Port of ClarkstonLocal Government

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Port of Clarkston January 1, 2024 through December 31, 2024 2024-001 The Port did not have adequate internal controls and did not comply with federal suspension and debarment requirements. Assistance Listing Number and Title: 21.029 – COVID 19 – Coronavirus Capital Projects Fund Federal Grantor Name: U.S. Department of Treasury Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Commerce Pass-through Award/Contract Number: PBC22-96104-002 PBC22-96104-005 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2023-001 Description of Condition The purpose of the Coronavirus Capital Projects Fund program is to carry out critical capital projects directly enabling work, education and health monitoring, including remote options, in response to the COVID-19 pandemic public health emergency. In fiscal year 2024, the Port spent $2,642,867 to administer this program. Federal regulations require recipients to establish, document 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 Port enters into contracts or purchases goods and services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify that the contractors are not suspended, debarred or otherwise excluded from participating in federal programs. The Port may verify this by obtaining a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at SAM.gov. The Port must verify this before entering into the contract, and must maintain documentation demonstrating compliance with this federal requirement. Our audit found the Port did not have adequate controls in place to verify two of four contractors we tested that it paid more than $25,000 in federal funds were not suspended or debarred from participating in federal programs. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition Although Port staff were aware this requirement applies to construction and professional services and verified that these contractors were not suspended or debarred, they were not aware it also applies to contractors that they purchase materials and supplies from. The Port implemented corrective action after receiving the prior audit finding in September 2024, but did not comply before this date. Effect of Condition The Port did not obtain a written certification from the contractor, insert a clause into the contract or check for exclusion records at SAM.gov to verify two contractors it paid $119,583 using federal funds were not suspended or debarred before purchasing from them. Without adequate internal controls, the Port increases its risk of awarding federal funds to contractors that are excluded from participating in federal programs. Any payments the Port made to an ineligible party would be unallowable, and the awarding agency could potentially recover them. The Port subsequently verified the contractors were not suspended or debarred. Therefore, we are not questioning costs. Recommendation We recommend the Port strengthen its 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 contracting with or purchasing from them. Port’s Response The Port of Clarkston has implemented internal controls for federally funded projects that all contractors will be verified for suspension and debarment by obtaining written certification, adding a clause or condition into the contract that states the government contractor is not suspended or debarred, or checking for exclusion records in the U.S General Services Administration’s System for Award Management at SAM.gov, regardless of threshold amount and prior to executing contract or purchasing. Auditor’s Remarks We appreciate the Port’s commitment to resolve this finding and thank the Port for its cooperation and assistance during the audit. We will review corrective action taken 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 to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Port of Clarkston January 1, 2023 through December 31, 2023 2023-001 The Port did not have adequate internal controls for ensuring compliance with federal suspension and debarment requirements. Assistance Listing Number and Title: 21.029 – COVID 19 – Coronavirus Capital Projects Fund Federal Grantor Name: U.S. Department of Treasury Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Commerce Pass-through Award/Contract Number: S21-96401-017 PBC22-96104-002 PBC22-96104-005 Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Description of Condition The purpose of the Coronavirus Capital Projects Fund program is to carry out critical capital projects directly enabling work, education and health monitoring, including remote options, in response to the public health emergency caused by the COVID-19 pandemic. In fiscal year 2023, the Port spent $1,595,323 to administer this program. 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 Port enters into contracts or purchases goods and services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify that the contractors are not suspended, debarred or otherwise excluded from participating in federal programs. The Port may verify this by obtaining a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at SAM.gov. The Port must verify this before entering into the contract and must maintain documentation demonstrating compliance with this federal requirement. Our audit found the Port did not have adequate controls in place to verify four of seven contractors it paid more than $25,000 in federal funds were not suspended or debarred from participating in federal programs. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition Although Port staff were aware this requirement applies to construction and professional services and verified that these contractors were not suspended or debarred, they were not aware it also applies to contractors that they purchase materials and supplies from. Effect of Condition The Port did not obtain a written certification from the contractor, insert a clause into the contract or check for exclusion records at SAM.gov to verify four contractors it paid $272,599 using federal funds were not suspended or debarred before purchasing from them. Without adequate internal controls, the Port cannot ensure the contractors it paid with federal funds were eligible to participate in federal programs. Any program funds the Port used to pay contractors that were suspended or debarred would be unallowable, and the awarding agency could potentially recover them. Because we subsequently verified the contractors were not suspended or debarred, we are not questioning costs. Recommendation We recommend the Port strengthen internal controls to ensure 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 contracting with or purchasing from them. Port’s Response The Port of Clarkston has implemented internal controls for federally funded projects (effective immediately) that all contractors will be verified for suspension and debarment by obtaining written certification, adding a clause or condition into the contract that states the government contractor is not suspended or debarred, or checking for exclusion records in the U.S General Services Administration’s System for Award Management at SAM.gov, regardless of threshold amount and prior to executing contract or purchasing. Auditor’s Remarks We thank the Port for its cooperation throughout the audit and the steps it is taking to address these concerns. We will review the status of the Port’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 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.