PIERCE COUNTY FIRE PROTECTION DISTRICT NO. 21

The District had inadequate internal controls for ensuring compliance with federal matching and reporting requirements. "See Schedule of Findings and Questioned Costs for chart/table" Description of Condition The District spent $1,543,222 in Staffing for Adequate Fire and Emergency Response (SAFER) Grant Program funds in 2020. The SAFER Grant Program provides grants to cities and fire districts to help increase or maintain the number of firefighters to comply with the National Fire Protection Association?s staffing, response and operational standards. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. The District must comply with the following SAFER Grant Program requirements for matching and reporting: Matching Funds The District must match the SAFER funding provided by the Federal Emergency Management Agency (FEMA) for at least 25 percent of the total program expenditures. The matching funds must be from allowable and unrestricted sources. The District did not have a monitoring process to ensure it paid matching funds with only an allowable local match source. Quarterly Performance Reporting FEMA approved the District to have a staffing level of 18 SAFER-funded positions, and it must actively attempt to fill any vacancies to meet this staffing maintenance level. FEMA requires the District to report its staffing maintenance level quarterly, and FEMA uses this report as a monitoring tool to ensure the District is meeting the staffing maintenance level requirement. The District has 30 days after each quarter-end to fulfill this reporting requirement. Our audit found the District did not have a control in place for ensuring it submitted quarterly performance reports on time. Semiannual Financial Reporting FEMA requires the District to submit semiannual Federal Financial Reports (SF-425) throughout the SAFER grant period of performance. This report measures the financial status of the grant at a specific point in time, and the District has until the end of the subsequent month of each reporting period to fulfill this reporting requirement. We found the District did not have a control in place for ensuring it submitted semiannual financial reports on time. Quarterly Financial Reporting FEMA also requires the District to submit a payment request for the grant expenditures at least quarterly in order to receive SAFER grant funds. We found the District did not have a control in place for ensuring it submitted quarterly financial reports on time. We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance. These issues were not reported as a finding in the prior audit. Cause of Condition Matching Funds The District?s allowable local match source has always been larger than the total amount of SAFER funds it has received. District officials said they did not know they were required to ensure that they used only unrestricted local funds as the District?s matching funds. As a result, the District did not perform any monitoring to ensure it paid matching funds from only an allowable local match source. Reporting Fiscal year 2020 was the second year the District managed and oversaw the SAFER Grant Program. The employee responsible for this requirement did not fully understand the program?s reporting requirements. The District also experienced turnover in the District Secretary position during the audit period, and it did not have available staff to file the required reports. Once the District filled the vacant position, management took action to file and submit the late reports. Effect of Condition Matching Funds Without a monitoring process in place, the District cannot demonstrate it only used allowable local matching sources. This could jeopardize the District?s eligibility for future federal assistance. Although the District did not perform any monitoring, our audit found the District met the matching requirements. Quarterly Performance Reporting When the District does not submit its required reports on time, FEMA cannot ensure the District is meeting the staffing maintenance level requirements and spending SAFER grant funds on allowable activities. This could jeopardize the District?s eligibility for future federal assistance. The District did not submit two of its four performance reports by the due date. The performance reports that covered December 1, 2019, to February 29, 2020, and September 1, 2020, to November 30, 2020, were submitted 65 and 201 days late, respectively. Semiannual Financial Reporting The District did not submit two SF-425 reports by the due date. The reports for periods ending June 30, 2020, and December 31, 2020, were submitted 82 and 171 days late, respectively. We also found the District underreported the federal and recipient share of expenditures as follows: "See Schedule of Findings and Questioned Costs for chart/table" Quarterly Financial Reporting The District submitted three payment requests, but the requests did not cover one quarter of expenditures, as FEMA requires. The first quarter report only covered two months, and the second and third quarter reports together covered seven months. Recommendation We recommend the District: ? Establish and maintain internal controls for tracking, monitoring, and documenting compliance with matching requirements ? Strengthen its internal controls for ensuring required reports are accurate, reviewed, and submitted on time District?s Response In learning that Pierce County Fire Protection District No. 21 earned a finding with regard to inadequate internal controls for ensuring compliance with federal matching and reporting requirements, the District concurs with this finding. The District has again experienced turnover in the key staff position responsible for financial tracking and reporting. In addition to the change in this role in 2019, there was a subsequent change in 2020, with an interim person in place from November 2020 through February 2021. The District has already enacted a plan to prevent this from happening again. 1) With each reimbursement request submitted for grant funds, the preparer will have a second person with knowledge review the expenses and confirm that allowable and unrestricted funds were used for those expenses. The preparer and second reviewer will both sign confirmation of use of allowable and unrestricted funds. 2) The spreadsheets used for tracking grant related and eligible expenditures and reimbursement requests have been updated to reflect the correct eligible expenditures. Semi-annual reports filed subsequent to this audit reflect the correct eligible amounts. 3) The Quarterly and Semi-Annual reports are now being submitted within 30 days of the end of the reporting period. The Quarterly Financial reports are submitted within 30 days following the close of a reporting period or once the previous Quarterly Report has been approved by FEMA. 4) All employees who are involved with recording expenses or requesting reimbursements related to grant funds have been required to read and review the grant User Guide. Auditor?s Remarks We appreciate the District?s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular 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 328 Financial reporting, establishes requirements for reporting financial information related to Federal awards. Title 2 CFR Part 200, Uniform Guidance, section 306 Cost sharing or matching, describes the requirements that must be met as part of the non-Federal entity?s cost sharing or matching. The Department of Homeland Security, Notice of Funding Opportunity, Staffing for Adequate Fire and Emergency Response, states in part; Under the SAFER Hiring of Firefighters Activity, grant recipients are required to contribute a Cost Share toward the actual cost of hiring firefighters under this program. The Federal portion of the costs of hiring new firefighters under this grant may not exceed: ? 75 percent of the actual costs incurred in each of the first and second years of the grant; and ? 35 percent of the actual costs incurred in the third year of the grant Therefore, the recipient is required to contribute at least the following in non- Federal funds: ? 25 percent of the actual costs incurred each of the first and second years of the grant; and ? 65 percent of the actual costs incurred in the third year of the grant. A Cost Share of non-federal cash is the only allowable recipient contribution. Grant recipients can apply to waive this requirement.