Finding Text
Federal Agency: U.S. Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds (Eviction Rental Assistance Program 2.0) Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP0002 2021 Pass-Through Agency: Washington State Department of Commerce Pass-Through Number(s): 21-4619C-104 Award Period: 10/1/2021 - 6/30/2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Uniform Guidance requires the auditee to prepare a complete and accurate Schedule of Expenditures of Federal Awards, including the identification of all federal awards expended during the period (2 CFR §200.508(b)). In addition, Uniform Guidance requires the auditee to establish and maintain effective internal control over compliance to provide reasonable assurance that federal awards are identified, tracked, and reported in accordance with applicable statutes, regulations, and the terms and conditions of the federal award (2 CFR §200.303). Condition: The auditee did not have effective internal control over compliance related to the preparation of the Schedule of Expenditures of Federal Awards (SEFA). Specifically, controls were not sufficient to ensure that all federal awards subject to Uniform Guidance requirements were properly identified, Assistance Listing Numbers were accurately determined, and federal expenditures were completely and accurately reported on the SEFA. As a result, material federal awards were omitted from the auditee‑prepared SEFA and errors in federal program identification occurred, which required identification and correction by the auditors. Context: The Schedule of Expenditures of Federal Awards is used to determine major programs and the scope of compliance testing under the Single Audit. Complete and accurate identification of federal awards is critical to ensure appropriate major program determination and compliance coverage. Cause: The auditee had not established formal procedures or an effective review process to ensure that all federal awards were identified and accurately reported on the SEFA. In addition, prior‑year omissions of federal awards were not adequately remediated, contributing to continued deficiencies in SEFA preparation and review. Effect: This significant deficiency resulted in a reasonable possibility that material noncompliance with federal reporting requirements would not be prevented or detected on a timely basis. An incomplete or inaccurate SEFA increases the risk of improper major program determination, inappropriate audit scope, and increased risk of material noncompliance with federal award requirements. Repeat Finding: Yes. Recommendation: We recommend that management design and implement effective internal controls over compliance related to SEFA preparation, including assigning responsibility to personnel with appropriate training in federal award requirements. Management should also implement a documented review process, performed by a knowledgeable individual, to ensure the SEFA is complete, accurate, and compliant with Uniform Guidance prior to submission for audit. Views of responsible officials: Management agrees with the finding and has prepared a Corrective Action Plan.