Olympic Area Agency on AgingLocal Government

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Olympic Area Agency on Aging January 1, 2023 through December 31, 2023 2023-001 The Agency did not have adequate internal controls for ensuring compliance with federal subrecipient monitoring requirements. Assistance Listing Number and Title: 93.391 – COVID-19 Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises Federal Grantor Name: 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: CBO26651, CBO26652 Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The purpose of the Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises program is to lead and coordinate efforts to reduce COVID-19 related health disparities at the community level, improve and increase testing and contract tracing for rural populations, and improve local capacity and services to prevent and control COVID-19 infection and transmission among rural and underserved populations. The Agency spent $323,844 in 2023 in program funds to cover expenditures related to advancing health equity among high-risk populations. The program funds included $264,669 passed through to five subrecipients through seven subawards to fulfill components of the program’s objectives. 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. When the Agency passes on federal funds to subrecipients, federal regulations require the Agency to ensure every subaward agreement clearly identifies that it is a federal award and includes the applicable federal requirements. Federal regulations require the Agency to report 14 federal award identification elements in each subaward agreement. When passing federal funding to subrecipients, federal regulations require the Agency to monitor the subrecipients and ensure they comply with the federal award’s terms and conditions. Description of Condition Our audit found the Agency’s internal controls were ineffective for ensuring it included all 14 required elements in its subaward agreements. All subawards were missing the following elements: • Federal Award Identification Number • Federal award date • Subaward budget period start and end date • Assistance Listing Number and program title Additionally, two of the subawards were also missing the subrecipient’s Unique Entity Identifier. We consider this deficiency in internal controls to be a significant deficiency. Cause of Condition While the Agency has a subaward template, staff responsible for creating the template did not have adequate training or understanding of these requirements and did not dedicate the necessary time and resources to creating and reviewing the template to ensure it included all required elements. Effect of Condition When subaward agreements do not include the required information, subrecipients are at an increased risk of not knowing they received federal funding and therefore need to comply with specific program requirements, which could lead subrecipients to spend the funds for unallowable purposes or not receive required single audits. The Agency did not provide evidence that it subsequently shared the missing federal award information with the five subrecipients. Recommendation We recommend the Agency ensure it includes all required elements in federally funded subaward agreements. Agency’s Response The Agency takes seriously their responsibility for managing Federal Grant Funds and accordingly will make sure that in the future subrecipient contracts will have the specific elements required by Federal Uniform Guidance in their subcontracts. The agency will institute a Contract Review Checklist and approval process that includes the 14 required elements in the Federal guidance CFR 200.332 in order to clearly identify the source of federal funds in each subaward agreement. The checklist elements will include: • Federal Award Identification Number (FAIN) • Federal Award Date • Subaward budget period start and end date • Assistance Listing Number and Program Title The completed checklist will be reviewed and approved by the Administrative Director or Contracts Director before finalizing the subrecipient agreement. In addition, the Olympic Area Agency on Aging will require contracts and program staff managing federal grants to attend Federal Uniform Guidance Grants Training. Auditor’s Remarks We thank the Agency for its cooperation throughout the audit and the steps it is taking to address these concerns. We will review the status of the Agency’s corrective action 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 332, Requirements for passthrough entities, establishes subrecipient monitoring and management requirements for pass through entities.