Finding Text
2022-002 The County did not have adequate internal controls to ensurefor ensuring compliance with federal reporting requirements.
Assistance Listing Number and Title: 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters)
Federal Grantor Name: Federal Emergency Management Agency, U.S. Department of Homeland Security
Federal Award/Contract Number: FEMA-4539-DR-WA
Pass-through Entity Name: WA Washington State Military Department
Pass-through Award/Contract Number: D20-2069
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Description of Condition
The Disaster Grants- – Public Assistance (PA) program helps state, tribal and local governments pay for their response to and recovery from disasters. Following a pPresidential declaration of a major disaster or an emergency, the Federal Emergency Management Agency (FEMA) provides program funds supplemental federal disaster grant assistance for debris removal, emergency protective measures, and the restoration of disaster-damaged facilities owned by states, municipalities, tribes and certain private nonprofit organizations. In Washington, the PA program agency is the Military Department (Department). In 2022, the County spent $3,329,662 in program PA funds.
Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls.
Federal regulations require the County to submit qThe County must comply with the following PA requirement for reporting:
Quarterly Performance Reporting
Quarterly progress reports are due from recipients onfor all open large projects within 30 days after the end of each calendar quarter. FEMA defines a large project as "“a project for which the final obligated (federal and nonfederal) amount is equal to or greater than the annually adjusted cost threshold for small project grants.” In 2022, the threshold for large projects was $139,800." The County is required to submit to the Department a quarterly report indicating the status of all their large projects. The reports shall status shall identify the costs incurred to date, the percentage of work completed, the anticipated completion date of the project and whether cost under runs or over runs are expected. In addition, the County should note in the comment field any challenges or issues associated with the project. Failure to submit a complete quarterly report within 15 days following the end of the quarter will result in suspension of all payments to the County until a complete quarterly report is received by the Department. The quarterly report will serve as the basis for any FEMA Office of Chief Financial Officer (OCFO) funds reduction.
We found the County did not have a control in place have adequate controls in place and did not retain documentation showing it submitted six out of eight quarterly reports due to FEMA for two large projects in 2022 to the awarding agency. to ensure all quarterly performance reports were retained. As a result, we were unable to obtain sufficient appropriate audit evidence for six out of eight quarterly performance reports.
We consider this control deficiency to be a material weakness that led to material noncompliance.
This issue was not reported as a finding in the prior audit.
Cause of Condition
The County staff said indicated it did submit they submitted hardprinted copies of all required quarterly performance reports to the Departmentawarding agencyFEMA. H, however, due to staff turnover due tobecause of staff turnover and the fact that printed reports were submittedreports being submitted in hard copy form, the County staff were was unable to locate an auditable copycopies of the reports submitted to demonstrate compliance .
Effect of Condition
By not retaining copies of the quarterly performance reports, management was unable to demonstrate the information the County reported was complete, and accurate, andthe Countyit submitted them within the required timeframe. FEMA The grantor may withhold payment if it does not receive quarterly reports are not received within
30 days. We did not identify any withheld payments.
Recommendation
We recommend the County strengthen internal controls to ensure for ensuring it maintains documentation showing it submitted required quarterly reports to the awarding agency FEMA when dueand supporting documentation are retained.
County’s Response
We agree the County failed to retain the first three quarters of this report. Accounting staff identified this issue at year end, prior to our audit and this finding. Procedures were updated in time for our 2022 4th quarter reporting and going forward.
Auditor’s Remarks
We thank the County for its commitment to resolving this issue. We will follow up
on the status of this finding 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 516, Audit findings, establishes reporting requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements.
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 .
Title 44 CFR section 206.204(f), Project Performance, states quarterly progress reports are required to be submitted for large projects. 2 CFR Part 200, Appendix XI, April 2022 Compliance Supplement, Part 4 – Agency Program Requirements, 97.036-Disaster Grants-Public Assistance (Presidentially Declared Disasters), Reporting section describes the requirement for grantees to prepare quarterly progress reports on all open large projects 30 days after the end of each calendar quarter.