FAC Explorer

Finding 418485 (2022-003)

Significant Deficiency
Requirement
I
Questioned Costs
-
Year
2022
Accepted
2023-09-28
Audit: 312191
Organization: City of Seattle (WA)
Auditor: Office of the Washington State Auditor

AI Summary

  • Core Issue: The City failed to verify that a subrecipient was not suspended or debarred before awarding $662,249 in federal funds, indicating inadequate internal controls.
  • Impacted Requirements: Federal regulations mandate that all contractors and subrecipients receiving $25,000 or more in federal funds must be verified against suspension and debarment lists.
  • Recommended Follow-Up: Strengthen internal controls by ensuring staff are trained on verification processes and implement consistent procedures for checking suspension and debarment status before contracts are finalized.

Finding Text

2022-003 The City?s internal controls were inadequate for ensuring compliance with federal suspension and debarment requirements.Assistance Listing Number and Title: 14.231 ? COVID-19 Emergency Solutions Grant ProgramFederal Grantor Name: U.S. Department of Housing and Urban DevelopmentFederal Award/Contract Number: E20MW530005Pass-through Entity Name: N/APass-through Award/ContractNumber: N/AKnown Questioned Cost Amount: $0Prior Year Audit Finding: N/ABackgroundThe Emergency Solutions Grant Program (ESG) provides grants to states,metropolitan cities, urban counties, and territories for the rehabilitation orconversion of buildings for use as emergency shelter for the homeless, the paymentof certain expenses related to operating emergency shelters, essential servicesrelated to emergency shelters and street outreach for the homeless, andhomelessness prevention and rapid re-housing assistance. The City spent$6,384,986 in Emergency Solutions Grant Program (ESG) award funds in 2022.Federal regulations require recipients to establish and follow internal controls thatensure compliance with program requirements. These controls includeunderstanding grant requirements and monitoring the effectiveness of establishedcontrols.Federal requirements prohibit grant recipients from contracting with or purchasingfrom parties suspended or debarred from doing business with the federalgovernment. Whenever the City enters into contracts or purchases goods or servicesthat it expects to equal or exceed $25,000, and for all subawards, irrespective of award amount, paid all or in part with federal funds, it must verify the contractorsor subrecipients have not been suspended, debarred or otherwise excluded. The Citymay accomplish this verification by collecting a written certification from thecontractor or subrecipient, adding a clause or condition into the contract that statesthe contractor or subrecipient is not suspended or debarred, or checking forexclusion records in the U.S. General Services Administration?s System for AwardManagement at SAM.gov. The City must perform this verification before enteringinto the contract or making the subaward, and it must maintain documentationdemonstrating compliance with this federal requirement.Description of ConditionOur audit found the City?s internal controls were inadequate for ensuring staffverified the suspension and debarment status of subrecipients, paid all or in partwith federal funds. Specifically, the City did not verify one subrecipient was notsuspended or debarred from participating in federal programs before entering intoa contract. The City paid this subrecipient $662,249 in 2022.We consider this deficiency in internal controls to be a material weakness that ledto material noncompliance.Cause of ConditionThe Office of Housing received a grant that was new to the Office of Housing andstaff were not aware of the requirement to verify suspension and debarment forcontractors and subrecipients.Effect of ConditionThe City did not obtain a written certification, insert a clause into the contract, orcheck SAM.gov to verify the subrecipient was not suspended or debarred beforeentering into the subaward agreement. Without this verification, the City increasesits risk of awarding federal funds to parties that are excluded from participating infederal programs. Any payments the City made to an ineligible party would beunallowable, and the federal grantor could potentially recover them.The City subsequently verified the contractor was not suspended or debarred.Therefore, we are not questioning costs. RecommendationWe recommend the City strengthen internal controls to ensure all subrecipients andcontractors it expects to pay $25,000 or more, all or in part with federal funds, arenot suspended or debarred from participating in federal programs.City?s ResponseHSD Response:HSD as the CDBG administrator, in collaboration with its contracted consultantsupport TDA consulting, will complete the following steps to support the resolutionof this finding noting internal controls were inadequate for ensuring staff verifiedthe suspension and debarment status of sub-recipients within the Office of Housing.HSD will conduct a thorough review of all existing MOAs with our recipients toensure that the language pertaining to the verification and the documenting of thesuspension and debarment status of sub-recipients is clear, consistent, and alignedwith federal and state regulations. HSD will also assure staff responsible foradministering CBDG funds and other federal funds are oriented to the importanceof adhering to the debarment verification requirements outlined in the MOAs. HSDwill encourage its city partners receiving these funds to work with other citypartners to adopt standardized procedures for the verification and documentationof sub-recipient suspension and debarment status.Office of Housing Response:The Office of Housing will implement and communicate the following procedures:For all contracts expected to receive $25,000 or more in federal funds, the programstaff person initiating the contract will first search the SAM website to verify that:the agency is registered, the agency?s registration status is active, and the agencydoes not have any active exclusions such as debarment or suspension. This statuswill be double-checked by the future Senior Contracts Specialist position beforeany contract is finalized.Auditor?s RemarksWe thank the City for its response and consideration in this matter and the steps itis taking to address this issue. We will review the status of the City?s correctiveaction during our next audit. Applicable Laws and RegulationsTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform AdministrativeRequirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance), section 516, Audit findings, establishes reportingrequirements for audit findings.Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describesthe requirements for auditees to maintain internal controls over federal programsand comply with federal program requirements.The American Institute of Certified Public Accountants defines significantdeficiencies and material weaknesses in its Codification of Statements on AuditingStandards, section 935, Compliance Audits, paragraph 11.Title 2 CFR Part 180, OMB Guidelines to Agencies on GovernmentwideDebarment and Suspension (Nonprocurement), establishes nonprocurementdebarment and suspension regulations implementing Executive Orders 12549 and12689.

Categories

Subrecipient Monitoring Procurement, Suspension & Debarment

Other Findings in this Audit

  • 418478 2022-003
    Significant Deficiency
  • 418479 2022-001
    - Repeat
  • 418480 2022-001
    - Repeat
  • 418481 2022-001
    - Repeat
  • 418482 2022-001
    - Repeat
  • 418483 2022-001
    - Repeat
  • 418484 2022-001
    - Repeat
  • 418486 2022-001
    - Repeat
  • 418487 2022-001
    - Repeat
  • 418488 2022-001
    - Repeat
  • 418489 2022-001
    - Repeat
  • 418490 2022-001
    - Repeat
  • 418491 2022-001
    - Repeat
  • 418492 2022-001
    - Repeat
  • 418493 2022-002
    Material Weakness Repeat
  • 418494 2022-002
    Material Weakness Repeat
  • 418495 2022-002
    Material Weakness Repeat
  • 418496 2022-002
    Material Weakness Repeat
  • 418497 2022-002
    Material Weakness Repeat
  • 418498 2022-002
    Material Weakness Repeat
  • 418499 2022-002
    Material Weakness Repeat
  • 418500 2022-002
    Material Weakness Repeat
  • 418501 2022-002
    Material Weakness Repeat
  • 418502 2022-002
    Material Weakness Repeat
  • 418503 2022-002
    Material Weakness Repeat
  • 418504 2022-002
    Material Weakness Repeat
  • 418505 2022-002
    Material Weakness Repeat
  • 994920 2022-003
    Significant Deficiency
  • 994921 2022-001
    - Repeat
  • 994922 2022-001
    - Repeat
  • 994923 2022-001
    - Repeat
  • 994924 2022-001
    - Repeat
  • 994925 2022-001
    - Repeat
  • 994926 2022-001
    - Repeat
  • 994927 2022-003
    Significant Deficiency
  • 994928 2022-001
    - Repeat
  • 994929 2022-001
    - Repeat
  • 994930 2022-001
    - Repeat
  • 994931 2022-001
    - Repeat
  • 994932 2022-001
    - Repeat
  • 994933 2022-001
    - Repeat
  • 994934 2022-001
    - Repeat
  • 994935 2022-002
    Material Weakness Repeat
  • 994936 2022-002
    Material Weakness Repeat
  • 994937 2022-002
    Material Weakness Repeat
  • 994938 2022-002
    Material Weakness Repeat
  • 994939 2022-002
    Material Weakness Repeat
  • 994940 2022-002
    Material Weakness Repeat
  • 994941 2022-002
    Material Weakness Repeat
  • 994942 2022-002
    Material Weakness Repeat
  • 994943 2022-002
    Material Weakness Repeat
  • 994944 2022-002
    Material Weakness Repeat
  • 994945 2022-002
    Material Weakness Repeat
  • 994946 2022-002
    Material Weakness Repeat
  • 994947 2022-002
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
66.458 Clean Water State Revolving Fund $8.07M
21.023 Covid 19 - Emergency Rental Assistance Program $3.73M
97.047 Bric: Building Resilient Infrastructure and Communities $2.10M
97.039 Hazard Mitigation Grant $1.37M
20.200 Highway Research and Development Program $1.32M
59.075 Covid 19 - Shuttered Venue Operators Grant Program $1.19M
10.558 Child and Adult Care Food Program $898,758
16.543 Missing Children's Assistance $707,467
14.231 Covid 19 - Emergency Solutions Grant Program $662,249
16.560 National Institute of Justice Research, Evaluation, and Development Project Grants $631,992
14.881 Moving to Work Demonstration Program $533,333
97.091 Homeland Security Biowatch Program $488,576
93.778 Medical Assistance Program $443,689
16.922 Equitable Sharing Program $420,424
10.559 Summer Food Service Program for Children $316,968
97.106 Securing the Cities Program $315,181
21.016 Equitable Sharing $295,231
16.838 Comprehensive Opioid, Stimulant, and Other Substances Use Program $263,540
84.047 Trio Upward Bound $229,868
14.239 Home Investment Partnerships Program $219,966
93.631 Developmental Disabilities Projects of National Significance $205,758
93.568 Low-Income Home Energy Assistance $188,098
93.569 Community Services Block Grant $181,812
16.582 Crime Victim Assistance/discretionary Grants $181,138
11.438 Pacific Coast Salmon Recovery Pacific Salmon Treaty Program $176,014
93.045 Special Programs for the Aging, Title Iii, Part C, Nutrition Services $170,962
14.218 Covid 19 - Community Development Block Grants/entitlement Grants $150,404
93.052 National Family Caregiver Support, Title Iii, Part E $143,382
97.042 Emergency Management Performance Grants $141,320
93.052 Covid 19 - National Family Caregiver Support, Title Iii, Part E $134,250
16.738 Edward Byrne Memorial Justice Assistance Grant Program $132,582
93.053 Nutrition Services Incentive Program $127,624
97.067 Homeland Security Grant Program $113,826
20.616 National Priority Safety Programs $110,138
14.241 Covid 19 - Housing Opportunities for Persons with Aids $106,646
93.048 Special Programs for the Aging, Title Iv, and Title Ii, Discretionary Projects $87,676
21.027 Covid 19 - Coronavirus State and Local Fiscal Recovery Funds $86,921
16.034 Covid 19 - Coronavirus Emergency Supplemental Funding Program $82,725
16.590 Grants to Encourage Arrest Policies and Enforcement of Protection Orders Program $81,124
93.044 Covid 19 - Special Programs for the Aging, Title Iii, Part B, Grants for Supportive Services and Senior Centers $63,693
14.267 Continuum of Care Program $61,816
16.320 Services for Trafficking Victims $59,634
20.507 Covid 19 - Federal Transit Formula Grants $59,618
97.044 Assistance to Firefighters Grant $51,428
97.056 Port Security Grant Program $49,644
93.043 Special Programs for the Aging, Title Iii, Part D, Disease Prevention and Health Promotion Services $49,378
20.703 Interagency Hazardous Materials Public Sector Training and Planning Grants $42,184
97.036 Disaster Grants - Public Assistance (presidentially Declared Disasters) $35,461
93.969 Pphf Geriatric Education Centers $31,693
20.507 Federal Transit Formula Grants $29,297
97.036 Covid 19 - Disaster Grants - Public Assistance (presidentially Declared Disasters) $23,392
16.575 Crime Victim Assistance $20,759
20.500 Federal Transit Capital Investment Grants $20,034
45.310 Grants to States $9,085
14.218 Community Development Block Grants/entitlement Grants $8,219
45.024 Promotion of the Arts Grants to Organizations and Individuals $7,100
10.576 Senior Farmers Market Nutrition Program $6,627
16.710 Public Safety Partnership and Community Policing Grants $6,392
20.600 State and Community Highway Safety $5,695
14.241 Housing Opportunities for Persons with Aids $4,294
15.916 Outdoor Recreation Acquisition, Development and Planning $2,840
20.205 Highway Planning and Construction $1,921
93.044 Special Programs for the Aging, Title Iii, Part B, Grants for Supportive Services and Senior Centers $1,596
20.525 State of Good Repair Grants Program $1,280
93.041 Special Programs for the Aging, Title Vii, Chapter 3, Programs for Prevention of Elder Abuse, Neglect, and Exploitation $666