Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Reporting Known Questioned Cost Amount: None Prior Year Audit Finding: Yes, Finding 2022-020 Background The Coronavirus State and Local Fiscal Recovery Funds (SLFRF), as part of the American Rescue Plan Act of 2021, delivered $350 billion to state, local, and tribal governments to support the response to and recovery from the COVID-19 public health emergency. The program also provides resources to fight the pandemic, address economic impacts, maintain vital public services, and build a strong, resilient, and equitable recovery. Washington received about $4.4 billion of SLFRF money from the U.S. Department of the Treasury, which the state’s Office of Financial Management allocated to state agencies for various programs. In fiscal year 2023, Washington spent more than $1.8 billion in federal program funds. Under the SLFRF program, recipients are required to submit Project and Expenditure Reports during the covered period, which began March 3, 2021, and ends December 31, 2024. Treasury identified the following key line items that contain critical information: 1. Obligations and Expenditures a. Current period obligation b. Cumulative obligation c. Current period expenditure d. Cumulative expenditure 2. Revenue loss calculation validation 3. Capital Expenditures The Office was responsible for compiling information from state agencies and submitting the reports no later than the last day of the month following the end of each reporting period. The Office was also responsible for calculating and reporting the state’s revenue losses from the pandemic, as well as identifying SLFRF projects with capital expenditures that required written justifications. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. In the prior audit, we reported the Office did not have adequate internal controls over and did not comply with reporting requirements for the SLFRF program. The prior finding number was 2022-020. Description of Condition The Office did not have adequate internal controls over and did not comply with reporting requirements for the SLFRF program. During the audit period, the Office submitted four quarterly Project and Expenditure Reports: • Report No. 4 (covering activity from July 1, 2022, through September 30, 2022) • Report No. 5 (covering activity from October 1, 2022, through December 31, 2022) • Report No. 6 (covering activity from January 1, 2023, through March 31, 2023) • Report No. 7 (covering activity from April 1, 2023, through June 30, 2023) Office staff prepared the reports by collecting and compiling reporting information from each state agency. For all four reports, we found that the Office did not have adequate supporting documentation for amounts reported under current period and cumulative obligations. We also found the Office did not have adequate internal controls to ensure material compliance with the capital expenditure requirement. We identified 14 out of 95 projects for which the Office did not follow up to determine whether there were capital expenditures incurred. Eight projects had expenditures greater than $1 million during fiscal year 2023, and two of those projects required written justifications. We found the Office did not have the required written justifications for two out of eight (25 percent) projects. We consider these internal control deficiencies to be a material weakness, which led to material noncompliance. Cause of Condition The Office did not require state agencies to include supporting documentation when they reported their obligations at the end of each reporting period. Instead, the Office relied on self-reporting by agencies without ensuring supporting documentation was provided and retained. In addition, management did not ensure that information provided by agencies was reviewed to ensure the project and expenditure reports are complete, accurate, and adequately supported. In addition, the Office was unable to confirm all information reported for capital expenditures was adequately supported. Effect of Condition We focused our review on the obligation and expenditure key line items for the Department of Commerce (Commerce) and Department of Social and Health Services (DSHS). Combined, these two agencies accounted for about 57 percent of total SLFRF expenditures during fiscal year 2023. We determined that both agencies’ current period and cumulative expenditures were accurate and supported, and any variances were not material to the overall reporting. However, we were unable to confirm whether the supporting documentation for both agencies’ reported obligations accounted for all activity during each reporting period. Therefore, our estimates of overreported and underreported obligations for both agencies in the tables below are based on the agency reports for obligations available at the time of the audit. Commerce We found that the current period obligations for Commerce in all four reports did not have adequate supporting documentation. We also found that cumulative obligations for Commerce in all four reports did not have adequate supporting documentation. As of the final fiscal year 2023 report, Commerce’s cumulative obligations totaled $985,274,734 and cumulative expenditures totaled $783,360,809. Because Commerce’s expenditures were accurate and supported, we calculated the variance to be the net of the unsupported obligations minus supported expenditures, or $201,913,924 (difference due to rounding). DSHS In two reports, we identified reporting variances for current period obligations reported for DSHS, including $7,158,350 in overreported obligations in Report No. 7. DSHS reported $17,781,970 in current obligations for Report No. 7. We also found that cumulative obligations were underreported by $1,445,556 compared to estimated expected obligations of $363,451,530. To determine the magnitude of the reporting variances, we totaled the largest current period obligation variance for DSHS with the net unsupported obligations for Commerce. This totaled $209,081,184, or about 11 percent of total SLFRF expenditures during fiscal year 2023. Our determination of the variance is an estimate because documentation necessary to calculate accurate obligation amounts for each reporting period was not available. By not establishing adequate internal controls, the Office cannot ensure that information reported to the federal grantor is complete and accurate. Without complete supporting documentation for obligations, management is not able to demonstrate that amounts reported to the federal grantor are complete and accurate. Recommendations We recommend the Office: • Establish internal controls to ensure reported obligations are supported by source documentation, which should be retained and available for review • Improve internal controls to ensure staff continue to follow up with agencies that report incomplete information • Ensure that management verifies reporting information is adequately supported before certifying and submitting the report Office’s Response The Office will continue to communicate to agencies the importance of maintaining adequate source supporting documentation for future project and expenditure reports. Although a complete cumulative obligations report as of the report date was not maintained supporting the project and expenditure report, all obligations are supported by grant agreements, contracts, and purchase orders. Additionally, the Office was able to provide the auditor a current report including all obligations to date which exceeded the cumulative obligations during the reporting period. The Office continues to improve the reporting template used to collect the required information from agencies and frequently meets with agencies to discuss the reporting requirements to ensure the quarterly Project and Expenditure Reports are complete, accurate, and supported. The Office will continue its review and verification process to ensure information is adequately supported before certifying and submitting the report. As noted in the U.S. Treasury reporting guidance, corrections or any changes to the report need to be reflected in the next Project and Expenditure report. As a result, the supporting documentation for the quarter may not align with the quarterly reports. Auditor’s Remarks We thank the Office for its cooperation and assistance throughout the audit. We will review the status of the Office’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200, Uniform Guidance, section 516, Audit findings, establishes reporting requirements for audit findings. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Office of Management and Budget, 2 CFR Part 200, Appendix XI, 2023 Compliance Supplement, for Assistance Listing 21.027 Coronavirus State and Local Fiscal Recovery Funds, states in part: L. Reporting 2. Performance Reporting Title of Report: Project and Expenditure Report PRA Number: 1505-0271 Reporting Cycle: Quarterly and Annual Authoritative Requirement: 2 CFR 200.328 and 31 CFR section 35.4(c) Reporting and requests for other information Blank Copy of the Report: https://home.treasury.gov/policyissues/coronavirus/assistance-for-state-local-and-tribal-governments/state-andlocal-fiscal-recovery-funds/recipient-compliance-and-reporting-responsibilities – See pages 17 through 34. Report Instructions: https://home.treasury.gov/policyissues/coronavirus/assistance-for-state-local-and-tribal-governments/state-andlocal-fiscal-recovery-funds/recipient-compliance-and-reporting-responsibilities – See pages 17 through 34. Report Corrections: Recipients will have an opportunity to reopen and provide edits to their submitted Project and Expenditure Reports any time before the reporting deadline. Recipients will then be required to re-certify and submit the report again to properly reflect any edits made. After the reporting deadline, unless prompted by Treasury staff, recipients will not be able to edit their submitted report, any changes or revisions will need to be reflected in the next Project and Expenditure report. The Office of Recovery Program’s (ORP) reporting portal has built-in functionality to reopen a report and allow recipients to make edits after the reporting deadline. However, it is ORP’s policy that recipients may only make revisions if authorized by Treasury staff for a period of up to 60 days after the reporting deadline. After the revision period ends, the report is final. A resubmitted report becomes a recipient’s final report within ORP’s reporting portal. Recipients can generate PDFs of this reports at any time. Key Line Item(s)- The following line items contain critical information: 1. Obligations and Expenditures- Quantifiable Objective Criteria: Reported obligations and expenditures. (See pages 16 and 17 of the above links.) a. Current period obligation b. Cumulative obligation c. Current period expenditure d. Cumulative expenditure Revenue loss calculation validation- Note- Recipients may elect a “standard allowance” of up to $10 million to spend on government services through the period of performance instead of using the full formula specified in the final rule. The standard allowance is available to all recipients. See page 30 for when recipients may modify their revenue loss election. Quantifiable Objective Criteria: Recipient’s application of the revenue loss calculation is accurate if they did not elect the standard allowance. Specific information regarding the revenue loss formula can be found in paragraph (d)(2) of 31 CFR § 35.6 at 31 CFR § 35.6(d)(2)(d)(2). Capital Expenditures- Quantifiable Objective Criteria: The recipient has the required written justification in their grant file if the total of the capital expenditures costs in a project is greater than or equal to $1 million and less than $10 million; or, the recipient submitted the required justification to Treasury if (1) a project has total capital expenditures costs greater than $10 million for capital expenditures enumerated by Treasury in the final rule; or (2) the total of a project’s capital expenditures costs is greater than $1 million for capital expenditures not enumerated by Treasury in the final rule. Note: Capital expenditures paid for using revenue replacement funds are not subject to this requirement. Tribal governments are not required to complete the written justification. (See 31 CFR section 35.6(b)(4))
2023-030 The Office of Financial Management did not have adequate internal controls over and did not comply with reporting requirements for the Coronavirus State and Local Fiscal Recovery Funds. Assistance Listing Number and Title: 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: None Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Reporting Known Questioned Cost Amount: None Prior Year Audit Finding: Yes, Finding 2022-020 Background The Coronavirus State and Local Fiscal Recovery Funds (SLFRF), as part of the American Rescue Plan Act of 2021, delivered $350 billion to state, local, and tribal governments to support the response to and recovery from the COVID-19 public health emergency. The program also provides resources to fight the pandemic, address economic impacts, maintain vital public services, and build a strong, resilient, and equitable recovery. Washington received about $4.4 billion of SLFRF money from the U.S. Department of the Treasury, which the state’s Office of Financial Management allocated to state agencies for various programs. In fiscal year 2023, Washington spent more than $1.8 billion in federal program funds. Under the SLFRF program, recipients are required to submit Project and Expenditure Reports during the covered period, which began March 3, 2021, and ends December 31, 2024. Treasury identified the following key line items that contain critical information: 1. Obligations and Expenditures a. Current period obligation b. Cumulative obligation c. Current period expenditure d. Cumulative expenditure 2. Revenue loss calculation validation 3. Capital Expenditures The Office was responsible for compiling information from state agencies and submitting the reports no later than the last day of the month following the end of each reporting period. The Office was also responsible for calculating and reporting the state’s revenue losses from the pandemic, as well as identifying SLFRF projects with capital expenditures that required written justifications. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. In the prior audit, we reported the Office did not have adequate internal controls over and did not comply with reporting requirements for the SLFRF program. The prior finding number was 2022-020. Description of Condition The Office did not have adequate internal controls over and did not comply with reporting requirements for the SLFRF program. During the audit period, the Office submitted four quarterly Project and Expenditure Reports: • Report No. 4 (covering activity from July 1, 2022, through September 30, 2022) • Report No. 5 (covering activity from October 1, 2022, through December 31, 2022) • Report No. 6 (covering activity from January 1, 2023, through March 31, 2023) • Report No. 7 (covering activity from April 1, 2023, through June 30, 2023) Office staff prepared the reports by collecting and compiling reporting information from each state agency. For all four reports, we found that the Office did not have adequate supporting documentation for amounts reported under current period and cumulative obligations. We also found the Office did not have adequate internal controls to ensure material compliance with the capital expenditure requirement. We identified 14 out of 95 projects for which the Office did not follow up to determine whether there were capital expenditures incurred. Eight projects had expenditures greater than $1 million during fiscal year 2023, and two of those projects required written justifications. We found the Office did not have the required written justifications for two out of eight (25 percent) projects. We consider these internal control deficiencies to be a material weakness, which led to material noncompliance. Cause of Condition The Office did not require state agencies to include supporting documentation when they reported their obligations at the end of each reporting period. Instead, the Office relied on self-reporting by agencies without ensuring supporting documentation was provided and retained. In addition, management did not ensure that information provided by agencies was reviewed to ensure the project and expenditure reports are complete, accurate, and adequately supported. In addition, the Office was unable to confirm all information reported for capital expenditures was adequately supported. Effect of Condition We focused our review on the obligation and expenditure key line items for the Department of Commerce (Commerce) and Department of Social and Health Services (DSHS). Combined, these two agencies accounted for about 57 percent of total SLFRF expenditures during fiscal year 2023. We determined that both agencies’ current period and cumulative expenditures were accurate and supported, and any variances were not material to the overall reporting. However, we were unable to confirm whether the supporting documentation for both agencies’ reported obligations accounted for all activity during each reporting period. Therefore, our estimates of overreported and underreported obligations for both agencies in the tables below are based on the agency reports for obligations available at the time of the audit. Commerce We found that the current period obligations for Commerce in all four reports did not have adequate supporting documentation. We also found that cumulative obligations for Commerce in all four reports did not have adequate supporting documentation. As of the final fiscal year 2023 report, Commerce’s cumulative obligations totaled $985,274,734 and cumulative expenditures totaled $783,360,809. Because Commerce’s expenditures were accurate and supported, we calculated the variance to be the net of the unsupported obligations minus supported expenditures, or $201,913,924 (difference due to rounding). DSHS In two reports, we identified reporting variances for current period obligations reported for DSHS, including $7,158,350 in overreported obligations in Report No. 7. DSHS reported $17,781,970 in current obligations for Report No. 7. We also found that cumulative obligations were underreported by $1,445,556 compared to estimated expected obligations of $363,451,530. To determine the magnitude of the reporting variances, we totaled the largest current period obligation variance for DSHS with the net unsupported obligations for Commerce. This totaled $209,081,184, or about 11 percent of total SLFRF expenditures during fiscal year 2023. Our determination of the variance is an estimate because documentation necessary to calculate accurate obligation amounts for each reporting period was not available. By not establishing adequate internal controls, the Office cannot ensure that information reported to the federal grantor is complete and accurate. Without complete supporting documentation for obligations, management is not able to demonstrate that amounts reported to the federal grantor are complete and accurate. Recommendations We recommend the Office: • Establish internal controls to ensure reported obligations are supported by source documentation, which should be retained and available for review • Improve internal controls to ensure staff continue to follow up with agencies that report incomplete information • Ensure that management verifies reporting information is adequately supported before certifying and submitting the report Office’s Response The Office will continue to communicate to agencies the importance of maintaining adequate source supporting documentation for future project and expenditure reports. Although a complete cumulative obligations report as of the report date was not maintained supporting the project and expenditure report, all obligations are supported by grant agreements, contracts, and purchase orders. Additionally, the Office was able to provide the auditor a current report including all obligations to date which exceeded the cumulative obligations during the reporting period. The Office continues to improve the reporting template used to collect the required information from agencies and frequently meets with agencies to discuss the reporting requirements to ensure the quarterly Project and Expenditure Reports are complete, accurate, and supported. The Office will continue its review and verification process to ensure information is adequately supported before certifying and submitting the report. As noted in the U.S. Treasury reporting guidance, corrections or any changes to the report need to be reflected in the next Project and Expenditure report. As a result, the supporting documentation for the quarter may not align with the quarterly reports. Auditor’s Remarks We thank the Office for its cooperation and assistance throughout the audit. We will review the status of the Office’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200, Uniform Guidance, section 516, Audit findings, establishes reporting requirements for audit findings. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Office of Management and Budget, 2 CFR Part 200, Appendix XI, 2023 Compliance Supplement, for Assistance Listing 21.027 Coronavirus State and Local Fiscal Recovery Funds, states in part: L. Reporting 2. Performance Reporting Title of Report: Project and Expenditure Report PRA Number: 1505-0271 Reporting Cycle: Quarterly and Annual Authoritative Requirement: 2 CFR 200.328 and 31 CFR section 35.4(c) Reporting and requests for other information Blank Copy of the Report: https://home.treasury.gov/policyissues/coronavirus/assistance-for-state-local-and-tribal-governments/state-andlocal-fiscal-recovery-funds/recipient-compliance-and-reporting-responsibilities – See pages 17 through 34. Report Instructions: https://home.treasury.gov/policyissues/coronavirus/assistance-for-state-local-and-tribal-governments/state-andlocal-fiscal-recovery-funds/recipient-compliance-and-reporting-responsibilities – See pages 17 through 34. Report Corrections: Recipients will have an opportunity to reopen and provide edits to their submitted Project and Expenditure Reports any time before the reporting deadline. Recipients will then be required to re-certify and submit the report again to properly reflect any edits made. After the reporting deadline, unless prompted by Treasury staff, recipients will not be able to edit their submitted report, any changes or revisions will need to be reflected in the next Project and Expenditure report. The Office of Recovery Program’s (ORP) reporting portal has built-in functionality to reopen a report and allow recipients to make edits after the reporting deadline. However, it is ORP’s policy that recipients may only make revisions if authorized by Treasury staff for a period of up to 60 days after the reporting deadline. After the revision period ends, the report is final. A resubmitted report becomes a recipient’s final report within ORP’s reporting portal. Recipients can generate PDFs of this reports at any time. Key Line Item(s)- The following line items contain critical information: 1. Obligations and Expenditures- Quantifiable Objective Criteria: Reported obligations and expenditures. (See pages 16 and 17 of the above links.) a. Current period obligation b. Cumulative obligation c. Current period expenditure d. Cumulative expenditure Revenue loss calculation validation- Note- Recipients may elect a “standard allowance” of up to $10 million to spend on government services through the period of performance instead of using the full formula specified in the final rule. The standard allowance is available to all recipients. See page 30 for when recipients may modify their revenue loss election. Quantifiable Objective Criteria: Recipient’s application of the revenue loss calculation is accurate if they did not elect the standard allowance. Specific information regarding the revenue loss formula can be found in paragraph (d)(2) of 31 CFR § 35.6 at 31 CFR § 35.6(d)(2)(d)(2). Capital Expenditures- Quantifiable Objective Criteria: The recipient has the required written justification in their grant file if the total of the capital expenditures costs in a project is greater than or equal to $1 million and less than $10 million; or, the recipient submitted the required justification to Treasury if (1) a project has total capital expenditures costs greater than $10 million for capital expenditures enumerated by Treasury in the final rule; or (2) the total of a project’s capital expenditures costs is greater than $1 million for capital expenditures not enumerated by Treasury in the final rule. Note: Capital expenditures paid for using revenue replacement funds are not subject to this requirement. Tribal governments are not required to complete the written justification. (See 31 CFR section 35.6(b)(4))
2023-030 The Office of Financial Management did not have adequate internal controls over and did not comply with reporting requirements for the Coronavirus State and Local Fiscal Recovery Funds. Assistance Listing Number and Title: 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: None Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Reporting Known Questioned Cost Amount: None Prior Year Audit Finding: Yes, Finding 2022-020 Background The Coronavirus State and Local Fiscal Recovery Funds (SLFRF), as part of the American Rescue Plan Act of 2021, delivered $350 billion to state, local, and tribal governments to support the response to and recovery from the COVID-19 public health emergency. The program also provides resources to fight the pandemic, address economic impacts, maintain vital public services, and build a strong, resilient, and equitable recovery. Washington received about $4.4 billion of SLFRF money from the U.S. Department of the Treasury, which the state’s Office of Financial Management allocated to state agencies for various programs. In fiscal year 2023, Washington spent more than $1.8 billion in federal program funds. Under the SLFRF program, recipients are required to submit Project and Expenditure Reports during the covered period, which began March 3, 2021, and ends December 31, 2024. Treasury identified the following key line items that contain critical information: 1. Obligations and Expenditures a. Current period obligation b. Cumulative obligation c. Current period expenditure d. Cumulative expenditure 2. Revenue loss calculation validation 3. Capital Expenditures The Office was responsible for compiling information from state agencies and submitting the reports no later than the last day of the month following the end of each reporting period. The Office was also responsible for calculating and reporting the state’s revenue losses from the pandemic, as well as identifying SLFRF projects with capital expenditures that required written justifications. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. In the prior audit, we reported the Office did not have adequate internal controls over and did not comply with reporting requirements for the SLFRF program. The prior finding number was 2022-020. Description of Condition The Office did not have adequate internal controls over and did not comply with reporting requirements for the SLFRF program. During the audit period, the Office submitted four quarterly Project and Expenditure Reports: • Report No. 4 (covering activity from July 1, 2022, through September 30, 2022) • Report No. 5 (covering activity from October 1, 2022, through December 31, 2022) • Report No. 6 (covering activity from January 1, 2023, through March 31, 2023) • Report No. 7 (covering activity from April 1, 2023, through June 30, 2023) Office staff prepared the reports by collecting and compiling reporting information from each state agency. For all four reports, we found that the Office did not have adequate supporting documentation for amounts reported under current period and cumulative obligations. We also found the Office did not have adequate internal controls to ensure material compliance with the capital expenditure requirement. We identified 14 out of 95 projects for which the Office did not follow up to determine whether there were capital expenditures incurred. Eight projects had expenditures greater than $1 million during fiscal year 2023, and two of those projects required written justifications. We found the Office did not have the required written justifications for two out of eight (25 percent) projects. We consider these internal control deficiencies to be a material weakness, which led to material noncompliance. Cause of Condition The Office did not require state agencies to include supporting documentation when they reported their obligations at the end of each reporting period. Instead, the Office relied on self-reporting by agencies without ensuring supporting documentation was provided and retained. In addition, management did not ensure that information provided by agencies was reviewed to ensure the project and expenditure reports are complete, accurate, and adequately supported. In addition, the Office was unable to confirm all information reported for capital expenditures was adequately supported. Effect of Condition We focused our review on the obligation and expenditure key line items for the Department of Commerce (Commerce) and Department of Social and Health Services (DSHS). Combined, these two agencies accounted for about 57 percent of total SLFRF expenditures during fiscal year 2023. We determined that both agencies’ current period and cumulative expenditures were accurate and supported, and any variances were not material to the overall reporting. However, we were unable to confirm whether the supporting documentation for both agencies’ reported obligations accounted for all activity during each reporting period. Therefore, our estimates of overreported and underreported obligations for both agencies in the tables below are based on the agency reports for obligations available at the time of the audit. Commerce We found that the current period obligations for Commerce in all four reports did not have adequate supporting documentation. We also found that cumulative obligations for Commerce in all four reports did not have adequate supporting documentation. As of the final fiscal year 2023 report, Commerce’s cumulative obligations totaled $985,274,734 and cumulative expenditures totaled $783,360,809. Because Commerce’s expenditures were accurate and supported, we calculated the variance to be the net of the unsupported obligations minus supported expenditures, or $201,913,924 (difference due to rounding). DSHS In two reports, we identified reporting variances for current period obligations reported for DSHS, including $7,158,350 in overreported obligations in Report No. 7. DSHS reported $17,781,970 in current obligations for Report No. 7. We also found that cumulative obligations were underreported by $1,445,556 compared to estimated expected obligations of $363,451,530. To determine the magnitude of the reporting variances, we totaled the largest current period obligation variance for DSHS with the net unsupported obligations for Commerce. This totaled $209,081,184, or about 11 percent of total SLFRF expenditures during fiscal year 2023. Our determination of the variance is an estimate because documentation necessary to calculate accurate obligation amounts for each reporting period was not available. By not establishing adequate internal controls, the Office cannot ensure that information reported to the federal grantor is complete and accurate. Without complete supporting documentation for obligations, management is not able to demonstrate that amounts reported to the federal grantor are complete and accurate. Recommendations We recommend the Office: • Establish internal controls to ensure reported obligations are supported by source documentation, which should be retained and available for review • Improve internal controls to ensure staff continue to follow up with agencies that report incomplete information • Ensure that management verifies reporting information is adequately supported before certifying and submitting the report Office’s Response The Office will continue to communicate to agencies the importance of maintaining adequate source supporting documentation for future project and expenditure reports. Although a complete cumulative obligations report as of the report date was not maintained supporting the project and expenditure report, all obligations are supported by grant agreements, contracts, and purchase orders. Additionally, the Office was able to provide the auditor a current report including all obligations to date which exceeded the cumulative obligations during the reporting period. The Office continues to improve the reporting template used to collect the required information from agencies and frequently meets with agencies to discuss the reporting requirements to ensure the quarterly Project and Expenditure Reports are complete, accurate, and supported. The Office will continue its review and verification process to ensure information is adequately supported before certifying and submitting the report. As noted in the U.S. Treasury reporting guidance, corrections or any changes to the report need to be reflected in the next Project and Expenditure report. As a result, the supporting documentation for the quarter may not align with the quarterly reports. Auditor’s Remarks We thank the Office for its cooperation and assistance throughout the audit. We will review the status of the Office’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200, Uniform Guidance, section 516, Audit findings, establishes reporting requirements for audit findings. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Office of Management and Budget, 2 CFR Part 200, Appendix XI, 2023 Compliance Supplement, for Assistance Listing 21.027 Coronavirus State and Local Fiscal Recovery Funds, states in part: L. Reporting 2. Performance Reporting Title of Report: Project and Expenditure Report PRA Number: 1505-0271 Reporting Cycle: Quarterly and Annual Authoritative Requirement: 2 CFR 200.328 and 31 CFR section 35.4(c) Reporting and requests for other information Blank Copy of the Report: https://home.treasury.gov/policyissues/coronavirus/assistance-for-state-local-and-tribal-governments/state-andlocal-fiscal-recovery-funds/recipient-compliance-and-reporting-responsibilities – See pages 17 through 34. Report Instructions: https://home.treasury.gov/policyissues/coronavirus/assistance-for-state-local-and-tribal-governments/state-andlocal-fiscal-recovery-funds/recipient-compliance-and-reporting-responsibilities – See pages 17 through 34. Report Corrections: Recipients will have an opportunity to reopen and provide edits to their submitted Project and Expenditure Reports any time before the reporting deadline. Recipients will then be required to re-certify and submit the report again to properly reflect any edits made. After the reporting deadline, unless prompted by Treasury staff, recipients will not be able to edit their submitted report, any changes or revisions will need to be reflected in the next Project and Expenditure report. The Office of Recovery Program’s (ORP) reporting portal has built-in functionality to reopen a report and allow recipients to make edits after the reporting deadline. However, it is ORP’s policy that recipients may only make revisions if authorized by Treasury staff for a period of up to 60 days after the reporting deadline. After the revision period ends, the report is final. A resubmitted report becomes a recipient’s final report within ORP’s reporting portal. Recipients can generate PDFs of this reports at any time. Key Line Item(s)- The following line items contain critical information: 1. Obligations and Expenditures- Quantifiable Objective Criteria: Reported obligations and expenditures. (See pages 16 and 17 of the above links.) a. Current period obligation b. Cumulative obligation c. Current period expenditure d. Cumulative expenditure Revenue loss calculation validation- Note- Recipients may elect a “standard allowance” of up to $10 million to spend on government services through the period of performance instead of using the full formula specified in the final rule. The standard allowance is available to all recipients. See page 30 for when recipients may modify their revenue loss election. Quantifiable Objective Criteria: Recipient’s application of the revenue loss calculation is accurate if they did not elect the standard allowance. Specific information regarding the revenue loss formula can be found in paragraph (d)(2) of 31 CFR § 35.6 at 31 CFR § 35.6(d)(2)(d)(2). Capital Expenditures- Quantifiable Objective Criteria: The recipient has the required written justification in their grant file if the total of the capital expenditures costs in a project is greater than or equal to $1 million and less than $10 million; or, the recipient submitted the required justification to Treasury if (1) a project has total capital expenditures costs greater than $10 million for capital expenditures enumerated by Treasury in the final rule; or (2) the total of a project’s capital expenditures costs is greater than $1 million for capital expenditures not enumerated by Treasury in the final rule. Note: Capital expenditures paid for using revenue replacement funds are not subject to this requirement. Tribal governments are not required to complete the written justification. (See 31 CFR section 35.6(b)(4))
2023-030 The Office of Financial Management did not have adequate internal controls over and did not comply with reporting requirements for the Coronavirus State and Local Fiscal Recovery Funds. Assistance Listing Number and Title: 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: None Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Reporting Known Questioned Cost Amount: None Prior Year Audit Finding: Yes, Finding 2022-020 Background The Coronavirus State and Local Fiscal Recovery Funds (SLFRF), as part of the American Rescue Plan Act of 2021, delivered $350 billion to state, local, and tribal governments to support the response to and recovery from the COVID-19 public health emergency. The program also provides resources to fight the pandemic, address economic impacts, maintain vital public services, and build a strong, resilient, and equitable recovery. Washington received about $4.4 billion of SLFRF money from the U.S. Department of the Treasury, which the state’s Office of Financial Management allocated to state agencies for various programs. In fiscal year 2023, Washington spent more than $1.8 billion in federal program funds. Under the SLFRF program, recipients are required to submit Project and Expenditure Reports during the covered period, which began March 3, 2021, and ends December 31, 2024. Treasury identified the following key line items that contain critical information: 1. Obligations and Expenditures a. Current period obligation b. Cumulative obligation c. Current period expenditure d. Cumulative expenditure 2. Revenue loss calculation validation 3. Capital Expenditures The Office was responsible for compiling information from state agencies and submitting the reports no later than the last day of the month following the end of each reporting period. The Office was also responsible for calculating and reporting the state’s revenue losses from the pandemic, as well as identifying SLFRF projects with capital expenditures that required written justifications. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. In the prior audit, we reported the Office did not have adequate internal controls over and did not comply with reporting requirements for the SLFRF program. The prior finding number was 2022-020. Description of Condition The Office did not have adequate internal controls over and did not comply with reporting requirements for the SLFRF program. During the audit period, the Office submitted four quarterly Project and Expenditure Reports: • Report No. 4 (covering activity from July 1, 2022, through September 30, 2022) • Report No. 5 (covering activity from October 1, 2022, through December 31, 2022) • Report No. 6 (covering activity from January 1, 2023, through March 31, 2023) • Report No. 7 (covering activity from April 1, 2023, through June 30, 2023) Office staff prepared the reports by collecting and compiling reporting information from each state agency. For all four reports, we found that the Office did not have adequate supporting documentation for amounts reported under current period and cumulative obligations. We also found the Office did not have adequate internal controls to ensure material compliance with the capital expenditure requirement. We identified 14 out of 95 projects for which the Office did not follow up to determine whether there were capital expenditures incurred. Eight projects had expenditures greater than $1 million during fiscal year 2023, and two of those projects required written justifications. We found the Office did not have the required written justifications for two out of eight (25 percent) projects. We consider these internal control deficiencies to be a material weakness, which led to material noncompliance. Cause of Condition The Office did not require state agencies to include supporting documentation when they reported their obligations at the end of each reporting period. Instead, the Office relied on self-reporting by agencies without ensuring supporting documentation was provided and retained. In addition, management did not ensure that information provided by agencies was reviewed to ensure the project and expenditure reports are complete, accurate, and adequately supported. In addition, the Office was unable to confirm all information reported for capital expenditures was adequately supported. Effect of Condition We focused our review on the obligation and expenditure key line items for the Department of Commerce (Commerce) and Department of Social and Health Services (DSHS). Combined, these two agencies accounted for about 57 percent of total SLFRF expenditures during fiscal year 2023. We determined that both agencies’ current period and cumulative expenditures were accurate and supported, and any variances were not material to the overall reporting. However, we were unable to confirm whether the supporting documentation for both agencies’ reported obligations accounted for all activity during each reporting period. Therefore, our estimates of overreported and underreported obligations for both agencies in the tables below are based on the agency reports for obligations available at the time of the audit. Commerce We found that the current period obligations for Commerce in all four reports did not have adequate supporting documentation. We also found that cumulative obligations for Commerce in all four reports did not have adequate supporting documentation. As of the final fiscal year 2023 report, Commerce’s cumulative obligations totaled $985,274,734 and cumulative expenditures totaled $783,360,809. Because Commerce’s expenditures were accurate and supported, we calculated the variance to be the net of the unsupported obligations minus supported expenditures, or $201,913,924 (difference due to rounding). DSHS In two reports, we identified reporting variances for current period obligations reported for DSHS, including $7,158,350 in overreported obligations in Report No. 7. DSHS reported $17,781,970 in current obligations for Report No. 7. We also found that cumulative obligations were underreported by $1,445,556 compared to estimated expected obligations of $363,451,530. To determine the magnitude of the reporting variances, we totaled the largest current period obligation variance for DSHS with the net unsupported obligations for Commerce. This totaled $209,081,184, or about 11 percent of total SLFRF expenditures during fiscal year 2023. Our determination of the variance is an estimate because documentation necessary to calculate accurate obligation amounts for each reporting period was not available. By not establishing adequate internal controls, the Office cannot ensure that information reported to the federal grantor is complete and accurate. Without complete supporting documentation for obligations, management is not able to demonstrate that amounts reported to the federal grantor are complete and accurate. Recommendations We recommend the Office: • Establish internal controls to ensure reported obligations are supported by source documentation, which should be retained and available for review • Improve internal controls to ensure staff continue to follow up with agencies that report incomplete information • Ensure that management verifies reporting information is adequately supported before certifying and submitting the report Office’s Response The Office will continue to communicate to agencies the importance of maintaining adequate source supporting documentation for future project and expenditure reports. Although a complete cumulative obligations report as of the report date was not maintained supporting the project and expenditure report, all obligations are supported by grant agreements, contracts, and purchase orders. Additionally, the Office was able to provide the auditor a current report including all obligations to date which exceeded the cumulative obligations during the reporting period. The Office continues to improve the reporting template used to collect the required information from agencies and frequently meets with agencies to discuss the reporting requirements to ensure the quarterly Project and Expenditure Reports are complete, accurate, and supported. The Office will continue its review and verification process to ensure information is adequately supported before certifying and submitting the report. As noted in the U.S. Treasury reporting guidance, corrections or any changes to the report need to be reflected in the next Project and Expenditure report. As a result, the supporting documentation for the quarter may not align with the quarterly reports. Auditor’s Remarks We thank the Office for its cooperation and assistance throughout the audit. We will review the status of the Office’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200, Uniform Guidance, section 516, Audit findings, establishes reporting requirements for audit findings. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Office of Management and Budget, 2 CFR Part 200, Appendix XI, 2023 Compliance Supplement, for Assistance Listing 21.027 Coronavirus State and Local Fiscal Recovery Funds, states in part: L. Reporting 2. Performance Reporting Title of Report: Project and Expenditure Report PRA Number: 1505-0271 Reporting Cycle: Quarterly and Annual Authoritative Requirement: 2 CFR 200.328 and 31 CFR section 35.4(c) Reporting and requests for other information Blank Copy of the Report: https://home.treasury.gov/policyissues/coronavirus/assistance-for-state-local-and-tribal-governments/state-andlocal-fiscal-recovery-funds/recipient-compliance-and-reporting-responsibilities – See pages 17 through 34. Report Instructions: https://home.treasury.gov/policyissues/coronavirus/assistance-for-state-local-and-tribal-governments/state-andlocal-fiscal-recovery-funds/recipient-compliance-and-reporting-responsibilities – See pages 17 through 34. Report Corrections: Recipients will have an opportunity to reopen and provide edits to their submitted Project and Expenditure Reports any time before the reporting deadline. Recipients will then be required to re-certify and submit the report again to properly reflect any edits made. After the reporting deadline, unless prompted by Treasury staff, recipients will not be able to edit their submitted report, any changes or revisions will need to be reflected in the next Project and Expenditure report. The Office of Recovery Program’s (ORP) reporting portal has built-in functionality to reopen a report and allow recipients to make edits after the reporting deadline. However, it is ORP’s policy that recipients may only make revisions if authorized by Treasury staff for a period of up to 60 days after the reporting deadline. After the revision period ends, the report is final. A resubmitted report becomes a recipient’s final report within ORP’s reporting portal. Recipients can generate PDFs of this reports at any time. Key Line Item(s)- The following line items contain critical information: 1. Obligations and Expenditures- Quantifiable Objective Criteria: Reported obligations and expenditures. (See pages 16 and 17 of the above links.) a. Current period obligation b. Cumulative obligation c. Current period expenditure d. Cumulative expenditure Revenue loss calculation validation- Note- Recipients may elect a “standard allowance” of up to $10 million to spend on government services through the period of performance instead of using the full formula specified in the final rule. The standard allowance is available to all recipients. See page 30 for when recipients may modify their revenue loss election. Quantifiable Objective Criteria: Recipient’s application of the revenue loss calculation is accurate if they did not elect the standard allowance. Specific information regarding the revenue loss formula can be found in paragraph (d)(2) of 31 CFR § 35.6 at 31 CFR § 35.6(d)(2)(d)(2). Capital Expenditures- Quantifiable Objective Criteria: The recipient has the required written justification in their grant file if the total of the capital expenditures costs in a project is greater than or equal to $1 million and less than $10 million; or, the recipient submitted the required justification to Treasury if (1) a project has total capital expenditures costs greater than $10 million for capital expenditures enumerated by Treasury in the final rule; or (2) the total of a project’s capital expenditures costs is greater than $1 million for capital expenditures not enumerated by Treasury in the final rule. Note: Capital expenditures paid for using revenue replacement funds are not subject to this requirement. Tribal governments are not required to complete the written justification. (See 31 CFR section 35.6(b)(4))
2023-030 The Office of Financial Management did not have adequate internal controls over and did not comply with reporting requirements for the Coronavirus State and Local Fiscal Recovery Funds. Assistance Listing Number and Title: 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: None Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Reporting Known Questioned Cost Amount: None Prior Year Audit Finding: Yes, Finding 2022-020 Background The Coronavirus State and Local Fiscal Recovery Funds (SLFRF), as part of the American Rescue Plan Act of 2021, delivered $350 billion to state, local, and tribal governments to support the response to and recovery from the COVID-19 public health emergency. The program also provides resources to fight the pandemic, address economic impacts, maintain vital public services, and build a strong, resilient, and equitable recovery. Washington received about $4.4 billion of SLFRF money from the U.S. Department of the Treasury, which the state’s Office of Financial Management allocated to state agencies for various programs. In fiscal year 2023, Washington spent more than $1.8 billion in federal program funds. Under the SLFRF program, recipients are required to submit Project and Expenditure Reports during the covered period, which began March 3, 2021, and ends December 31, 2024. Treasury identified the following key line items that contain critical information: 1. Obligations and Expenditures a. Current period obligation b. Cumulative obligation c. Current period expenditure d. Cumulative expenditure 2. Revenue loss calculation validation 3. Capital Expenditures The Office was responsible for compiling information from state agencies and submitting the reports no later than the last day of the month following the end of each reporting period. The Office was also responsible for calculating and reporting the state’s revenue losses from the pandemic, as well as identifying SLFRF projects with capital expenditures that required written justifications. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. In the prior audit, we reported the Office did not have adequate internal controls over and did not comply with reporting requirements for the SLFRF program. The prior finding number was 2022-020. Description of Condition The Office did not have adequate internal controls over and did not comply with reporting requirements for the SLFRF program. During the audit period, the Office submitted four quarterly Project and Expenditure Reports: • Report No. 4 (covering activity from July 1, 2022, through September 30, 2022) • Report No. 5 (covering activity from October 1, 2022, through December 31, 2022) • Report No. 6 (covering activity from January 1, 2023, through March 31, 2023) • Report No. 7 (covering activity from April 1, 2023, through June 30, 2023) Office staff prepared the reports by collecting and compiling reporting information from each state agency. For all four reports, we found that the Office did not have adequate supporting documentation for amounts reported under current period and cumulative obligations. We also found the Office did not have adequate internal controls to ensure material compliance with the capital expenditure requirement. We identified 14 out of 95 projects for which the Office did not follow up to determine whether there were capital expenditures incurred. Eight projects had expenditures greater than $1 million during fiscal year 2023, and two of those projects required written justifications. We found the Office did not have the required written justifications for two out of eight (25 percent) projects. We consider these internal control deficiencies to be a material weakness, which led to material noncompliance. Cause of Condition The Office did not require state agencies to include supporting documentation when they reported their obligations at the end of each reporting period. Instead, the Office relied on self-reporting by agencies without ensuring supporting documentation was provided and retained. In addition, management did not ensure that information provided by agencies was reviewed to ensure the project and expenditure reports are complete, accurate, and adequately supported. In addition, the Office was unable to confirm all information reported for capital expenditures was adequately supported. Effect of Condition We focused our review on the obligation and expenditure key line items for the Department of Commerce (Commerce) and Department of Social and Health Services (DSHS). Combined, these two agencies accounted for about 57 percent of total SLFRF expenditures during fiscal year 2023. We determined that both agencies’ current period and cumulative expenditures were accurate and supported, and any variances were not material to the overall reporting. However, we were unable to confirm whether the supporting documentation for both agencies’ reported obligations accounted for all activity during each reporting period. Therefore, our estimates of overreported and underreported obligations for both agencies in the tables below are based on the agency reports for obligations available at the time of the audit. Commerce We found that the current period obligations for Commerce in all four reports did not have adequate supporting documentation. We also found that cumulative obligations for Commerce in all four reports did not have adequate supporting documentation. As of the final fiscal year 2023 report, Commerce’s cumulative obligations totaled $985,274,734 and cumulative expenditures totaled $783,360,809. Because Commerce’s expenditures were accurate and supported, we calculated the variance to be the net of the unsupported obligations minus supported expenditures, or $201,913,924 (difference due to rounding). DSHS In two reports, we identified reporting variances for current period obligations reported for DSHS, including $7,158,350 in overreported obligations in Report No. 7. DSHS reported $17,781,970 in current obligations for Report No. 7. We also found that cumulative obligations were underreported by $1,445,556 compared to estimated expected obligations of $363,451,530. To determine the magnitude of the reporting variances, we totaled the largest current period obligation variance for DSHS with the net unsupported obligations for Commerce. This totaled $209,081,184, or about 11 percent of total SLFRF expenditures during fiscal year 2023. Our determination of the variance is an estimate because documentation necessary to calculate accurate obligation amounts for each reporting period was not available. By not establishing adequate internal controls, the Office cannot ensure that information reported to the federal grantor is complete and accurate. Without complete supporting documentation for obligations, management is not able to demonstrate that amounts reported to the federal grantor are complete and accurate. Recommendations We recommend the Office: • Establish internal controls to ensure reported obligations are supported by source documentation, which should be retained and available for review • Improve internal controls to ensure staff continue to follow up with agencies that report incomplete information • Ensure that management verifies reporting information is adequately supported before certifying and submitting the report Office’s Response The Office will continue to communicate to agencies the importance of maintaining adequate source supporting documentation for future project and expenditure reports. Although a complete cumulative obligations report as of the report date was not maintained supporting the project and expenditure report, all obligations are supported by grant agreements, contracts, and purchase orders. Additionally, the Office was able to provide the auditor a current report including all obligations to date which exceeded the cumulative obligations during the reporting period. The Office continues to improve the reporting template used to collect the required information from agencies and frequently meets with agencies to discuss the reporting requirements to ensure the quarterly Project and Expenditure Reports are complete, accurate, and supported. The Office will continue its review and verification process to ensure information is adequately supported before certifying and submitting the report. As noted in the U.S. Treasury reporting guidance, corrections or any changes to the report need to be reflected in the next Project and Expenditure report. As a result, the supporting documentation for the quarter may not align with the quarterly reports. Auditor’s Remarks We thank the Office for its cooperation and assistance throughout the audit. We will review the status of the Office’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200, Uniform Guidance, section 516, Audit findings, establishes reporting requirements for audit findings. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Office of Management and Budget, 2 CFR Part 200, Appendix XI, 2023 Compliance Supplement, for Assistance Listing 21.027 Coronavirus State and Local Fiscal Recovery Funds, states in part: L. Reporting 2. Performance Reporting Title of Report: Project and Expenditure Report PRA Number: 1505-0271 Reporting Cycle: Quarterly and Annual Authoritative Requirement: 2 CFR 200.328 and 31 CFR section 35.4(c) Reporting and requests for other information Blank Copy of the Report: https://home.treasury.gov/policyissues/coronavirus/assistance-for-state-local-and-tribal-governments/state-andlocal-fiscal-recovery-funds/recipient-compliance-and-reporting-responsibilities – See pages 17 through 34. Report Instructions: https://home.treasury.gov/policyissues/coronavirus/assistance-for-state-local-and-tribal-governments/state-andlocal-fiscal-recovery-funds/recipient-compliance-and-reporting-responsibilities – See pages 17 through 34. Report Corrections: Recipients will have an opportunity to reopen and provide edits to their submitted Project and Expenditure Reports any time before the reporting deadline. Recipients will then be required to re-certify and submit the report again to properly reflect any edits made. After the reporting deadline, unless prompted by Treasury staff, recipients will not be able to edit their submitted report, any changes or revisions will need to be reflected in the next Project and Expenditure report. The Office of Recovery Program’s (ORP) reporting portal has built-in functionality to reopen a report and allow recipients to make edits after the reporting deadline. However, it is ORP’s policy that recipients may only make revisions if authorized by Treasury staff for a period of up to 60 days after the reporting deadline. After the revision period ends, the report is final. A resubmitted report becomes a recipient’s final report within ORP’s reporting portal. Recipients can generate PDFs of this reports at any time. Key Line Item(s)- The following line items contain critical information: 1. Obligations and Expenditures- Quantifiable Objective Criteria: Reported obligations and expenditures. (See pages 16 and 17 of the above links.) a. Current period obligation b. Cumulative obligation c. Current period expenditure d. Cumulative expenditure Revenue loss calculation validation- Note- Recipients may elect a “standard allowance” of up to $10 million to spend on government services through the period of performance instead of using the full formula specified in the final rule. The standard allowance is available to all recipients. See page 30 for when recipients may modify their revenue loss election. Quantifiable Objective Criteria: Recipient’s application of the revenue loss calculation is accurate if they did not elect the standard allowance. Specific information regarding the revenue loss formula can be found in paragraph (d)(2) of 31 CFR § 35.6 at 31 CFR § 35.6(d)(2)(d)(2). Capital Expenditures- Quantifiable Objective Criteria: The recipient has the required written justification in their grant file if the total of the capital expenditures costs in a project is greater than or equal to $1 million and less than $10 million; or, the recipient submitted the required justification to Treasury if (1) a project has total capital expenditures costs greater than $10 million for capital expenditures enumerated by Treasury in the final rule; or (2) the total of a project’s capital expenditures costs is greater than $1 million for capital expenditures not enumerated by Treasury in the final rule. Note: Capital expenditures paid for using revenue replacement funds are not subject to this requirement. Tribal governments are not required to complete the written justification. (See 31 CFR section 35.6(b)(4))
2023-030 The Office of Financial Management did not have adequate internal controls over and did not comply with reporting requirements for the Coronavirus State and Local Fiscal Recovery Funds. Assistance Listing Number and Title: 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: None Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Reporting Known Questioned Cost Amount: None Prior Year Audit Finding: Yes, Finding 2022-020 Background The Coronavirus State and Local Fiscal Recovery Funds (SLFRF), as part of the American Rescue Plan Act of 2021, delivered $350 billion to state, local, and tribal governments to support the response to and recovery from the COVID-19 public health emergency. The program also provides resources to fight the pandemic, address economic impacts, maintain vital public services, and build a strong, resilient, and equitable recovery. Washington received about $4.4 billion of SLFRF money from the U.S. Department of the Treasury, which the state’s Office of Financial Management allocated to state agencies for various programs. In fiscal year 2023, Washington spent more than $1.8 billion in federal program funds. Under the SLFRF program, recipients are required to submit Project and Expenditure Reports during the covered period, which began March 3, 2021, and ends December 31, 2024. Treasury identified the following key line items that contain critical information: 1. Obligations and Expenditures a. Current period obligation b. Cumulative obligation c. Current period expenditure d. Cumulative expenditure 2. Revenue loss calculation validation 3. Capital Expenditures The Office was responsible for compiling information from state agencies and submitting the reports no later than the last day of the month following the end of each reporting period. The Office was also responsible for calculating and reporting the state’s revenue losses from the pandemic, as well as identifying SLFRF projects with capital expenditures that required written justifications. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. In the prior audit, we reported the Office did not have adequate internal controls over and did not comply with reporting requirements for the SLFRF program. The prior finding number was 2022-020. Description of Condition The Office did not have adequate internal controls over and did not comply with reporting requirements for the SLFRF program. During the audit period, the Office submitted four quarterly Project and Expenditure Reports: • Report No. 4 (covering activity from July 1, 2022, through September 30, 2022) • Report No. 5 (covering activity from October 1, 2022, through December 31, 2022) • Report No. 6 (covering activity from January 1, 2023, through March 31, 2023) • Report No. 7 (covering activity from April 1, 2023, through June 30, 2023) Office staff prepared the reports by collecting and compiling reporting information from each state agency. For all four reports, we found that the Office did not have adequate supporting documentation for amounts reported under current period and cumulative obligations. We also found the Office did not have adequate internal controls to ensure material compliance with the capital expenditure requirement. We identified 14 out of 95 projects for which the Office did not follow up to determine whether there were capital expenditures incurred. Eight projects had expenditures greater than $1 million during fiscal year 2023, and two of those projects required written justifications. We found the Office did not have the required written justifications for two out of eight (25 percent) projects. We consider these internal control deficiencies to be a material weakness, which led to material noncompliance. Cause of Condition The Office did not require state agencies to include supporting documentation when they reported their obligations at the end of each reporting period. Instead, the Office relied on self-reporting by agencies without ensuring supporting documentation was provided and retained. In addition, management did not ensure that information provided by agencies was reviewed to ensure the project and expenditure reports are complete, accurate, and adequately supported. In addition, the Office was unable to confirm all information reported for capital expenditures was adequately supported. Effect of Condition We focused our review on the obligation and expenditure key line items for the Department of Commerce (Commerce) and Department of Social and Health Services (DSHS). Combined, these two agencies accounted for about 57 percent of total SLFRF expenditures during fiscal year 2023. We determined that both agencies’ current period and cumulative expenditures were accurate and supported, and any variances were not material to the overall reporting. However, we were unable to confirm whether the supporting documentation for both agencies’ reported obligations accounted for all activity during each reporting period. Therefore, our estimates of overreported and underreported obligations for both agencies in the tables below are based on the agency reports for obligations available at the time of the audit. Commerce We found that the current period obligations for Commerce in all four reports did not have adequate supporting documentation. We also found that cumulative obligations for Commerce in all four reports did not have adequate supporting documentation. As of the final fiscal year 2023 report, Commerce’s cumulative obligations totaled $985,274,734 and cumulative expenditures totaled $783,360,809. Because Commerce’s expenditures were accurate and supported, we calculated the variance to be the net of the unsupported obligations minus supported expenditures, or $201,913,924 (difference due to rounding). DSHS In two reports, we identified reporting variances for current period obligations reported for DSHS, including $7,158,350 in overreported obligations in Report No. 7. DSHS reported $17,781,970 in current obligations for Report No. 7. We also found that cumulative obligations were underreported by $1,445,556 compared to estimated expected obligations of $363,451,530. To determine the magnitude of the reporting variances, we totaled the largest current period obligation variance for DSHS with the net unsupported obligations for Commerce. This totaled $209,081,184, or about 11 percent of total SLFRF expenditures during fiscal year 2023. Our determination of the variance is an estimate because documentation necessary to calculate accurate obligation amounts for each reporting period was not available. By not establishing adequate internal controls, the Office cannot ensure that information reported to the federal grantor is complete and accurate. Without complete supporting documentation for obligations, management is not able to demonstrate that amounts reported to the federal grantor are complete and accurate. Recommendations We recommend the Office: • Establish internal controls to ensure reported obligations are supported by source documentation, which should be retained and available for review • Improve internal controls to ensure staff continue to follow up with agencies that report incomplete information • Ensure that management verifies reporting information is adequately supported before certifying and submitting the report Office’s Response The Office will continue to communicate to agencies the importance of maintaining adequate source supporting documentation for future project and expenditure reports. Although a complete cumulative obligations report as of the report date was not maintained supporting the project and expenditure report, all obligations are supported by grant agreements, contracts, and purchase orders. Additionally, the Office was able to provide the auditor a current report including all obligations to date which exceeded the cumulative obligations during the reporting period. The Office continues to improve the reporting template used to collect the required information from agencies and frequently meets with agencies to discuss the reporting requirements to ensure the quarterly Project and Expenditure Reports are complete, accurate, and supported. The Office will continue its review and verification process to ensure information is adequately supported before certifying and submitting the report. As noted in the U.S. Treasury reporting guidance, corrections or any changes to the report need to be reflected in the next Project and Expenditure report. As a result, the supporting documentation for the quarter may not align with the quarterly reports. Auditor’s Remarks We thank the Office for its cooperation and assistance throughout the audit. We will review the status of the Office’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200, Uniform Guidance, section 516, Audit findings, establishes reporting requirements for audit findings. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Office of Management and Budget, 2 CFR Part 200, Appendix XI, 2023 Compliance Supplement, for Assistance Listing 21.027 Coronavirus State and Local Fiscal Recovery Funds, states in part: L. Reporting 2. Performance Reporting Title of Report: Project and Expenditure Report PRA Number: 1505-0271 Reporting Cycle: Quarterly and Annual Authoritative Requirement: 2 CFR 200.328 and 31 CFR section 35.4(c) Reporting and requests for other information Blank Copy of the Report: https://home.treasury.gov/policyissues/coronavirus/assistance-for-state-local-and-tribal-governments/state-andlocal-fiscal-recovery-funds/recipient-compliance-and-reporting-responsibilities – See pages 17 through 34. Report Instructions: https://home.treasury.gov/policyissues/coronavirus/assistance-for-state-local-and-tribal-governments/state-andlocal-fiscal-recovery-funds/recipient-compliance-and-reporting-responsibilities – See pages 17 through 34. Report Corrections: Recipients will have an opportunity to reopen and provide edits to their submitted Project and Expenditure Reports any time before the reporting deadline. Recipients will then be required to re-certify and submit the report again to properly reflect any edits made. After the reporting deadline, unless prompted by Treasury staff, recipients will not be able to edit their submitted report, any changes or revisions will need to be reflected in the next Project and Expenditure report. The Office of Recovery Program’s (ORP) reporting portal has built-in functionality to reopen a report and allow recipients to make edits after the reporting deadline. However, it is ORP’s policy that recipients may only make revisions if authorized by Treasury staff for a period of up to 60 days after the reporting deadline. After the revision period ends, the report is final. A resubmitted report becomes a recipient’s final report within ORP’s reporting portal. Recipients can generate PDFs of this reports at any time. Key Line Item(s)- The following line items contain critical information: 1. Obligations and Expenditures- Quantifiable Objective Criteria: Reported obligations and expenditures. (See pages 16 and 17 of the above links.) a. Current period obligation b. Cumulative obligation c. Current period expenditure d. Cumulative expenditure Revenue loss calculation validation- Note- Recipients may elect a “standard allowance” of up to $10 million to spend on government services through the period of performance instead of using the full formula specified in the final rule. The standard allowance is available to all recipients. See page 30 for when recipients may modify their revenue loss election. Quantifiable Objective Criteria: Recipient’s application of the revenue loss calculation is accurate if they did not elect the standard allowance. Specific information regarding the revenue loss formula can be found in paragraph (d)(2) of 31 CFR § 35.6 at 31 CFR § 35.6(d)(2)(d)(2). Capital Expenditures- Quantifiable Objective Criteria: The recipient has the required written justification in their grant file if the total of the capital expenditures costs in a project is greater than or equal to $1 million and less than $10 million; or, the recipient submitted the required justification to Treasury if (1) a project has total capital expenditures costs greater than $10 million for capital expenditures enumerated by Treasury in the final rule; or (2) the total of a project’s capital expenditures costs is greater than $1 million for capital expenditures not enumerated by Treasury in the final rule. Note: Capital expenditures paid for using revenue replacement funds are not subject to this requirement. Tribal governments are not required to complete the written justification. (See 31 CFR section 35.6(b)(4))
2023-030 The Office of Financial Management did not have adequate internal controls over and did not comply with reporting requirements for the Coronavirus State and Local Fiscal Recovery Funds. Assistance Listing Number and Title: 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: None Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Reporting Known Questioned Cost Amount: None Prior Year Audit Finding: Yes, Finding 2022-020 Background The Coronavirus State and Local Fiscal Recovery Funds (SLFRF), as part of the American Rescue Plan Act of 2021, delivered $350 billion to state, local, and tribal governments to support the response to and recovery from the COVID-19 public health emergency. The program also provides resources to fight the pandemic, address economic impacts, maintain vital public services, and build a strong, resilient, and equitable recovery. Washington received about $4.4 billion of SLFRF money from the U.S. Department of the Treasury, which the state’s Office of Financial Management allocated to state agencies for various programs. In fiscal year 2023, Washington spent more than $1.8 billion in federal program funds. Under the SLFRF program, recipients are required to submit Project and Expenditure Reports during the covered period, which began March 3, 2021, and ends December 31, 2024. Treasury identified the following key line items that contain critical information: 1. Obligations and Expenditures a. Current period obligation b. Cumulative obligation c. Current period expenditure d. Cumulative expenditure 2. Revenue loss calculation validation 3. Capital Expenditures The Office was responsible for compiling information from state agencies and submitting the reports no later than the last day of the month following the end of each reporting period. The Office was also responsible for calculating and reporting the state’s revenue losses from the pandemic, as well as identifying SLFRF projects with capital expenditures that required written justifications. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. In the prior audit, we reported the Office did not have adequate internal controls over and did not comply with reporting requirements for the SLFRF program. The prior finding number was 2022-020. Description of Condition The Office did not have adequate internal controls over and did not comply with reporting requirements for the SLFRF program. During the audit period, the Office submitted four quarterly Project and Expenditure Reports: • Report No. 4 (covering activity from July 1, 2022, through September 30, 2022) • Report No. 5 (covering activity from October 1, 2022, through December 31, 2022) • Report No. 6 (covering activity from January 1, 2023, through March 31, 2023) • Report No. 7 (covering activity from April 1, 2023, through June 30, 2023) Office staff prepared the reports by collecting and compiling reporting information from each state agency. For all four reports, we found that the Office did not have adequate supporting documentation for amounts reported under current period and cumulative obligations. We also found the Office did not have adequate internal controls to ensure material compliance with the capital expenditure requirement. We identified 14 out of 95 projects for which the Office did not follow up to determine whether there were capital expenditures incurred. Eight projects had expenditures greater than $1 million during fiscal year 2023, and two of those projects required written justifications. We found the Office did not have the required written justifications for two out of eight (25 percent) projects. We consider these internal control deficiencies to be a material weakness, which led to material noncompliance. Cause of Condition The Office did not require state agencies to include supporting documentation when they reported their obligations at the end of each reporting period. Instead, the Office relied on self-reporting by agencies without ensuring supporting documentation was provided and retained. In addition, management did not ensure that information provided by agencies was reviewed to ensure the project and expenditure reports are complete, accurate, and adequately supported. In addition, the Office was unable to confirm all information reported for capital expenditures was adequately supported. Effect of Condition We focused our review on the obligation and expenditure key line items for the Department of Commerce (Commerce) and Department of Social and Health Services (DSHS). Combined, these two agencies accounted for about 57 percent of total SLFRF expenditures during fiscal year 2023. We determined that both agencies’ current period and cumulative expenditures were accurate and supported, and any variances were not material to the overall reporting. However, we were unable to confirm whether the supporting documentation for both agencies’ reported obligations accounted for all activity during each reporting period. Therefore, our estimates of overreported and underreported obligations for both agencies in the tables below are based on the agency reports for obligations available at the time of the audit. Commerce We found that the current period obligations for Commerce in all four reports did not have adequate supporting documentation. We also found that cumulative obligations for Commerce in all four reports did not have adequate supporting documentation. As of the final fiscal year 2023 report, Commerce’s cumulative obligations totaled $985,274,734 and cumulative expenditures totaled $783,360,809. Because Commerce’s expenditures were accurate and supported, we calculated the variance to be the net of the unsupported obligations minus supported expenditures, or $201,913,924 (difference due to rounding). DSHS In two reports, we identified reporting variances for current period obligations reported for DSHS, including $7,158,350 in overreported obligations in Report No. 7. DSHS reported $17,781,970 in current obligations for Report No. 7. We also found that cumulative obligations were underreported by $1,445,556 compared to estimated expected obligations of $363,451,530. To determine the magnitude of the reporting variances, we totaled the largest current period obligation variance for DSHS with the net unsupported obligations for Commerce. This totaled $209,081,184, or about 11 percent of total SLFRF expenditures during fiscal year 2023. Our determination of the variance is an estimate because documentation necessary to calculate accurate obligation amounts for each reporting period was not available. By not establishing adequate internal controls, the Office cannot ensure that information reported to the federal grantor is complete and accurate. Without complete supporting documentation for obligations, management is not able to demonstrate that amounts reported to the federal grantor are complete and accurate. Recommendations We recommend the Office: • Establish internal controls to ensure reported obligations are supported by source documentation, which should be retained and available for review • Improve internal controls to ensure staff continue to follow up with agencies that report incomplete information • Ensure that management verifies reporting information is adequately supported before certifying and submitting the report Office’s Response The Office will continue to communicate to agencies the importance of maintaining adequate source supporting documentation for future project and expenditure reports. Although a complete cumulative obligations report as of the report date was not maintained supporting the project and expenditure report, all obligations are supported by grant agreements, contracts, and purchase orders. Additionally, the Office was able to provide the auditor a current report including all obligations to date which exceeded the cumulative obligations during the reporting period. The Office continues to improve the reporting template used to collect the required information from agencies and frequently meets with agencies to discuss the reporting requirements to ensure the quarterly Project and Expenditure Reports are complete, accurate, and supported. The Office will continue its review and verification process to ensure information is adequately supported before certifying and submitting the report. As noted in the U.S. Treasury reporting guidance, corrections or any changes to the report need to be reflected in the next Project and Expenditure report. As a result, the supporting documentation for the quarter may not align with the quarterly reports. Auditor’s Remarks We thank the Office for its cooperation and assistance throughout the audit. We will review the status of the Office’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200, Uniform Guidance, section 516, Audit findings, establishes reporting requirements for audit findings. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Office of Management and Budget, 2 CFR Part 200, Appendix XI, 2023 Compliance Supplement, for Assistance Listing 21.027 Coronavirus State and Local Fiscal Recovery Funds, states in part: L. Reporting 2. Performance Reporting Title of Report: Project and Expenditure Report PRA Number: 1505-0271 Reporting Cycle: Quarterly and Annual Authoritative Requirement: 2 CFR 200.328 and 31 CFR section 35.4(c) Reporting and requests for other information Blank Copy of the Report: https://home.treasury.gov/policyissues/coronavirus/assistance-for-state-local-and-tribal-governments/state-andlocal-fiscal-recovery-funds/recipient-compliance-and-reporting-responsibilities – See pages 17 through 34. Report Instructions: https://home.treasury.gov/policyissues/coronavirus/assistance-for-state-local-and-tribal-governments/state-andlocal-fiscal-recovery-funds/recipient-compliance-and-reporting-responsibilities – See pages 17 through 34. Report Corrections: Recipients will have an opportunity to reopen and provide edits to their submitted Project and Expenditure Reports any time before the reporting deadline. Recipients will then be required to re-certify and submit the report again to properly reflect any edits made. After the reporting deadline, unless prompted by Treasury staff, recipients will not be able to edit their submitted report, any changes or revisions will need to be reflected in the next Project and Expenditure report. The Office of Recovery Program’s (ORP) reporting portal has built-in functionality to reopen a report and allow recipients to make edits after the reporting deadline. However, it is ORP’s policy that recipients may only make revisions if authorized by Treasury staff for a period of up to 60 days after the reporting deadline. After the revision period ends, the report is final. A resubmitted report becomes a recipient’s final report within ORP’s reporting portal. Recipients can generate PDFs of this reports at any time. Key Line Item(s)- The following line items contain critical information: 1. Obligations and Expenditures- Quantifiable Objective Criteria: Reported obligations and expenditures. (See pages 16 and 17 of the above links.) a. Current period obligation b. Cumulative obligation c. Current period expenditure d. Cumulative expenditure Revenue loss calculation validation- Note- Recipients may elect a “standard allowance” of up to $10 million to spend on government services through the period of performance instead of using the full formula specified in the final rule. The standard allowance is available to all recipients. See page 30 for when recipients may modify their revenue loss election. Quantifiable Objective Criteria: Recipient’s application of the revenue loss calculation is accurate if they did not elect the standard allowance. Specific information regarding the revenue loss formula can be found in paragraph (d)(2) of 31 CFR § 35.6 at 31 CFR § 35.6(d)(2)(d)(2). Capital Expenditures- Quantifiable Objective Criteria: The recipient has the required written justification in their grant file if the total of the capital expenditures costs in a project is greater than or equal to $1 million and less than $10 million; or, the recipient submitted the required justification to Treasury if (1) a project has total capital expenditures costs greater than $10 million for capital expenditures enumerated by Treasury in the final rule; or (2) the total of a project’s capital expenditures costs is greater than $1 million for capital expenditures not enumerated by Treasury in the final rule. Note: Capital expenditures paid for using revenue replacement funds are not subject to this requirement. Tribal governments are not required to complete the written justification. (See 31 CFR section 35.6(b)(4))
2023-030 The Office of Financial Management did not have adequate internal controls over and did not comply with reporting requirements for the Coronavirus State and Local Fiscal Recovery Funds. Assistance Listing Number and Title: 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: None Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Reporting Known Questioned Cost Amount: None Prior Year Audit Finding: Yes, Finding 2022-020 Background The Coronavirus State and Local Fiscal Recovery Funds (SLFRF), as part of the American Rescue Plan Act of 2021, delivered $350 billion to state, local, and tribal governments to support the response to and recovery from the COVID-19 public health emergency. The program also provides resources to fight the pandemic, address economic impacts, maintain vital public services, and build a strong, resilient, and equitable recovery. Washington received about $4.4 billion of SLFRF money from the U.S. Department of the Treasury, which the state’s Office of Financial Management allocated to state agencies for various programs. In fiscal year 2023, Washington spent more than $1.8 billion in federal program funds. Under the SLFRF program, recipients are required to submit Project and Expenditure Reports during the covered period, which began March 3, 2021, and ends December 31, 2024. Treasury identified the following key line items that contain critical information: 1. Obligations and Expenditures a. Current period obligation b. Cumulative obligation c. Current period expenditure d. Cumulative expenditure 2. Revenue loss calculation validation 3. Capital Expenditures The Office was responsible for compiling information from state agencies and submitting the reports no later than the last day of the month following the end of each reporting period. The Office was also responsible for calculating and reporting the state’s revenue losses from the pandemic, as well as identifying SLFRF projects with capital expenditures that required written justifications. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. In the prior audit, we reported the Office did not have adequate internal controls over and did not comply with reporting requirements for the SLFRF program. The prior finding number was 2022-020. Description of Condition The Office did not have adequate internal controls over and did not comply with reporting requirements for the SLFRF program. During the audit period, the Office submitted four quarterly Project and Expenditure Reports: • Report No. 4 (covering activity from July 1, 2022, through September 30, 2022) • Report No. 5 (covering activity from October 1, 2022, through December 31, 2022) • Report No. 6 (covering activity from January 1, 2023, through March 31, 2023) • Report No. 7 (covering activity from April 1, 2023, through June 30, 2023) Office staff prepared the reports by collecting and compiling reporting information from each state agency. For all four reports, we found that the Office did not have adequate supporting documentation for amounts reported under current period and cumulative obligations. We also found the Office did not have adequate internal controls to ensure material compliance with the capital expenditure requirement. We identified 14 out of 95 projects for which the Office did not follow up to determine whether there were capital expenditures incurred. Eight projects had expenditures greater than $1 million during fiscal year 2023, and two of those projects required written justifications. We found the Office did not have the required written justifications for two out of eight (25 percent) projects. We consider these internal control deficiencies to be a material weakness, which led to material noncompliance. Cause of Condition The Office did not require state agencies to include supporting documentation when they reported their obligations at the end of each reporting period. Instead, the Office relied on self-reporting by agencies without ensuring supporting documentation was provided and retained. In addition, management did not ensure that information provided by agencies was reviewed to ensure the project and expenditure reports are complete, accurate, and adequately supported. In addition, the Office was unable to confirm all information reported for capital expenditures was adequately supported. Effect of Condition We focused our review on the obligation and expenditure key line items for the Department of Commerce (Commerce) and Department of Social and Health Services (DSHS). Combined, these two agencies accounted for about 57 percent of total SLFRF expenditures during fiscal year 2023. We determined that both agencies’ current period and cumulative expenditures were accurate and supported, and any variances were not material to the overall reporting. However, we were unable to confirm whether the supporting documentation for both agencies’ reported obligations accounted for all activity during each reporting period. Therefore, our estimates of overreported and underreported obligations for both agencies in the tables below are based on the agency reports for obligations available at the time of the audit. Commerce We found that the current period obligations for Commerce in all four reports did not have adequate supporting documentation. We also found that cumulative obligations for Commerce in all four reports did not have adequate supporting documentation. As of the final fiscal year 2023 report, Commerce’s cumulative obligations totaled $985,274,734 and cumulative expenditures totaled $783,360,809. Because Commerce’s expenditures were accurate and supported, we calculated the variance to be the net of the unsupported obligations minus supported expenditures, or $201,913,924 (difference due to rounding). DSHS In two reports, we identified reporting variances for current period obligations reported for DSHS, including $7,158,350 in overreported obligations in Report No. 7. DSHS reported $17,781,970 in current obligations for Report No. 7. We also found that cumulative obligations were underreported by $1,445,556 compared to estimated expected obligations of $363,451,530. To determine the magnitude of the reporting variances, we totaled the largest current period obligation variance for DSHS with the net unsupported obligations for Commerce. This totaled $209,081,184, or about 11 percent of total SLFRF expenditures during fiscal year 2023. Our determination of the variance is an estimate because documentation necessary to calculate accurate obligation amounts for each reporting period was not available. By not establishing adequate internal controls, the Office cannot ensure that information reported to the federal grantor is complete and accurate. Without complete supporting documentation for obligations, management is not able to demonstrate that amounts reported to the federal grantor are complete and accurate. Recommendations We recommend the Office: • Establish internal controls to ensure reported obligations are supported by source documentation, which should be retained and available for review • Improve internal controls to ensure staff continue to follow up with agencies that report incomplete information • Ensure that management verifies reporting information is adequately supported before certifying and submitting the report Office’s Response The Office will continue to communicate to agencies the importance of maintaining adequate source supporting documentation for future project and expenditure reports. Although a complete cumulative obligations report as of the report date was not maintained supporting the project and expenditure report, all obligations are supported by grant agreements, contracts, and purchase orders. Additionally, the Office was able to provide the auditor a current report including all obligations to date which exceeded the cumulative obligations during the reporting period. The Office continues to improve the reporting template used to collect the required information from agencies and frequently meets with agencies to discuss the reporting requirements to ensure the quarterly Project and Expenditure Reports are complete, accurate, and supported. The Office will continue its review and verification process to ensure information is adequately supported before certifying and submitting the report. As noted in the U.S. Treasury reporting guidance, corrections or any changes to the report need to be reflected in the next Project and Expenditure report. As a result, the supporting documentation for the quarter may not align with the quarterly reports. Auditor’s Remarks We thank the Office for its cooperation and assistance throughout the audit. We will review the status of the Office’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200, Uniform Guidance, section 516, Audit findings, establishes reporting requirements for audit findings. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Office of Management and Budget, 2 CFR Part 200, Appendix XI, 2023 Compliance Supplement, for Assistance Listing 21.027 Coronavirus State and Local Fiscal Recovery Funds, states in part: L. Reporting 2. Performance Reporting Title of Report: Project and Expenditure Report PRA Number: 1505-0271 Reporting Cycle: Quarterly and Annual Authoritative Requirement: 2 CFR 200.328 and 31 CFR section 35.4(c) Reporting and requests for other information Blank Copy of the Report: https://home.treasury.gov/policyissues/coronavirus/assistance-for-state-local-and-tribal-governments/state-andlocal-fiscal-recovery-funds/recipient-compliance-and-reporting-responsibilities – See pages 17 through 34. Report Instructions: https://home.treasury.gov/policyissues/coronavirus/assistance-for-state-local-and-tribal-governments/state-andlocal-fiscal-recovery-funds/recipient-compliance-and-reporting-responsibilities – See pages 17 through 34. Report Corrections: Recipients will have an opportunity to reopen and provide edits to their submitted Project and Expenditure Reports any time before the reporting deadline. Recipients will then be required to re-certify and submit the report again to properly reflect any edits made. After the reporting deadline, unless prompted by Treasury staff, recipients will not be able to edit their submitted report, any changes or revisions will need to be reflected in the next Project and Expenditure report. The Office of Recovery Program’s (ORP) reporting portal has built-in functionality to reopen a report and allow recipients to make edits after the reporting deadline. However, it is ORP’s policy that recipients may only make revisions if authorized by Treasury staff for a period of up to 60 days after the reporting deadline. After the revision period ends, the report is final. A resubmitted report becomes a recipient’s final report within ORP’s reporting portal. Recipients can generate PDFs of this reports at any time. Key Line Item(s)- The following line items contain critical information: 1. Obligations and Expenditures- Quantifiable Objective Criteria: Reported obligations and expenditures. (See pages 16 and 17 of the above links.) a. Current period obligation b. Cumulative obligation c. Current period expenditure d. Cumulative expenditure Revenue loss calculation validation- Note- Recipients may elect a “standard allowance” of up to $10 million to spend on government services through the period of performance instead of using the full formula specified in the final rule. The standard allowance is available to all recipients. See page 30 for when recipients may modify their revenue loss election. Quantifiable Objective Criteria: Recipient’s application of the revenue loss calculation is accurate if they did not elect the standard allowance. Specific information regarding the revenue loss formula can be found in paragraph (d)(2) of 31 CFR § 35.6 at 31 CFR § 35.6(d)(2)(d)(2). Capital Expenditures- Quantifiable Objective Criteria: The recipient has the required written justification in their grant file if the total of the capital expenditures costs in a project is greater than or equal to $1 million and less than $10 million; or, the recipient submitted the required justification to Treasury if (1) a project has total capital expenditures costs greater than $10 million for capital expenditures enumerated by Treasury in the final rule; or (2) the total of a project’s capital expenditures costs is greater than $1 million for capital expenditures not enumerated by Treasury in the final rule. Note: Capital expenditures paid for using revenue replacement funds are not subject to this requirement. Tribal governments are not required to complete the written justification. (See 31 CFR section 35.6(b)(4))
2023-030 The Office of Financial Management did not have adequate internal controls over and did not comply with reporting requirements for the Coronavirus State and Local Fiscal Recovery Funds. Assistance Listing Number and Title: 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: None Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Reporting Known Questioned Cost Amount: None Prior Year Audit Finding: Yes, Finding 2022-020 Background The Coronavirus State and Local Fiscal Recovery Funds (SLFRF), as part of the American Rescue Plan Act of 2021, delivered $350 billion to state, local, and tribal governments to support the response to and recovery from the COVID-19 public health emergency. The program also provides resources to fight the pandemic, address economic impacts, maintain vital public services, and build a strong, resilient, and equitable recovery. Washington received about $4.4 billion of SLFRF money from the U.S. Department of the Treasury, which the state’s Office of Financial Management allocated to state agencies for various programs. In fiscal year 2023, Washington spent more than $1.8 billion in federal program funds. Under the SLFRF program, recipients are required to submit Project and Expenditure Reports during the covered period, which began March 3, 2021, and ends December 31, 2024. Treasury identified the following key line items that contain critical information: 1. Obligations and Expenditures a. Current period obligation b. Cumulative obligation c. Current period expenditure d. Cumulative expenditure 2. Revenue loss calculation validation 3. Capital Expenditures The Office was responsible for compiling information from state agencies and submitting the reports no later than the last day of the month following the end of each reporting period. The Office was also responsible for calculating and reporting the state’s revenue losses from the pandemic, as well as identifying SLFRF projects with capital expenditures that required written justifications. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. In the prior audit, we reported the Office did not have adequate internal controls over and did not comply with reporting requirements for the SLFRF program. The prior finding number was 2022-020. Description of Condition The Office did not have adequate internal controls over and did not comply with reporting requirements for the SLFRF program. During the audit period, the Office submitted four quarterly Project and Expenditure Reports: • Report No. 4 (covering activity from July 1, 2022, through September 30, 2022) • Report No. 5 (covering activity from October 1, 2022, through December 31, 2022) • Report No. 6 (covering activity from January 1, 2023, through March 31, 2023) • Report No. 7 (covering activity from April 1, 2023, through June 30, 2023) Office staff prepared the reports by collecting and compiling reporting information from each state agency. For all four reports, we found that the Office did not have adequate supporting documentation for amounts reported under current period and cumulative obligations. We also found the Office did not have adequate internal controls to ensure material compliance with the capital expenditure requirement. We identified 14 out of 95 projects for which the Office did not follow up to determine whether there were capital expenditures incurred. Eight projects had expenditures greater than $1 million during fiscal year 2023, and two of those projects required written justifications. We found the Office did not have the required written justifications for two out of eight (25 percent) projects. We consider these internal control deficiencies to be a material weakness, which led to material noncompliance. Cause of Condition The Office did not require state agencies to include supporting documentation when they reported their obligations at the end of each reporting period. Instead, the Office relied on self-reporting by agencies without ensuring supporting documentation was provided and retained. In addition, management did not ensure that information provided by agencies was reviewed to ensure the project and expenditure reports are complete, accurate, and adequately supported. In addition, the Office was unable to confirm all information reported for capital expenditures was adequately supported. Effect of Condition We focused our review on the obligation and expenditure key line items for the Department of Commerce (Commerce) and Department of Social and Health Services (DSHS). Combined, these two agencies accounted for about 57 percent of total SLFRF expenditures during fiscal year 2023. We determined that both agencies’ current period and cumulative expenditures were accurate and supported, and any variances were not material to the overall reporting. However, we were unable to confirm whether the supporting documentation for both agencies’ reported obligations accounted for all activity during each reporting period. Therefore, our estimates of overreported and underreported obligations for both agencies in the tables below are based on the agency reports for obligations available at the time of the audit. Commerce We found that the current period obligations for Commerce in all four reports did not have adequate supporting documentation. We also found that cumulative obligations for Commerce in all four reports did not have adequate supporting documentation. As of the final fiscal year 2023 report, Commerce’s cumulative obligations totaled $985,274,734 and cumulative expenditures totaled $783,360,809. Because Commerce’s expenditures were accurate and supported, we calculated the variance to be the net of the unsupported obligations minus supported expenditures, or $201,913,924 (difference due to rounding). DSHS In two reports, we identified reporting variances for current period obligations reported for DSHS, including $7,158,350 in overreported obligations in Report No. 7. DSHS reported $17,781,970 in current obligations for Report No. 7. We also found that cumulative obligations were underreported by $1,445,556 compared to estimated expected obligations of $363,451,530. To determine the magnitude of the reporting variances, we totaled the largest current period obligation variance for DSHS with the net unsupported obligations for Commerce. This totaled $209,081,184, or about 11 percent of total SLFRF expenditures during fiscal year 2023. Our determination of the variance is an estimate because documentation necessary to calculate accurate obligation amounts for each reporting period was not available. By not establishing adequate internal controls, the Office cannot ensure that information reported to the federal grantor is complete and accurate. Without complete supporting documentation for obligations, management is not able to demonstrate that amounts reported to the federal grantor are complete and accurate. Recommendations We recommend the Office: • Establish internal controls to ensure reported obligations are supported by source documentation, which should be retained and available for review • Improve internal controls to ensure staff continue to follow up with agencies that report incomplete information • Ensure that management verifies reporting information is adequately supported before certifying and submitting the report Office’s Response The Office will continue to communicate to agencies the importance of maintaining adequate source supporting documentation for future project and expenditure reports. Although a complete cumulative obligations report as of the report date was not maintained supporting the project and expenditure report, all obligations are supported by grant agreements, contracts, and purchase orders. Additionally, the Office was able to provide the auditor a current report including all obligations to date which exceeded the cumulative obligations during the reporting period. The Office continues to improve the reporting template used to collect the required information from agencies and frequently meets with agencies to discuss the reporting requirements to ensure the quarterly Project and Expenditure Reports are complete, accurate, and supported. The Office will continue its review and verification process to ensure information is adequately supported before certifying and submitting the report. As noted in the U.S. Treasury reporting guidance, corrections or any changes to the report need to be reflected in the next Project and Expenditure report. As a result, the supporting documentation for the quarter may not align with the quarterly reports. Auditor’s Remarks We thank the Office for its cooperation and assistance throughout the audit. We will review the status of the Office’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200, Uniform Guidance, section 516, Audit findings, establishes reporting requirements for audit findings. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Office of Management and Budget, 2 CFR Part 200, Appendix XI, 2023 Compliance Supplement, for Assistance Listing 21.027 Coronavirus State and Local Fiscal Recovery Funds, states in part: L. Reporting 2. Performance Reporting Title of Report: Project and Expenditure Report PRA Number: 1505-0271 Reporting Cycle: Quarterly and Annual Authoritative Requirement: 2 CFR 200.328 and 31 CFR section 35.4(c) Reporting and requests for other information Blank Copy of the Report: https://home.treasury.gov/policyissues/coronavirus/assistance-for-state-local-and-tribal-governments/state-andlocal-fiscal-recovery-funds/recipient-compliance-and-reporting-responsibilities – See pages 17 through 34. Report Instructions: https://home.treasury.gov/policyissues/coronavirus/assistance-for-state-local-and-tribal-governments/state-andlocal-fiscal-recovery-funds/recipient-compliance-and-reporting-responsibilities – See pages 17 through 34. Report Corrections: Recipients will have an opportunity to reopen and provide edits to their submitted Project and Expenditure Reports any time before the reporting deadline. Recipients will then be required to re-certify and submit the report again to properly reflect any edits made. After the reporting deadline, unless prompted by Treasury staff, recipients will not be able to edit their submitted report, any changes or revisions will need to be reflected in the next Project and Expenditure report. The Office of Recovery Program’s (ORP) reporting portal has built-in functionality to reopen a report and allow recipients to make edits after the reporting deadline. However, it is ORP’s policy that recipients may only make revisions if authorized by Treasury staff for a period of up to 60 days after the reporting deadline. After the revision period ends, the report is final. A resubmitted report becomes a recipient’s final report within ORP’s reporting portal. Recipients can generate PDFs of this reports at any time. Key Line Item(s)- The following line items contain critical information: 1. Obligations and Expenditures- Quantifiable Objective Criteria: Reported obligations and expenditures. (See pages 16 and 17 of the above links.) a. Current period obligation b. Cumulative obligation c. Current period expenditure d. Cumulative expenditure Revenue loss calculation validation- Note- Recipients may elect a “standard allowance” of up to $10 million to spend on government services through the period of performance instead of using the full formula specified in the final rule. The standard allowance is available to all recipients. See page 30 for when recipients may modify their revenue loss election. Quantifiable Objective Criteria: Recipient’s application of the revenue loss calculation is accurate if they did not elect the standard allowance. Specific information regarding the revenue loss formula can be found in paragraph (d)(2) of 31 CFR § 35.6 at 31 CFR § 35.6(d)(2)(d)(2). Capital Expenditures- Quantifiable Objective Criteria: The recipient has the required written justification in their grant file if the total of the capital expenditures costs in a project is greater than or equal to $1 million and less than $10 million; or, the recipient submitted the required justification to Treasury if (1) a project has total capital expenditures costs greater than $10 million for capital expenditures enumerated by Treasury in the final rule; or (2) the total of a project’s capital expenditures costs is greater than $1 million for capital expenditures not enumerated by Treasury in the final rule. Note: Capital expenditures paid for using revenue replacement funds are not subject to this requirement. Tribal governments are not required to complete the written justification. (See 31 CFR section 35.6(b)(4))
2023-030 The Office of Financial Management did not have adequate internal controls over and did not comply with reporting requirements for the Coronavirus State and Local Fiscal Recovery Funds. Assistance Listing Number and Title: 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: None Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Reporting Known Questioned Cost Amount: None Prior Year Audit Finding: Yes, Finding 2022-020 Background The Coronavirus State and Local Fiscal Recovery Funds (SLFRF), as part of the American Rescue Plan Act of 2021, delivered $350 billion to state, local, and tribal governments to support the response to and recovery from the COVID-19 public health emergency. The program also provides resources to fight the pandemic, address economic impacts, maintain vital public services, and build a strong, resilient, and equitable recovery. Washington received about $4.4 billion of SLFRF money from the U.S. Department of the Treasury, which the state’s Office of Financial Management allocated to state agencies for various programs. In fiscal year 2023, Washington spent more than $1.8 billion in federal program funds. Under the SLFRF program, recipients are required to submit Project and Expenditure Reports during the covered period, which began March 3, 2021, and ends December 31, 2024. Treasury identified the following key line items that contain critical information: 1. Obligations and Expenditures a. Current period obligation b. Cumulative obligation c. Current period expenditure d. Cumulative expenditure 2. Revenue loss calculation validation 3. Capital Expenditures The Office was responsible for compiling information from state agencies and submitting the reports no later than the last day of the month following the end of each reporting period. The Office was also responsible for calculating and reporting the state’s revenue losses from the pandemic, as well as identifying SLFRF projects with capital expenditures that required written justifications. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. In the prior audit, we reported the Office did not have adequate internal controls over and did not comply with reporting requirements for the SLFRF program. The prior finding number was 2022-020. Description of Condition The Office did not have adequate internal controls over and did not comply with reporting requirements for the SLFRF program. During the audit period, the Office submitted four quarterly Project and Expenditure Reports: • Report No. 4 (covering activity from July 1, 2022, through September 30, 2022) • Report No. 5 (covering activity from October 1, 2022, through December 31, 2022) • Report No. 6 (covering activity from January 1, 2023, through March 31, 2023) • Report No. 7 (covering activity from April 1, 2023, through June 30, 2023) Office staff prepared the reports by collecting and compiling reporting information from each state agency. For all four reports, we found that the Office did not have adequate supporting documentation for amounts reported under current period and cumulative obligations. We also found the Office did not have adequate internal controls to ensure material compliance with the capital expenditure requirement. We identified 14 out of 95 projects for which the Office did not follow up to determine whether there were capital expenditures incurred. Eight projects had expenditures greater than $1 million during fiscal year 2023, and two of those projects required written justifications. We found the Office did not have the required written justifications for two out of eight (25 percent) projects. We consider these internal control deficiencies to be a material weakness, which led to material noncompliance. Cause of Condition The Office did not require state agencies to include supporting documentation when they reported their obligations at the end of each reporting period. Instead, the Office relied on self-reporting by agencies without ensuring supporting documentation was provided and retained. In addition, management did not ensure that information provided by agencies was reviewed to ensure the project and expenditure reports are complete, accurate, and adequately supported. In addition, the Office was unable to confirm all information reported for capital expenditures was adequately supported. Effect of Condition We focused our review on the obligation and expenditure key line items for the Department of Commerce (Commerce) and Department of Social and Health Services (DSHS). Combined, these two agencies accounted for about 57 percent of total SLFRF expenditures during fiscal year 2023. We determined that both agencies’ current period and cumulative expenditures were accurate and supported, and any variances were not material to the overall reporting. However, we were unable to confirm whether the supporting documentation for both agencies’ reported obligations accounted for all activity during each reporting period. Therefore, our estimates of overreported and underreported obligations for both agencies in the tables below are based on the agency reports for obligations available at the time of the audit. Commerce We found that the current period obligations for Commerce in all four reports did not have adequate supporting documentation. We also found that cumulative obligations for Commerce in all four reports did not have adequate supporting documentation. As of the final fiscal year 2023 report, Commerce’s cumulative obligations totaled $985,274,734 and cumulative expenditures totaled $783,360,809. Because Commerce’s expenditures were accurate and supported, we calculated the variance to be the net of the unsupported obligations minus supported expenditures, or $201,913,924 (difference due to rounding). DSHS In two reports, we identified reporting variances for current period obligations reported for DSHS, including $7,158,350 in overreported obligations in Report No. 7. DSHS reported $17,781,970 in current obligations for Report No. 7. We also found that cumulative obligations were underreported by $1,445,556 compared to estimated expected obligations of $363,451,530. To determine the magnitude of the reporting variances, we totaled the largest current period obligation variance for DSHS with the net unsupported obligations for Commerce. This totaled $209,081,184, or about 11 percent of total SLFRF expenditures during fiscal year 2023. Our determination of the variance is an estimate because documentation necessary to calculate accurate obligation amounts for each reporting period was not available. By not establishing adequate internal controls, the Office cannot ensure that information reported to the federal grantor is complete and accurate. Without complete supporting documentation for obligations, management is not able to demonstrate that amounts reported to the federal grantor are complete and accurate. Recommendations We recommend the Office: • Establish internal controls to ensure reported obligations are supported by source documentation, which should be retained and available for review • Improve internal controls to ensure staff continue to follow up with agencies that report incomplete information • Ensure that management verifies reporting information is adequately supported before certifying and submitting the report Office’s Response The Office will continue to communicate to agencies the importance of maintaining adequate source supporting documentation for future project and expenditure reports. Although a complete cumulative obligations report as of the report date was not maintained supporting the project and expenditure report, all obligations are supported by grant agreements, contracts, and purchase orders. Additionally, the Office was able to provide the auditor a current report including all obligations to date which exceeded the cumulative obligations during the reporting period. The Office continues to improve the reporting template used to collect the required information from agencies and frequently meets with agencies to discuss the reporting requirements to ensure the quarterly Project and Expenditure Reports are complete, accurate, and supported. The Office will continue its review and verification process to ensure information is adequately supported before certifying and submitting the report. As noted in the U.S. Treasury reporting guidance, corrections or any changes to the report need to be reflected in the next Project and Expenditure report. As a result, the supporting documentation for the quarter may not align with the quarterly reports. Auditor’s Remarks We thank the Office for its cooperation and assistance throughout the audit. We will review the status of the Office’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200, Uniform Guidance, section 516, Audit findings, establishes reporting requirements for audit findings. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Office of Management and Budget, 2 CFR Part 200, Appendix XI, 2023 Compliance Supplement, for Assistance Listing 21.027 Coronavirus State and Local Fiscal Recovery Funds, states in part: L. Reporting 2. Performance Reporting Title of Report: Project and Expenditure Report PRA Number: 1505-0271 Reporting Cycle: Quarterly and Annual Authoritative Requirement: 2 CFR 200.328 and 31 CFR section 35.4(c) Reporting and requests for other information Blank Copy of the Report: https://home.treasury.gov/policyissues/coronavirus/assistance-for-state-local-and-tribal-governments/state-andlocal-fiscal-recovery-funds/recipient-compliance-and-reporting-responsibilities – See pages 17 through 34. Report Instructions: https://home.treasury.gov/policyissues/coronavirus/assistance-for-state-local-and-tribal-governments/state-andlocal-fiscal-recovery-funds/recipient-compliance-and-reporting-responsibilities – See pages 17 through 34. Report Corrections: Recipients will have an opportunity to reopen and provide edits to their submitted Project and Expenditure Reports any time before the reporting deadline. Recipients will then be required to re-certify and submit the report again to properly reflect any edits made. After the reporting deadline, unless prompted by Treasury staff, recipients will not be able to edit their submitted report, any changes or revisions will need to be reflected in the next Project and Expenditure report. The Office of Recovery Program’s (ORP) reporting portal has built-in functionality to reopen a report and allow recipients to make edits after the reporting deadline. However, it is ORP’s policy that recipients may only make revisions if authorized by Treasury staff for a period of up to 60 days after the reporting deadline. After the revision period ends, the report is final. A resubmitted report becomes a recipient’s final report within ORP’s reporting portal. Recipients can generate PDFs of this reports at any time. Key Line Item(s)- The following line items contain critical information: 1. Obligations and Expenditures- Quantifiable Objective Criteria: Reported obligations and expenditures. (See pages 16 and 17 of the above links.) a. Current period obligation b. Cumulative obligation c. Current period expenditure d. Cumulative expenditure Revenue loss calculation validation- Note- Recipients may elect a “standard allowance” of up to $10 million to spend on government services through the period of performance instead of using the full formula specified in the final rule. The standard allowance is available to all recipients. See page 30 for when recipients may modify their revenue loss election. Quantifiable Objective Criteria: Recipient’s application of the revenue loss calculation is accurate if they did not elect the standard allowance. Specific information regarding the revenue loss formula can be found in paragraph (d)(2) of 31 CFR § 35.6 at 31 CFR § 35.6(d)(2)(d)(2). Capital Expenditures- Quantifiable Objective Criteria: The recipient has the required written justification in their grant file if the total of the capital expenditures costs in a project is greater than or equal to $1 million and less than $10 million; or, the recipient submitted the required justification to Treasury if (1) a project has total capital expenditures costs greater than $10 million for capital expenditures enumerated by Treasury in the final rule; or (2) the total of a project’s capital expenditures costs is greater than $1 million for capital expenditures not enumerated by Treasury in the final rule. Note: Capital expenditures paid for using revenue replacement funds are not subject to this requirement. Tribal governments are not required to complete the written justification. (See 31 CFR section 35.6(b)(4))
2023-030 The Office of Financial Management did not have adequate internal controls over and did not comply with reporting requirements for the Coronavirus State and Local Fiscal Recovery Funds. Assistance Listing Number and Title: 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: None Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Reporting Known Questioned Cost Amount: None Prior Year Audit Finding: Yes, Finding 2022-020 Background The Coronavirus State and Local Fiscal Recovery Funds (SLFRF), as part of the American Rescue Plan Act of 2021, delivered $350 billion to state, local, and tribal governments to support the response to and recovery from the COVID-19 public health emergency. The program also provides resources to fight the pandemic, address economic impacts, maintain vital public services, and build a strong, resilient, and equitable recovery. Washington received about $4.4 billion of SLFRF money from the U.S. Department of the Treasury, which the state’s Office of Financial Management allocated to state agencies for various programs. In fiscal year 2023, Washington spent more than $1.8 billion in federal program funds. Under the SLFRF program, recipients are required to submit Project and Expenditure Reports during the covered period, which began March 3, 2021, and ends December 31, 2024. Treasury identified the following key line items that contain critical information: 1. Obligations and Expenditures a. Current period obligation b. Cumulative obligation c. Current period expenditure d. Cumulative expenditure 2. Revenue loss calculation validation 3. Capital Expenditures The Office was responsible for compiling information from state agencies and submitting the reports no later than the last day of the month following the end of each reporting period. The Office was also responsible for calculating and reporting the state’s revenue losses from the pandemic, as well as identifying SLFRF projects with capital expenditures that required written justifications. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. In the prior audit, we reported the Office did not have adequate internal controls over and did not comply with reporting requirements for the SLFRF program. The prior finding number was 2022-020. Description of Condition The Office did not have adequate internal controls over and did not comply with reporting requirements for the SLFRF program. During the audit period, the Office submitted four quarterly Project and Expenditure Reports: • Report No. 4 (covering activity from July 1, 2022, through September 30, 2022) • Report No. 5 (covering activity from October 1, 2022, through December 31, 2022) • Report No. 6 (covering activity from January 1, 2023, through March 31, 2023) • Report No. 7 (covering activity from April 1, 2023, through June 30, 2023) Office staff prepared the reports by collecting and compiling reporting information from each state agency. For all four reports, we found that the Office did not have adequate supporting documentation for amounts reported under current period and cumulative obligations. We also found the Office did not have adequate internal controls to ensure material compliance with the capital expenditure requirement. We identified 14 out of 95 projects for which the Office did not follow up to determine whether there were capital expenditures incurred. Eight projects had expenditures greater than $1 million during fiscal year 2023, and two of those projects required written justifications. We found the Office did not have the required written justifications for two out of eight (25 percent) projects. We consider these internal control deficiencies to be a material weakness, which led to material noncompliance. Cause of Condition The Office did not require state agencies to include supporting documentation when they reported their obligations at the end of each reporting period. Instead, the Office relied on self-reporting by agencies without ensuring supporting documentation was provided and retained. In addition, management did not ensure that information provided by agencies was reviewed to ensure the project and expenditure reports are complete, accurate, and adequately supported. In addition, the Office was unable to confirm all information reported for capital expenditures was adequately supported. Effect of Condition We focused our review on the obligation and expenditure key line items for the Department of Commerce (Commerce) and Department of Social and Health Services (DSHS). Combined, these two agencies accounted for about 57 percent of total SLFRF expenditures during fiscal year 2023. We determined that both agencies’ current period and cumulative expenditures were accurate and supported, and any variances were not material to the overall reporting. However, we were unable to confirm whether the supporting documentation for both agencies’ reported obligations accounted for all activity during each reporting period. Therefore, our estimates of overreported and underreported obligations for both agencies in the tables below are based on the agency reports for obligations available at the time of the audit. Commerce We found that the current period obligations for Commerce in all four reports did not have adequate supporting documentation. We also found that cumulative obligations for Commerce in all four reports did not have adequate supporting documentation. As of the final fiscal year 2023 report, Commerce’s cumulative obligations totaled $985,274,734 and cumulative expenditures totaled $783,360,809. Because Commerce’s expenditures were accurate and supported, we calculated the variance to be the net of the unsupported obligations minus supported expenditures, or $201,913,924 (difference due to rounding). DSHS In two reports, we identified reporting variances for current period obligations reported for DSHS, including $7,158,350 in overreported obligations in Report No. 7. DSHS reported $17,781,970 in current obligations for Report No. 7. We also found that cumulative obligations were underreported by $1,445,556 compared to estimated expected obligations of $363,451,530. To determine the magnitude of the reporting variances, we totaled the largest current period obligation variance for DSHS with the net unsupported obligations for Commerce. This totaled $209,081,184, or about 11 percent of total SLFRF expenditures during fiscal year 2023. Our determination of the variance is an estimate because documentation necessary to calculate accurate obligation amounts for each reporting period was not available. By not establishing adequate internal controls, the Office cannot ensure that information reported to the federal grantor is complete and accurate. Without complete supporting documentation for obligations, management is not able to demonstrate that amounts reported to the federal grantor are complete and accurate. Recommendations We recommend the Office: • Establish internal controls to ensure reported obligations are supported by source documentation, which should be retained and available for review • Improve internal controls to ensure staff continue to follow up with agencies that report incomplete information • Ensure that management verifies reporting information is adequately supported before certifying and submitting the report Office’s Response The Office will continue to communicate to agencies the importance of maintaining adequate source supporting documentation for future project and expenditure reports. Although a complete cumulative obligations report as of the report date was not maintained supporting the project and expenditure report, all obligations are supported by grant agreements, contracts, and purchase orders. Additionally, the Office was able to provide the auditor a current report including all obligations to date which exceeded the cumulative obligations during the reporting period. The Office continues to improve the reporting template used to collect the required information from agencies and frequently meets with agencies to discuss the reporting requirements to ensure the quarterly Project and Expenditure Reports are complete, accurate, and supported. The Office will continue its review and verification process to ensure information is adequately supported before certifying and submitting the report. As noted in the U.S. Treasury reporting guidance, corrections or any changes to the report need to be reflected in the next Project and Expenditure report. As a result, the supporting documentation for the quarter may not align with the quarterly reports. Auditor’s Remarks We thank the Office for its cooperation and assistance throughout the audit. We will review the status of the Office’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200, Uniform Guidance, section 516, Audit findings, establishes reporting requirements for audit findings. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Office of Management and Budget, 2 CFR Part 200, Appendix XI, 2023 Compliance Supplement, for Assistance Listing 21.027 Coronavirus State and Local Fiscal Recovery Funds, states in part: L. Reporting 2. Performance Reporting Title of Report: Project and Expenditure Report PRA Number: 1505-0271 Reporting Cycle: Quarterly and Annual Authoritative Requirement: 2 CFR 200.328 and 31 CFR section 35.4(c) Reporting and requests for other information Blank Copy of the Report: https://home.treasury.gov/policyissues/coronavirus/assistance-for-state-local-and-tribal-governments/state-andlocal-fiscal-recovery-funds/recipient-compliance-and-reporting-responsibilities – See pages 17 through 34. Report Instructions: https://home.treasury.gov/policyissues/coronavirus/assistance-for-state-local-and-tribal-governments/state-andlocal-fiscal-recovery-funds/recipient-compliance-and-reporting-responsibilities – See pages 17 through 34. Report Corrections: Recipients will have an opportunity to reopen and provide edits to their submitted Project and Expenditure Reports any time before the reporting deadline. Recipients will then be required to re-certify and submit the report again to properly reflect any edits made. After the reporting deadline, unless prompted by Treasury staff, recipients will not be able to edit their submitted report, any changes or revisions will need to be reflected in the next Project and Expenditure report. The Office of Recovery Program’s (ORP) reporting portal has built-in functionality to reopen a report and allow recipients to make edits after the reporting deadline. However, it is ORP’s policy that recipients may only make revisions if authorized by Treasury staff for a period of up to 60 days after the reporting deadline. After the revision period ends, the report is final. A resubmitted report becomes a recipient’s final report within ORP’s reporting portal. Recipients can generate PDFs of this reports at any time. Key Line Item(s)- The following line items contain critical information: 1. Obligations and Expenditures- Quantifiable Objective Criteria: Reported obligations and expenditures. (See pages 16 and 17 of the above links.) a. Current period obligation b. Cumulative obligation c. Current period expenditure d. Cumulative expenditure Revenue loss calculation validation- Note- Recipients may elect a “standard allowance” of up to $10 million to spend on government services through the period of performance instead of using the full formula specified in the final rule. The standard allowance is available to all recipients. See page 30 for when recipients may modify their revenue loss election. Quantifiable Objective Criteria: Recipient’s application of the revenue loss calculation is accurate if they did not elect the standard allowance. Specific information regarding the revenue loss formula can be found in paragraph (d)(2) of 31 CFR § 35.6 at 31 CFR § 35.6(d)(2)(d)(2). Capital Expenditures- Quantifiable Objective Criteria: The recipient has the required written justification in their grant file if the total of the capital expenditures costs in a project is greater than or equal to $1 million and less than $10 million; or, the recipient submitted the required justification to Treasury if (1) a project has total capital expenditures costs greater than $10 million for capital expenditures enumerated by Treasury in the final rule; or (2) the total of a project’s capital expenditures costs is greater than $1 million for capital expenditures not enumerated by Treasury in the final rule. Note: Capital expenditures paid for using revenue replacement funds are not subject to this requirement. Tribal governments are not required to complete the written justification. (See 31 CFR section 35.6(b)(4))
2023-030 The Office of Financial Management did not have adequate internal controls over and did not comply with reporting requirements for the Coronavirus State and Local Fiscal Recovery Funds. Assistance Listing Number and Title: 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: None Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Reporting Known Questioned Cost Amount: None Prior Year Audit Finding: Yes, Finding 2022-020 Background The Coronavirus State and Local Fiscal Recovery Funds (SLFRF), as part of the American Rescue Plan Act of 2021, delivered $350 billion to state, local, and tribal governments to support the response to and recovery from the COVID-19 public health emergency. The program also provides resources to fight the pandemic, address economic impacts, maintain vital public services, and build a strong, resilient, and equitable recovery. Washington received about $4.4 billion of SLFRF money from the U.S. Department of the Treasury, which the state’s Office of Financial Management allocated to state agencies for various programs. In fiscal year 2023, Washington spent more than $1.8 billion in federal program funds. Under the SLFRF program, recipients are required to submit Project and Expenditure Reports during the covered period, which began March 3, 2021, and ends December 31, 2024. Treasury identified the following key line items that contain critical information: 1. Obligations and Expenditures a. Current period obligation b. Cumulative obligation c. Current period expenditure d. Cumulative expenditure 2. Revenue loss calculation validation 3. Capital Expenditures The Office was responsible for compiling information from state agencies and submitting the reports no later than the last day of the month following the end of each reporting period. The Office was also responsible for calculating and reporting the state’s revenue losses from the pandemic, as well as identifying SLFRF projects with capital expenditures that required written justifications. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. In the prior audit, we reported the Office did not have adequate internal controls over and did not comply with reporting requirements for the SLFRF program. The prior finding number was 2022-020. Description of Condition The Office did not have adequate internal controls over and did not comply with reporting requirements for the SLFRF program. During the audit period, the Office submitted four quarterly Project and Expenditure Reports: • Report No. 4 (covering activity from July 1, 2022, through September 30, 2022) • Report No. 5 (covering activity from October 1, 2022, through December 31, 2022) • Report No. 6 (covering activity from January 1, 2023, through March 31, 2023) • Report No. 7 (covering activity from April 1, 2023, through June 30, 2023) Office staff prepared the reports by collecting and compiling reporting information from each state agency. For all four reports, we found that the Office did not have adequate supporting documentation for amounts reported under current period and cumulative obligations. We also found the Office did not have adequate internal controls to ensure material compliance with the capital expenditure requirement. We identified 14 out of 95 projects for which the Office did not follow up to determine whether there were capital expenditures incurred. Eight projects had expenditures greater than $1 million during fiscal year 2023, and two of those projects required written justifications. We found the Office did not have the required written justifications for two out of eight (25 percent) projects. We consider these internal control deficiencies to be a material weakness, which led to material noncompliance. Cause of Condition The Office did not require state agencies to include supporting documentation when they reported their obligations at the end of each reporting period. Instead, the Office relied on self-reporting by agencies without ensuring supporting documentation was provided and retained. In addition, management did not ensure that information provided by agencies was reviewed to ensure the project and expenditure reports are complete, accurate, and adequately supported. In addition, the Office was unable to confirm all information reported for capital expenditures was adequately supported. Effect of Condition We focused our review on the obligation and expenditure key line items for the Department of Commerce (Commerce) and Department of Social and Health Services (DSHS). Combined, these two agencies accounted for about 57 percent of total SLFRF expenditures during fiscal year 2023. We determined that both agencies’ current period and cumulative expenditures were accurate and supported, and any variances were not material to the overall reporting. However, we were unable to confirm whether the supporting documentation for both agencies’ reported obligations accounted for all activity during each reporting period. Therefore, our estimates of overreported and underreported obligations for both agencies in the tables below are based on the agency reports for obligations available at the time of the audit. Commerce We found that the current period obligations for Commerce in all four reports did not have adequate supporting documentation. We also found that cumulative obligations for Commerce in all four reports did not have adequate supporting documentation. As of the final fiscal year 2023 report, Commerce’s cumulative obligations totaled $985,274,734 and cumulative expenditures totaled $783,360,809. Because Commerce’s expenditures were accurate and supported, we calculated the variance to be the net of the unsupported obligations minus supported expenditures, or $201,913,924 (difference due to rounding). DSHS In two reports, we identified reporting variances for current period obligations reported for DSHS, including $7,158,350 in overreported obligations in Report No. 7. DSHS reported $17,781,970 in current obligations for Report No. 7. We also found that cumulative obligations were underreported by $1,445,556 compared to estimated expected obligations of $363,451,530. To determine the magnitude of the reporting variances, we totaled the largest current period obligation variance for DSHS with the net unsupported obligations for Commerce. This totaled $209,081,184, or about 11 percent of total SLFRF expenditures during fiscal year 2023. Our determination of the variance is an estimate because documentation necessary to calculate accurate obligation amounts for each reporting period was not available. By not establishing adequate internal controls, the Office cannot ensure that information reported to the federal grantor is complete and accurate. Without complete supporting documentation for obligations, management is not able to demonstrate that amounts reported to the federal grantor are complete and accurate. Recommendations We recommend the Office: • Establish internal controls to ensure reported obligations are supported by source documentation, which should be retained and available for review • Improve internal controls to ensure staff continue to follow up with agencies that report incomplete information • Ensure that management verifies reporting information is adequately supported before certifying and submitting the report Office’s Response The Office will continue to communicate to agencies the importance of maintaining adequate source supporting documentation for future project and expenditure reports. Although a complete cumulative obligations report as of the report date was not maintained supporting the project and expenditure report, all obligations are supported by grant agreements, contracts, and purchase orders. Additionally, the Office was able to provide the auditor a current report including all obligations to date which exceeded the cumulative obligations during the reporting period. The Office continues to improve the reporting template used to collect the required information from agencies and frequently meets with agencies to discuss the reporting requirements to ensure the quarterly Project and Expenditure Reports are complete, accurate, and supported. The Office will continue its review and verification process to ensure information is adequately supported before certifying and submitting the report. As noted in the U.S. Treasury reporting guidance, corrections or any changes to the report need to be reflected in the next Project and Expenditure report. As a result, the supporting documentation for the quarter may not align with the quarterly reports. Auditor’s Remarks We thank the Office for its cooperation and assistance throughout the audit. We will review the status of the Office’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200, Uniform Guidance, section 516, Audit findings, establishes reporting requirements for audit findings. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Office of Management and Budget, 2 CFR Part 200, Appendix XI, 2023 Compliance Supplement, for Assistance Listing 21.027 Coronavirus State and Local Fiscal Recovery Funds, states in part: L. Reporting 2. Performance Reporting Title of Report: Project and Expenditure Report PRA Number: 1505-0271 Reporting Cycle: Quarterly and Annual Authoritative Requirement: 2 CFR 200.328 and 31 CFR section 35.4(c) Reporting and requests for other information Blank Copy of the Report: https://home.treasury.gov/policyissues/coronavirus/assistance-for-state-local-and-tribal-governments/state-andlocal-fiscal-recovery-funds/recipient-compliance-and-reporting-responsibilities – See pages 17 through 34. Report Instructions: https://home.treasury.gov/policyissues/coronavirus/assistance-for-state-local-and-tribal-governments/state-andlocal-fiscal-recovery-funds/recipient-compliance-and-reporting-responsibilities – See pages 17 through 34. Report Corrections: Recipients will have an opportunity to reopen and provide edits to their submitted Project and Expenditure Reports any time before the reporting deadline. Recipients will then be required to re-certify and submit the report again to properly reflect any edits made. After the reporting deadline, unless prompted by Treasury staff, recipients will not be able to edit their submitted report, any changes or revisions will need to be reflected in the next Project and Expenditure report. The Office of Recovery Program’s (ORP) reporting portal has built-in functionality to reopen a report and allow recipients to make edits after the reporting deadline. However, it is ORP’s policy that recipients may only make revisions if authorized by Treasury staff for a period of up to 60 days after the reporting deadline. After the revision period ends, the report is final. A resubmitted report becomes a recipient’s final report within ORP’s reporting portal. Recipients can generate PDFs of this reports at any time. Key Line Item(s)- The following line items contain critical information: 1. Obligations and Expenditures- Quantifiable Objective Criteria: Reported obligations and expenditures. (See pages 16 and 17 of the above links.) a. Current period obligation b. Cumulative obligation c. Current period expenditure d. Cumulative expenditure Revenue loss calculation validation- Note- Recipients may elect a “standard allowance” of up to $10 million to spend on government services through the period of performance instead of using the full formula specified in the final rule. The standard allowance is available to all recipients. See page 30 for when recipients may modify their revenue loss election. Quantifiable Objective Criteria: Recipient’s application of the revenue loss calculation is accurate if they did not elect the standard allowance. Specific information regarding the revenue loss formula can be found in paragraph (d)(2) of 31 CFR § 35.6 at 31 CFR § 35.6(d)(2)(d)(2). Capital Expenditures- Quantifiable Objective Criteria: The recipient has the required written justification in their grant file if the total of the capital expenditures costs in a project is greater than or equal to $1 million and less than $10 million; or, the recipient submitted the required justification to Treasury if (1) a project has total capital expenditures costs greater than $10 million for capital expenditures enumerated by Treasury in the final rule; or (2) the total of a project’s capital expenditures costs is greater than $1 million for capital expenditures not enumerated by Treasury in the final rule. Note: Capital expenditures paid for using revenue replacement funds are not subject to this requirement. Tribal governments are not required to complete the written justification. (See 31 CFR section 35.6(b)(4))
2023-030 The Office of Financial Management did not have adequate internal controls over and did not comply with reporting requirements for the Coronavirus State and Local Fiscal Recovery Funds. Assistance Listing Number and Title: 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: None Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Reporting Known Questioned Cost Amount: None Prior Year Audit Finding: Yes, Finding 2022-020 Background The Coronavirus State and Local Fiscal Recovery Funds (SLFRF), as part of the American Rescue Plan Act of 2021, delivered $350 billion to state, local, and tribal governments to support the response to and recovery from the COVID-19 public health emergency. The program also provides resources to fight the pandemic, address economic impacts, maintain vital public services, and build a strong, resilient, and equitable recovery. Washington received about $4.4 billion of SLFRF money from the U.S. Department of the Treasury, which the state’s Office of Financial Management allocated to state agencies for various programs. In fiscal year 2023, Washington spent more than $1.8 billion in federal program funds. Under the SLFRF program, recipients are required to submit Project and Expenditure Reports during the covered period, which began March 3, 2021, and ends December 31, 2024. Treasury identified the following key line items that contain critical information: 1. Obligations and Expenditures a. Current period obligation b. Cumulative obligation c. Current period expenditure d. Cumulative expenditure 2. Revenue loss calculation validation 3. Capital Expenditures The Office was responsible for compiling information from state agencies and submitting the reports no later than the last day of the month following the end of each reporting period. The Office was also responsible for calculating and reporting the state’s revenue losses from the pandemic, as well as identifying SLFRF projects with capital expenditures that required written justifications. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. In the prior audit, we reported the Office did not have adequate internal controls over and did not comply with reporting requirements for the SLFRF program. The prior finding number was 2022-020. Description of Condition The Office did not have adequate internal controls over and did not comply with reporting requirements for the SLFRF program. During the audit period, the Office submitted four quarterly Project and Expenditure Reports: • Report No. 4 (covering activity from July 1, 2022, through September 30, 2022) • Report No. 5 (covering activity from October 1, 2022, through December 31, 2022) • Report No. 6 (covering activity from January 1, 2023, through March 31, 2023) • Report No. 7 (covering activity from April 1, 2023, through June 30, 2023) Office staff prepared the reports by collecting and compiling reporting information from each state agency. For all four reports, we found that the Office did not have adequate supporting documentation for amounts reported under current period and cumulative obligations. We also found the Office did not have adequate internal controls to ensure material compliance with the capital expenditure requirement. We identified 14 out of 95 projects for which the Office did not follow up to determine whether there were capital expenditures incurred. Eight projects had expenditures greater than $1 million during fiscal year 2023, and two of those projects required written justifications. We found the Office did not have the required written justifications for two out of eight (25 percent) projects. We consider these internal control deficiencies to be a material weakness, which led to material noncompliance. Cause of Condition The Office did not require state agencies to include supporting documentation when they reported their obligations at the end of each reporting period. Instead, the Office relied on self-reporting by agencies without ensuring supporting documentation was provided and retained. In addition, management did not ensure that information provided by agencies was reviewed to ensure the project and expenditure reports are complete, accurate, and adequately supported. In addition, the Office was unable to confirm all information reported for capital expenditures was adequately supported. Effect of Condition We focused our review on the obligation and expenditure key line items for the Department of Commerce (Commerce) and Department of Social and Health Services (DSHS). Combined, these two agencies accounted for about 57 percent of total SLFRF expenditures during fiscal year 2023. We determined that both agencies’ current period and cumulative expenditures were accurate and supported, and any variances were not material to the overall reporting. However, we were unable to confirm whether the supporting documentation for both agencies’ reported obligations accounted for all activity during each reporting period. Therefore, our estimates of overreported and underreported obligations for both agencies in the tables below are based on the agency reports for obligations available at the time of the audit. Commerce We found that the current period obligations for Commerce in all four reports did not have adequate supporting documentation. We also found that cumulative obligations for Commerce in all four reports did not have adequate supporting documentation. As of the final fiscal year 2023 report, Commerce’s cumulative obligations totaled $985,274,734 and cumulative expenditures totaled $783,360,809. Because Commerce’s expenditures were accurate and supported, we calculated the variance to be the net of the unsupported obligations minus supported expenditures, or $201,913,924 (difference due to rounding). DSHS In two reports, we identified reporting variances for current period obligations reported for DSHS, including $7,158,350 in overreported obligations in Report No. 7. DSHS reported $17,781,970 in current obligations for Report No. 7. We also found that cumulative obligations were underreported by $1,445,556 compared to estimated expected obligations of $363,451,530. To determine the magnitude of the reporting variances, we totaled the largest current period obligation variance for DSHS with the net unsupported obligations for Commerce. This totaled $209,081,184, or about 11 percent of total SLFRF expenditures during fiscal year 2023. Our determination of the variance is an estimate because documentation necessary to calculate accurate obligation amounts for each reporting period was not available. By not establishing adequate internal controls, the Office cannot ensure that information reported to the federal grantor is complete and accurate. Without complete supporting documentation for obligations, management is not able to demonstrate that amounts reported to the federal grantor are complete and accurate. Recommendations We recommend the Office: • Establish internal controls to ensure reported obligations are supported by source documentation, which should be retained and available for review • Improve internal controls to ensure staff continue to follow up with agencies that report incomplete information • Ensure that management verifies reporting information is adequately supported before certifying and submitting the report Office’s Response The Office will continue to communicate to agencies the importance of maintaining adequate source supporting documentation for future project and expenditure reports. Although a complete cumulative obligations report as of the report date was not maintained supporting the project and expenditure report, all obligations are supported by grant agreements, contracts, and purchase orders. Additionally, the Office was able to provide the auditor a current report including all obligations to date which exceeded the cumulative obligations during the reporting period. The Office continues to improve the reporting template used to collect the required information from agencies and frequently meets with agencies to discuss the reporting requirements to ensure the quarterly Project and Expenditure Reports are complete, accurate, and supported. The Office will continue its review and verification process to ensure information is adequately supported before certifying and submitting the report. As noted in the U.S. Treasury reporting guidance, corrections or any changes to the report need to be reflected in the next Project and Expenditure report. As a result, the supporting documentation for the quarter may not align with the quarterly reports. Auditor’s Remarks We thank the Office for its cooperation and assistance throughout the audit. We will review the status of the Office’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200, Uniform Guidance, section 516, Audit findings, establishes reporting requirements for audit findings. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Office of Management and Budget, 2 CFR Part 200, Appendix XI, 2023 Compliance Supplement, for Assistance Listing 21.027 Coronavirus State and Local Fiscal Recovery Funds, states in part: L. Reporting 2. Performance Reporting Title of Report: Project and Expenditure Report PRA Number: 1505-0271 Reporting Cycle: Quarterly and Annual Authoritative Requirement: 2 CFR 200.328 and 31 CFR section 35.4(c) Reporting and requests for other information Blank Copy of the Report: https://home.treasury.gov/policyissues/coronavirus/assistance-for-state-local-and-tribal-governments/state-andlocal-fiscal-recovery-funds/recipient-compliance-and-reporting-responsibilities – See pages 17 through 34. Report Instructions: https://home.treasury.gov/policyissues/coronavirus/assistance-for-state-local-and-tribal-governments/state-andlocal-fiscal-recovery-funds/recipient-compliance-and-reporting-responsibilities – See pages 17 through 34. Report Corrections: Recipients will have an opportunity to reopen and provide edits to their submitted Project and Expenditure Reports any time before the reporting deadline. Recipients will then be required to re-certify and submit the report again to properly reflect any edits made. After the reporting deadline, unless prompted by Treasury staff, recipients will not be able to edit their submitted report, any changes or revisions will need to be reflected in the next Project and Expenditure report. The Office of Recovery Program’s (ORP) reporting portal has built-in functionality to reopen a report and allow recipients to make edits after the reporting deadline. However, it is ORP’s policy that recipients may only make revisions if authorized by Treasury staff for a period of up to 60 days after the reporting deadline. After the revision period ends, the report is final. A resubmitted report becomes a recipient’s final report within ORP’s reporting portal. Recipients can generate PDFs of this reports at any time. Key Line Item(s)- The following line items contain critical information: 1. Obligations and Expenditures- Quantifiable Objective Criteria: Reported obligations and expenditures. (See pages 16 and 17 of the above links.) a. Current period obligation b. Cumulative obligation c. Current period expenditure d. Cumulative expenditure Revenue loss calculation validation- Note- Recipients may elect a “standard allowance” of up to $10 million to spend on government services through the period of performance instead of using the full formula specified in the final rule. The standard allowance is available to all recipients. See page 30 for when recipients may modify their revenue loss election. Quantifiable Objective Criteria: Recipient’s application of the revenue loss calculation is accurate if they did not elect the standard allowance. Specific information regarding the revenue loss formula can be found in paragraph (d)(2) of 31 CFR § 35.6 at 31 CFR § 35.6(d)(2)(d)(2). Capital Expenditures- Quantifiable Objective Criteria: The recipient has the required written justification in their grant file if the total of the capital expenditures costs in a project is greater than or equal to $1 million and less than $10 million; or, the recipient submitted the required justification to Treasury if (1) a project has total capital expenditures costs greater than $10 million for capital expenditures enumerated by Treasury in the final rule; or (2) the total of a project’s capital expenditures costs is greater than $1 million for capital expenditures not enumerated by Treasury in the final rule. Note: Capital expenditures paid for using revenue replacement funds are not subject to this requirement. Tribal governments are not required to complete the written justification. (See 31 CFR section 35.6(b)(4))
2023-030 The Office of Financial Management did not have adequate internal controls over and did not comply with reporting requirements for the Coronavirus State and Local Fiscal Recovery Funds. Assistance Listing Number and Title: 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: None Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Reporting Known Questioned Cost Amount: None Prior Year Audit Finding: Yes, Finding 2022-020 Background The Coronavirus State and Local Fiscal Recovery Funds (SLFRF), as part of the American Rescue Plan Act of 2021, delivered $350 billion to state, local, and tribal governments to support the response to and recovery from the COVID-19 public health emergency. The program also provides resources to fight the pandemic, address economic impacts, maintain vital public services, and build a strong, resilient, and equitable recovery. Washington received about $4.4 billion of SLFRF money from the U.S. Department of the Treasury, which the state’s Office of Financial Management allocated to state agencies for various programs. In fiscal year 2023, Washington spent more than $1.8 billion in federal program funds. Under the SLFRF program, recipients are required to submit Project and Expenditure Reports during the covered period, which began March 3, 2021, and ends December 31, 2024. Treasury identified the following key line items that contain critical information: 1. Obligations and Expenditures a. Current period obligation b. Cumulative obligation c. Current period expenditure d. Cumulative expenditure 2. Revenue loss calculation validation 3. Capital Expenditures The Office was responsible for compiling information from state agencies and submitting the reports no later than the last day of the month following the end of each reporting period. The Office was also responsible for calculating and reporting the state’s revenue losses from the pandemic, as well as identifying SLFRF projects with capital expenditures that required written justifications. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. In the prior audit, we reported the Office did not have adequate internal controls over and did not comply with reporting requirements for the SLFRF program. The prior finding number was 2022-020. Description of Condition The Office did not have adequate internal controls over and did not comply with reporting requirements for the SLFRF program. During the audit period, the Office submitted four quarterly Project and Expenditure Reports: • Report No. 4 (covering activity from July 1, 2022, through September 30, 2022) • Report No. 5 (covering activity from October 1, 2022, through December 31, 2022) • Report No. 6 (covering activity from January 1, 2023, through March 31, 2023) • Report No. 7 (covering activity from April 1, 2023, through June 30, 2023) Office staff prepared the reports by collecting and compiling reporting information from each state agency. For all four reports, we found that the Office did not have adequate supporting documentation for amounts reported under current period and cumulative obligations. We also found the Office did not have adequate internal controls to ensure material compliance with the capital expenditure requirement. We identified 14 out of 95 projects for which the Office did not follow up to determine whether there were capital expenditures incurred. Eight projects had expenditures greater than $1 million during fiscal year 2023, and two of those projects required written justifications. We found the Office did not have the required written justifications for two out of eight (25 percent) projects. We consider these internal control deficiencies to be a material weakness, which led to material noncompliance. Cause of Condition The Office did not require state agencies to include supporting documentation when they reported their obligations at the end of each reporting period. Instead, the Office relied on self-reporting by agencies without ensuring supporting documentation was provided and retained. In addition, management did not ensure that information provided by agencies was reviewed to ensure the project and expenditure reports are complete, accurate, and adequately supported. In addition, the Office was unable to confirm all information reported for capital expenditures was adequately supported. Effect of Condition We focused our review on the obligation and expenditure key line items for the Department of Commerce (Commerce) and Department of Social and Health Services (DSHS). Combined, these two agencies accounted for about 57 percent of total SLFRF expenditures during fiscal year 2023. We determined that both agencies’ current period and cumulative expenditures were accurate and supported, and any variances were not material to the overall reporting. However, we were unable to confirm whether the supporting documentation for both agencies’ reported obligations accounted for all activity during each reporting period. Therefore, our estimates of overreported and underreported obligations for both agencies in the tables below are based on the agency reports for obligations available at the time of the audit. Commerce We found that the current period obligations for Commerce in all four reports did not have adequate supporting documentation. We also found that cumulative obligations for Commerce in all four reports did not have adequate supporting documentation. As of the final fiscal year 2023 report, Commerce’s cumulative obligations totaled $985,274,734 and cumulative expenditures totaled $783,360,809. Because Commerce’s expenditures were accurate and supported, we calculated the variance to be the net of the unsupported obligations minus supported expenditures, or $201,913,924 (difference due to rounding). DSHS In two reports, we identified reporting variances for current period obligations reported for DSHS, including $7,158,350 in overreported obligations in Report No. 7. DSHS reported $17,781,970 in current obligations for Report No. 7. We also found that cumulative obligations were underreported by $1,445,556 compared to estimated expected obligations of $363,451,530. To determine the magnitude of the reporting variances, we totaled the largest current period obligation variance for DSHS with the net unsupported obligations for Commerce. This totaled $209,081,184, or about 11 percent of total SLFRF expenditures during fiscal year 2023. Our determination of the variance is an estimate because documentation necessary to calculate accurate obligation amounts for each reporting period was not available. By not establishing adequate internal controls, the Office cannot ensure that information reported to the federal grantor is complete and accurate. Without complete supporting documentation for obligations, management is not able to demonstrate that amounts reported to the federal grantor are complete and accurate. Recommendations We recommend the Office: • Establish internal controls to ensure reported obligations are supported by source documentation, which should be retained and available for review • Improve internal controls to ensure staff continue to follow up with agencies that report incomplete information • Ensure that management verifies reporting information is adequately supported before certifying and submitting the report Office’s Response The Office will continue to communicate to agencies the importance of maintaining adequate source supporting documentation for future project and expenditure reports. Although a complete cumulative obligations report as of the report date was not maintained supporting the project and expenditure report, all obligations are supported by grant agreements, contracts, and purchase orders. Additionally, the Office was able to provide the auditor a current report including all obligations to date which exceeded the cumulative obligations during the reporting period. The Office continues to improve the reporting template used to collect the required information from agencies and frequently meets with agencies to discuss the reporting requirements to ensure the quarterly Project and Expenditure Reports are complete, accurate, and supported. The Office will continue its review and verification process to ensure information is adequately supported before certifying and submitting the report. As noted in the U.S. Treasury reporting guidance, corrections or any changes to the report need to be reflected in the next Project and Expenditure report. As a result, the supporting documentation for the quarter may not align with the quarterly reports. Auditor’s Remarks We thank the Office for its cooperation and assistance throughout the audit. We will review the status of the Office’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200, Uniform Guidance, section 516, Audit findings, establishes reporting requirements for audit findings. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Office of Management and Budget, 2 CFR Part 200, Appendix XI, 2023 Compliance Supplement, for Assistance Listing 21.027 Coronavirus State and Local Fiscal Recovery Funds, states in part: L. Reporting 2. Performance Reporting Title of Report: Project and Expenditure Report PRA Number: 1505-0271 Reporting Cycle: Quarterly and Annual Authoritative Requirement: 2 CFR 200.328 and 31 CFR section 35.4(c) Reporting and requests for other information Blank Copy of the Report: https://home.treasury.gov/policyissues/coronavirus/assistance-for-state-local-and-tribal-governments/state-andlocal-fiscal-recovery-funds/recipient-compliance-and-reporting-responsibilities – See pages 17 through 34. Report Instructions: https://home.treasury.gov/policyissues/coronavirus/assistance-for-state-local-and-tribal-governments/state-andlocal-fiscal-recovery-funds/recipient-compliance-and-reporting-responsibilities – See pages 17 through 34. Report Corrections: Recipients will have an opportunity to reopen and provide edits to their submitted Project and Expenditure Reports any time before the reporting deadline. Recipients will then be required to re-certify and submit the report again to properly reflect any edits made. After the reporting deadline, unless prompted by Treasury staff, recipients will not be able to edit their submitted report, any changes or revisions will need to be reflected in the next Project and Expenditure report. The Office of Recovery Program’s (ORP) reporting portal has built-in functionality to reopen a report and allow recipients to make edits after the reporting deadline. However, it is ORP’s policy that recipients may only make revisions if authorized by Treasury staff for a period of up to 60 days after the reporting deadline. After the revision period ends, the report is final. A resubmitted report becomes a recipient’s final report within ORP’s reporting portal. Recipients can generate PDFs of this reports at any time. Key Line Item(s)- The following line items contain critical information: 1. Obligations and Expenditures- Quantifiable Objective Criteria: Reported obligations and expenditures. (See pages 16 and 17 of the above links.) a. Current period obligation b. Cumulative obligation c. Current period expenditure d. Cumulative expenditure Revenue loss calculation validation- Note- Recipients may elect a “standard allowance” of up to $10 million to spend on government services through the period of performance instead of using the full formula specified in the final rule. The standard allowance is available to all recipients. See page 30 for when recipients may modify their revenue loss election. Quantifiable Objective Criteria: Recipient’s application of the revenue loss calculation is accurate if they did not elect the standard allowance. Specific information regarding the revenue loss formula can be found in paragraph (d)(2) of 31 CFR § 35.6 at 31 CFR § 35.6(d)(2)(d)(2). Capital Expenditures- Quantifiable Objective Criteria: The recipient has the required written justification in their grant file if the total of the capital expenditures costs in a project is greater than or equal to $1 million and less than $10 million; or, the recipient submitted the required justification to Treasury if (1) a project has total capital expenditures costs greater than $10 million for capital expenditures enumerated by Treasury in the final rule; or (2) the total of a project’s capital expenditures costs is greater than $1 million for capital expenditures not enumerated by Treasury in the final rule. Note: Capital expenditures paid for using revenue replacement funds are not subject to this requirement. Tribal governments are not required to complete the written justification. (See 31 CFR section 35.6(b)(4))
2023-030 The Office of Financial Management did not have adequate internal controls over and did not comply with reporting requirements for the Coronavirus State and Local Fiscal Recovery Funds. Assistance Listing Number and Title: 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: None Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Reporting Known Questioned Cost Amount: None Prior Year Audit Finding: Yes, Finding 2022-020 Background The Coronavirus State and Local Fiscal Recovery Funds (SLFRF), as part of the American Rescue Plan Act of 2021, delivered $350 billion to state, local, and tribal governments to support the response to and recovery from the COVID-19 public health emergency. The program also provides resources to fight the pandemic, address economic impacts, maintain vital public services, and build a strong, resilient, and equitable recovery. Washington received about $4.4 billion of SLFRF money from the U.S. Department of the Treasury, which the state’s Office of Financial Management allocated to state agencies for various programs. In fiscal year 2023, Washington spent more than $1.8 billion in federal program funds. Under the SLFRF program, recipients are required to submit Project and Expenditure Reports during the covered period, which began March 3, 2021, and ends December 31, 2024. Treasury identified the following key line items that contain critical information: 1. Obligations and Expenditures a. Current period obligation b. Cumulative obligation c. Current period expenditure d. Cumulative expenditure 2. Revenue loss calculation validation 3. Capital Expenditures The Office was responsible for compiling information from state agencies and submitting the reports no later than the last day of the month following the end of each reporting period. The Office was also responsible for calculating and reporting the state’s revenue losses from the pandemic, as well as identifying SLFRF projects with capital expenditures that required written justifications. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. In the prior audit, we reported the Office did not have adequate internal controls over and did not comply with reporting requirements for the SLFRF program. The prior finding number was 2022-020. Description of Condition The Office did not have adequate internal controls over and did not comply with reporting requirements for the SLFRF program. During the audit period, the Office submitted four quarterly Project and Expenditure Reports: • Report No. 4 (covering activity from July 1, 2022, through September 30, 2022) • Report No. 5 (covering activity from October 1, 2022, through December 31, 2022) • Report No. 6 (covering activity from January 1, 2023, through March 31, 2023) • Report No. 7 (covering activity from April 1, 2023, through June 30, 2023) Office staff prepared the reports by collecting and compiling reporting information from each state agency. For all four reports, we found that the Office did not have adequate supporting documentation for amounts reported under current period and cumulative obligations. We also found the Office did not have adequate internal controls to ensure material compliance with the capital expenditure requirement. We identified 14 out of 95 projects for which the Office did not follow up to determine whether there were capital expenditures incurred. Eight projects had expenditures greater than $1 million during fiscal year 2023, and two of those projects required written justifications. We found the Office did not have the required written justifications for two out of eight (25 percent) projects. We consider these internal control deficiencies to be a material weakness, which led to material noncompliance. Cause of Condition The Office did not require state agencies to include supporting documentation when they reported their obligations at the end of each reporting period. Instead, the Office relied on self-reporting by agencies without ensuring supporting documentation was provided and retained. In addition, management did not ensure that information provided by agencies was reviewed to ensure the project and expenditure reports are complete, accurate, and adequately supported. In addition, the Office was unable to confirm all information reported for capital expenditures was adequately supported. Effect of Condition We focused our review on the obligation and expenditure key line items for the Department of Commerce (Commerce) and Department of Social and Health Services (DSHS). Combined, these two agencies accounted for about 57 percent of total SLFRF expenditures during fiscal year 2023. We determined that both agencies’ current period and cumulative expenditures were accurate and supported, and any variances were not material to the overall reporting. However, we were unable to confirm whether the supporting documentation for both agencies’ reported obligations accounted for all activity during each reporting period. Therefore, our estimates of overreported and underreported obligations for both agencies in the tables below are based on the agency reports for obligations available at the time of the audit. Commerce We found that the current period obligations for Commerce in all four reports did not have adequate supporting documentation. We also found that cumulative obligations for Commerce in all four reports did not have adequate supporting documentation. As of the final fiscal year 2023 report, Commerce’s cumulative obligations totaled $985,274,734 and cumulative expenditures totaled $783,360,809. Because Commerce’s expenditures were accurate and supported, we calculated the variance to be the net of the unsupported obligations minus supported expenditures, or $201,913,924 (difference due to rounding). DSHS In two reports, we identified reporting variances for current period obligations reported for DSHS, including $7,158,350 in overreported obligations in Report No. 7. DSHS reported $17,781,970 in current obligations for Report No. 7. We also found that cumulative obligations were underreported by $1,445,556 compared to estimated expected obligations of $363,451,530. To determine the magnitude of the reporting variances, we totaled the largest current period obligation variance for DSHS with the net unsupported obligations for Commerce. This totaled $209,081,184, or about 11 percent of total SLFRF expenditures during fiscal year 2023. Our determination of the variance is an estimate because documentation necessary to calculate accurate obligation amounts for each reporting period was not available. By not establishing adequate internal controls, the Office cannot ensure that information reported to the federal grantor is complete and accurate. Without complete supporting documentation for obligations, management is not able to demonstrate that amounts reported to the federal grantor are complete and accurate. Recommendations We recommend the Office: • Establish internal controls to ensure reported obligations are supported by source documentation, which should be retained and available for review • Improve internal controls to ensure staff continue to follow up with agencies that report incomplete information • Ensure that management verifies reporting information is adequately supported before certifying and submitting the report Office’s Response The Office will continue to communicate to agencies the importance of maintaining adequate source supporting documentation for future project and expenditure reports. Although a complete cumulative obligations report as of the report date was not maintained supporting the project and expenditure report, all obligations are supported by grant agreements, contracts, and purchase orders. Additionally, the Office was able to provide the auditor a current report including all obligations to date which exceeded the cumulative obligations during the reporting period. The Office continues to improve the reporting template used to collect the required information from agencies and frequently meets with agencies to discuss the reporting requirements to ensure the quarterly Project and Expenditure Reports are complete, accurate, and supported. The Office will continue its review and verification process to ensure information is adequately supported before certifying and submitting the report. As noted in the U.S. Treasury reporting guidance, corrections or any changes to the report need to be reflected in the next Project and Expenditure report. As a result, the supporting documentation for the quarter may not align with the quarterly reports. Auditor’s Remarks We thank the Office for its cooperation and assistance throughout the audit. We will review the status of the Office’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200, Uniform Guidance, section 516, Audit findings, establishes reporting requirements for audit findings. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Office of Management and Budget, 2 CFR Part 200, Appendix XI, 2023 Compliance Supplement, for Assistance Listing 21.027 Coronavirus State and Local Fiscal Recovery Funds, states in part: L. Reporting 2. Performance Reporting Title of Report: Project and Expenditure Report PRA Number: 1505-0271 Reporting Cycle: Quarterly and Annual Authoritative Requirement: 2 CFR 200.328 and 31 CFR section 35.4(c) Reporting and requests for other information Blank Copy of the Report: https://home.treasury.gov/policyissues/coronavirus/assistance-for-state-local-and-tribal-governments/state-andlocal-fiscal-recovery-funds/recipient-compliance-and-reporting-responsibilities – See pages 17 through 34. Report Instructions: https://home.treasury.gov/policyissues/coronavirus/assistance-for-state-local-and-tribal-governments/state-andlocal-fiscal-recovery-funds/recipient-compliance-and-reporting-responsibilities – See pages 17 through 34. Report Corrections: Recipients will have an opportunity to reopen and provide edits to their submitted Project and Expenditure Reports any time before the reporting deadline. Recipients will then be required to re-certify and submit the report again to properly reflect any edits made. After the reporting deadline, unless prompted by Treasury staff, recipients will not be able to edit their submitted report, any changes or revisions will need to be reflected in the next Project and Expenditure report. The Office of Recovery Program’s (ORP) reporting portal has built-in functionality to reopen a report and allow recipients to make edits after the reporting deadline. However, it is ORP’s policy that recipients may only make revisions if authorized by Treasury staff for a period of up to 60 days after the reporting deadline. After the revision period ends, the report is final. A resubmitted report becomes a recipient’s final report within ORP’s reporting portal. Recipients can generate PDFs of this reports at any time. Key Line Item(s)- The following line items contain critical information: 1. Obligations and Expenditures- Quantifiable Objective Criteria: Reported obligations and expenditures. (See pages 16 and 17 of the above links.) a. Current period obligation b. Cumulative obligation c. Current period expenditure d. Cumulative expenditure Revenue loss calculation validation- Note- Recipients may elect a “standard allowance” of up to $10 million to spend on government services through the period of performance instead of using the full formula specified in the final rule. The standard allowance is available to all recipients. See page 30 for when recipients may modify their revenue loss election. Quantifiable Objective Criteria: Recipient’s application of the revenue loss calculation is accurate if they did not elect the standard allowance. Specific information regarding the revenue loss formula can be found in paragraph (d)(2) of 31 CFR § 35.6 at 31 CFR § 35.6(d)(2)(d)(2). Capital Expenditures- Quantifiable Objective Criteria: The recipient has the required written justification in their grant file if the total of the capital expenditures costs in a project is greater than or equal to $1 million and less than $10 million; or, the recipient submitted the required justification to Treasury if (1) a project has total capital expenditures costs greater than $10 million for capital expenditures enumerated by Treasury in the final rule; or (2) the total of a project’s capital expenditures costs is greater than $1 million for capital expenditures not enumerated by Treasury in the final rule. Note: Capital expenditures paid for using revenue replacement funds are not subject to this requirement. Tribal governments are not required to complete the written justification. (See 31 CFR section 35.6(b)(4))