CITY OF ENTIATLocal Government

2019-001 The City did not have adequate internal controls to ensure compliance with federal procurement requirements. CFDA Number and Title: 15.916 Outdoor Recreation Acquisition, Development and Planning Federal Grantor Name: US Department of the Interior, National Park Service Federal Award/Contract Number: 16-1858D Pass-through Entity Name: Pass-through Award/Contract Number: N/A Questioned Cost Amount: $0 Description of Condition During fiscal year 2019, the City spent $262,627 in Outdoor Recreation Acquisition, Development and Planning grant funding. The City used the funding for one project in 2019. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Additionally, federal regulations require grant recipients to follow their own written procurement procedures, which must reflect applicable federal, state, and local laws. Established procedures must conform to federal thresholds to ensure recipients follow the most restrictive of local, state or federal procurement methods when using federal funds. The City had procedures in place regarding procurement, but the procedures do not conform to or include federal procurement requirements and do not include procedures for methods of procuring public works contracts. We consider this deficiency in internal controls to be a material weakness. This issue was not reported as a finding in the prior audit. Cause of Condition The City was not aware of the federal requirement to have and use its own written procurement procedures that conform to the federal requirements. Also, it had not been subject to a federal grant compliance audit in recent history, and it relied on its external engineering firm to understand procurement requirements. Effect of Condition Without updated written procedures in place, the City is at greater risk of non-compliance with the most restrictive of federal, state, or local procurement methods when procuring contractors paid all or in part with federal funds. Although the City did not update its written procedures, it did comply with federal requirements when soliciting competitive bids for the project. Recommendation We recommend the City update and maintain written procurement procedures, as required by federal regulations. City?s Response The City agrees with the Cause and Effect of Condition, which occurred during a previous administration. Current staff will be researching and compiling existing policies regarding Local, State and Federal procurement, and will be drafting proposed policies for Council?s approval. City of Entiat administration wishes to thank the State Auditor?s Office for its diligence in making recommendations to better safeguard the city. Auditor?s Remarks We appreciate the steps the City is taking to resolve this issue. We will review the condition 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 318 General procurement standards, establishes requirements for documented procurement procedures which reflect applicable state, local, and federal laws and regulations.