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 2 CFR §200.302(b) requires non‑Federal entities to maintain effective control over and accountability for Federal awards, including accurate financial reporting. In addition, 2 CFR §200.303(a) requires the auditee to establish and maintain effective internal control over Federal awards that provides reasonable assurance that the entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. The grant agreement with the Washington State Department of Commerce further requires that reimbursement requests be submitted in accordance with the approved budget and cost categories. Condition: The client submitted reimbursement requests to the Washington State Department of Commerce using Form 19‑1A; however, the budget line items reported on the Form 19‑1A did not agree to the approved grant budget in all instances tested. Specifically, while the underlying expenditures were allowable and incurred in accordance with the grant agreement, the budget line items selected on the Form 19‑1A were incorrect in every instance tested, resulting in inaccurate budget category reporting to the pass‑through entity. Context: None of Form 19-1A's contain accurate budget line items do not align with the grant or its amendments. Cause: The auditee did not have adequate internal controls in place to ensure that expenditures were consistently and accurately mapped to the correct budget line items when preparing Form 19‑1A reimbursement requests. Specifically, there was no documented review or reconciliation process to verify that the budget categories selected on the Form 19‑1A agreed to the approved grant budget prior to submission. Effect: As a result of this control deficiency, reimbursement requests submitted to the pass‑through entity did not accurately reflect budgeted cost categories, which increases the risk of noncompliance with the terms of the grant agreement. While the costs tested were determined to be allowable, the inaccurate budget allocation could result in improper reporting, increased scrutiny from the grantor, or potential disallowed costs if not corrected. No questioned costs were identified as the expenditures tested were allowable and supported. Repeat Finding: No. Recommendation: We recommend that the auditee implement procedures to ensure that Form 19‑1A reimbursement requests are reviewed prior to submission to confirm that expenditures are charged to the correct approved budget line items. This may include maintaining a reconciliation between the general ledger, the approved grant budget, and the Form 19‑1A, as well as implementing supervisory review and approval of reimbursement submissions. Views of responsible officials: Management agrees with the finding and has prepared a Corrective Action Plan.