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 2022 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 and Compliance Criteria or specific requirement: Uniform Guidance permits advance payments; however, advance payments must be limited to the minimum amounts needed and timed to meet the immediate cash requirements of the recipient (2 CFR §200.305(b)(1)). In addition, Uniform Guidance requires non‑Federal entities to establish and maintain effective internal control over federal awards to provide reasonable assurance that the award is being managed in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award (2 CFR §200.303). Condition: The auditee billed the Washington State Department of Commerce for the Emergency Rental Assistance Program (ERA2) and received federal funding totaling $8,674,165.38 over the life of the grant. While total eligible expenditures incurred over the life of the grant exceeded this amount, billing activity occurred in advance of eligible expenditures at certain points during the grant period. As a result, the auditee received federal funds in advance of incurring allowable expenditures, resulting in excess federal cash on hand of $47,833.36 at the time of billing. Context: The Emergency Rental Assistance Program (ERAP 2.0) allows for a combination of advance payments and cost‑reimbursement payments. As a result, recipients must maintain controls to ensure that advances are limited to immediate cash needs and reconciled to eligible expenditures incurred Cause: The auditee did not have sufficient procedures in place to ensure that federal reimbursement requests and advance payments were limited to actual eligible expenditures incurred as of the billing date and that excess advances were timely identified and monitored. Effect: The auditee’s billing practices resulted in the receipt of federal funds in advance of incurring allowable costs, which constitutes noncompliance with Uniform Guidance cash‑management requirements. This increased the risk that federal funds were not appropriately limited to immediate cash needs and were not timely identified as advances requiring monitoring or deferral. Repeat Finding: No. Recommendation: We recommend that the auditee strengthen controls over grant billing and cash management to ensure that reimbursement requests and advance payments submitted to the pass‑through entity are limited to immediate cash needs and supported by allowable costs incurred as of the billing date, in accordance with Uniform Guidance requirements. Views of responsible officials: Management agrees with the finding and has prepared a Corrective Action Plan.