Okanogan County Public Health

The District did not have adequate internal controls and did not comply with federal suspension and debarment requirements. Assistance Listing Number and Title: 21.027 – COVID 19 - Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S Department of the Treasury Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Health Pass-through Award/Contract Number: CLH3102 Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Description of Condition During fiscal year 2023, the District spent $249,000 in federal funding under the Coronavirus State and Local Fiscal Recovery Funds program to provide resources needed to support distribution of COVID-19 information. 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. Federal requirements prohibit recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the District enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the contractors are not suspended, debarred or otherwise excluded from participating in federal programs. The District may verify this by checking for exclusion records in the U.S General Services Administration’s System for Award Management (SAM.gov), obtaining a written certification from the contractor, or inserting a clause or condition into the contract stating the contractor is not suspended or debarred. The District must verify this before entering into the contract, and must keep documentation demonstrating compliance with this federal requirement. Our audit found the District’s internal controls were ineffective for ensuring it verified all contractors receiving $25,000 or more in federal funds were not suspended or debarred. The District did not obtain a written certification from the contractor, include a clause in the contract, or check for exclusion records at SAM.gov to verify that the one contractor we tested was not suspended or debarred before entering into the contract or purchasing from them. The District entered into this contract in June 2023 and paid the contractor $110,000 during fiscal year 2023. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition District staff did not know about the suspension and debarment verification requirement until the last audit, which was after they entered into the contract. Effect of Condition Without adequate internal controls, the District increases its risk of awarding federal funds to contractors that are excluded from participating in federal programs. Any payments the District made to an ineligible party would be unallowable, and the awarding agency could potentially recover them. We subsequently verified the contractor was not suspended or debarred. Therefore, we are not questioning costs. Recommendation We recommend the District strengthen internal controls to verify all contractors it pays $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into contracts or purchasing from them, and maintain documentation demonstrating compliance with this requirement   District’s Response This finding is a duplicate of last year’s audit finding, which was immediately addressed by OCPHD and then fully corrected on 12/12/2023 with passage of OCPHD’s procurement policy by the Board of Health. OCPHD wasn’t aware of the suspension and debarment verification until September 20, 2023 upon the release of the last audit finding. For a more complete explanation regarding OCPHD’s corrective actions (and timing of the same), please reference the Corrective Action Plan submitted in response to finding 2023-001. Auditor’s Remarks We appreciate the District's commitment to resolving the issues noted, and will follow up during the 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 180, OMB Guidelines on Agencies on Governmentwide Department and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.

Finding caption: The District did not have adequate internal controls and did not comply with federal suspension and debarment requirements. Name, address, and telephone of District contact person: Jill Gates Fiscal Coordinator 1234 2nd Ave South Okanogan, WA 98840 (509) 422-7140 Corrective action the auditee plans to take in response to the finding: The District has a Board of Health approved Procurement Policy in place and has followed it since the release of the 2022 Audit Report which was issued September 20, 2023. The District added a suspension and debarment provision to all agreements that include a federal funding component, while still checking the status on Sam.gov. The District also went back and reviewed previous agreements to ensure the entities providing services to the District were not suspended or debarred (none were suspended or debarred). These changes went into effect immediately following the finding issued to the District in September 2023 (resulting from the 2022 Audit Finding). From January 2023-September 2023 the District was unaware of the corrective action necessary due to the timing of the 2022 Audit Report. Therefore, during 2023, this finding was partially corrected and has since been fully corrected. Anticipated date to complete the corrective action: 12/2024

The District had inadequate controls for ensuring compliance with federal procurement and suspension and debarment requirements. Assistance Listing Number and Title: 93.323 ? COVID 19 ? Epidemiology and Laboratory Capacity for Infectious Diseases Federal Grantor Name: U.S. Department of Health and Human Services Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Health Pass-through Award/Contract Number: CLH31021 Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Description of Condition During fiscal year 2022, the District spent $514,448 in federal funding under the Epidemiology and Laboratory Capacity for Infectious Diseases program to provide contact tracing, case investigation, testing and community education related to the COVID-19 pandemic. Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Procurement policies and procedures Federal regulations require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR 200.318-327. The procedures must reflect the most restrictive of applicable federal requirements, state laws or local policies. Our audit found the District did not have written procurement policies or procedures, as federal regulations require. Procurement Federal regulations allow local governments to make purchases using a noncompetitive process for emergency and exigent circumstances. For a local government to use emergency procurement procedures, it must evaluate each procurement action individually and document its rationale for waiving competition. Our audit found the District?s internal controls were ineffective for ensuring it complied with federal procurement requirements and appropriately waived competitive procedures for contracted services. During the audit period, the District relied on the state?s general emergency declarations due to COVID-19 to waive competitive procedures for three purchased services contracts paid with federal funds. Suspension and debarment Federal requirements prohibit recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the District enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the contractors have not been suspended, debarred or otherwise excluded from participating in federal programs. The District may accomplish this verification by checking for exclusion records in the U.S General Services Administration?s System for Award Management (SAM.gov), obtaining a written certification from the contractor, or inserting a clause into the contract stating the contractor is not suspended or debarred. The District must perform this verification before entering into the contract, and it must keep documentation demonstrating compliance with this federal requirement. Our audit found the District?s internal controls were ineffective for ensuring it verified all contractors receiving $25,000 or more in federal funds were not suspended or debarred. The District did not obtain a written certification, include a clause in the contract, or document a search for exclusion records in SAM.gov to verify that three contractors were not suspended or debarred before entering into the contracts or charging costs to the federal award. The District paid these contractors a total of $172,846 during fiscal year 2022. We consider these deficiencies in internal controls to be material weaknesses, which led to material noncompliance. Cause of Condition Procurement policies and procedures District personnel did not prioritize adopting written procurement policies or procedures that conform to federal procurement standards. Procurement District personnel did not fully understand emergency procurement requirements. Suspension and debarment District personnel did not know about the suspension and debarment verification requirement. Effect of Condition Procurement policies and procedures Without written procurement procedures, the District is at greater risk of noncompliance with the most restrictive of federal, state, or local procurement methods when using federal funds to procure contractors. Procurement The District paid three contractors a total of $172,846 in federal program funds without competitively procuring or documenting its evaluation and rationale for using a noncompetitive process. Without effective internal controls, the District cannot ensure it allowed for full and open competition, received the best price, and complied with federal procurement requirements. Suspension and debarment Without adequate internal controls, the District cannot ensure the contractors paid with federal funds are eligible to participate in federal programs. Any program funds the District used to pay contractors that haven been suspended or debarred would be unallowable, and the grantor could potentially recover them. We subsequently verified the contractors were not suspended or debarred. Therefore, we are not questioning costs. Recommendation We recommend the District strengthen internal controls to ensure it: ? Develops written policies and procedures that conform with Uniform Guidance (2 CFR 200.318-327) for all procurement activities ? Procures goods and services in accordance with federal regulations, state law, and its own procurement policies and procedures ? Verifies that all contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred before entering into contracts with them or charging costs to a federal award, and maintain documentation demonstrating compliance with this requirement District?s Response We acknowledge that OCPHD does not have a current Procurement Policy and will prioritize establishing a policy for Board approval. We acknowledge that suspension and debarment documentation was not provided and will establish internal control measures to ensure contractors are eligible to participate in State and Federal programs. We understand the findings and are currently working to correct those internal controls. Auditor?s Remarks We appreciate the District's commitment to resolving the issues noted, and will follow up during the 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 318, General procurement standards, establishes requirements for written procedures. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring goods and services, including noncompetitive procurement. Title 2 CFR Part 180, OMB Guidelines on Agencies on Governmentwide Department and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.

Finding ref number: 2022-002 Finding caption: The District had inadequate controls for ensuring compliance with federal procurement and suspension and debarment requirements. Name, address, and telephone of District?s contact person: Jill Gates 1234 2nd Avenue S. Okanogan, WA. 98840 (509) 422-7149 Corrective action the auditee plans to take in response to the finding: Okanogan County Public Health District (OCPHD) is working on a procurement policy and procedure to present to the Board of Health on October 10, 2023 (the Board meets once/month). Several examples of good policies were obtained. We will be reviewing those to ensure our new policy conforms to Uniform Guidance (2 CFR 200.318-327) and follows state/federal law. OCPHD will ensure that all contractors are eligible to participate in federal programs and have documentation/verification that they are not suspended or disbarred. Anticipated date to complete the corrective action: October 10, 2023