Finding Text
SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
Kittitas County
January 1, 2023 through December 31, 2023
2023-001 The County did not have adequate internal controls for ensuring compliance with federal reporting requirements.
Assistance Listing Number and Title: 20.106 - Airport Improvement Program
Federal Grantor Name: Federal Aviation Administration,
U.S. Department of Transportation
Federal Award/Contract Number: 3-53-0026-021-2023
3-53-0026-022-2023
3-53-0026-019-2023
3-53-0026-020-2023
3-53-0029-015-2020
Pass-through Entity Name: N/A
Pass-through Award/Contract Number: N/A
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Description of Condition
The objective of the Airport Improvement Program is to help sponsors, owners or
operators of public-use airports develop a nationwide system of airports adequate
to meet the needs of civil aeronautics. Kittitas County, as the award recipient, is the
sponsor of Bowers Field Airport, and spent $1,227,997 in federal program funds in 2023.
Federal regulations require recipients to establish and maintain internal controls
that ensure compliance with program requirements. These controls include
understanding program requirements and monitoring the effectiveness of
established controls.
To comply with reporting requirements, the County must submit the Federal
Financial Report (SF-425) and the Outlay Report and Request for Reimbursement
for Construction Programs (SF-271) or the Request for Advance or Reimbursement
(SF-270) annually.
Our audit found the County did not have adequate controls to ensure it submitted
complete and accurate annual SF-425 and SF-271 or SF-270 reports in accordance
with the award agreement terms.
We consider this internal control deficiency to be a material weakness that led to
material noncompliance.
Cause of Condition
The public works department was put in charge of managing the County’s airport
in September 2023. County staff evaluated Federal Aviation Administration (FAA)
guidance to determine the applicability of these reports and how to prepare them.
During this evaluation, staff incorrectly determined they should only submit the
SF-425 and SF-271 or SF-270 reports once a project had been completed.
Effect of Condition
The County did not prepare or submit the annual SF-425 or SF-271 reports required
for projects in progress during the period. The County was required to prepare and
submit five SF-425 and SF-271 reports each, 10 in total, but only submitted one of
each for contract 3-53-0029-015-2020. The County did not report the remaining
contracts to the FAA.
Recommendation
We recommend the County establish internal controls to ensure it prepares and
submits all required reports for its federal programs.
County’s Response
The County is in agreement with SAO’s finding pertaining to delinquent filings for its FAA grants. Though the underlying project was completed in good order, the award contract stipulated more frequent reporting than the County provided. Kittitas County has since implemented one of two controls enhancements to ensure better visibility of its entire grants-award portfolio, which is the inclusion of anticipated grants activity in its department-level budget workbooks for the coming year. This procedural revision will be a catalyst for ongoing engagement with the Finance Department to help ensure compliance with the various awarding agencies.
The second of two enhancements will be implemented with the upgrade of the County’s ERP scheduled for March 2025. This upgrade will include an improved grants-accounting module, which will further improve visibility and GASB compliance.
Auditor’s Remarks
We appreciate the County’s commitment to resolving this finding and thank the County for its cooperation and assistance during the audit. We will review the corrective action taken 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 2 CFR Part 200, Uniform Guidance, section 329, describes requirements for
monitoring and reporting program performance including construction and nonconstruction
reporting.