Clark County

2021-001 The County?s internal controls were inadequate for ensuring compliance with allowable costs and cash management requirements. CFDA Number and Title: 93.268 ? COVID-19 ? Immunization Cooperative Agreements 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: NH23IP922619 Questioned Cost Amount: $585,352 Description of Condition The objective of the Immunization Cooperative Agreement (ICA) program is to reduce and ultimately eliminate vaccine-preventable diseases by increasing and maintaining high immunization coverage. The County spent $1,898,191 of its ICA awards during fiscal year 2021. Federal regulations require award 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. The Washington State Department of Health operates this program on a reimbursement basis, meaning the County is required to incur and pay for eligible costs before requesting reimbursement. Our audit found the County?s internal controls were inadequate for ensuring it only requested reimbursement for allowable expenses. The County submitted a claim for reimbursement for costs that the granting agency had already reimbursed. This resulted in the County receiving a cash advance, which the granting agency does not allow. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. This issue was not reported as a finding in the prior audit. Cause of Condition When preparing the March 2021 reimbursement request, County staff manually identified and included costs with an April 2021 general ledger accounting date. The County again included these same costs in the April 2021 reimbursement request. During their review, staff did not detect that the County had already charged these costs to the program. Effect of Condition and Questioned Costs The County charged $585,352 to the program, which included $143,782 for indirect costs that was unallowable because the granting agency had already reimbursed the County for these same costs. Therefore, we are questioning these costs. Additionally, the $585,352 received represented a cash advance, which the granting agency does not allow. Recommendation We recommend the County strengthen its internal controls to ensure compliance with federal requirements. Specifically, the County should strengthen its review of reimbursement requests to ensure that only allowable costs are claimed for reimbursement and do not include costs previously submitted. Additionally, we recommend the County consult with its grantor about returning any interest earned on the cash advance. County?s Response Clark County thanks the Washington State Auditor?s Office for their efforts throughout the audit process. The County acknowledges this finding. The primary focus of Clark County Public Health during this time was to limit the spread of a deadly disease that had reached pandemic levels. Department Finance staff had been tasked with filling critical Incident Command Structure (ICS) roles to support response efforts. In addition, Public Health received numerous funding sources for pandemic response activities, each with distinct parameters. Some funds were awarded only to be removed and replaced with other funding sources after the allocation period had begun. The questioned costs included with the March invoice were for expenses incurred prior to April 2021 and were intended to be excluded in the April 2021 invoice; while they were manually included in the March 2021 invoice, the intent was to exclude them from the April 2021 invoice. The inclusion of these costs with the April 2021 invoice was an oversight. Public Health has since expanded its Finance team to a more adequate size considering its body of work. A procedure change to no longer manually accrue expenditures unless it is into the final billing period of the funding source has already been implemented. We feel it is important to note the questioned costs were corrected in 2022, within the same grant period but not the same (audited) fiscal year. Auditor?s Remarks We appreciate the County?s response and commitment to resolving this finding. We thank it 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. Title 2 CFR Part 200, Uniform Guidance, Subpart E, Cost Principles, establishes requirements for determining allowable costs and supporting costs allocated to federal programs. Title 2 CFR Part 200, Uniform Guidance, section 305, Payment, establishes requirements for the method of reimbursement and disbursement of Federal funds by non-Federal entities. 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.

2021-002 The County?s internal controls were inadequate for ensuring compliance with federal requirements for suspension and debarment. CFDA Number and Title: 93.323 ? COVID-19 ? Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) 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: NU50CK000515 Questioned Cost Amount: $0 Description of Condition During fiscal year 2021, the County spent $7,710,237 in federal funding for the Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) program. The program?s objective is to protect public health and safety by enhancing public health agencies? capacity to effectively detect, respond, prevent and control known and emerging infectious diseases. 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 County 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 contractor has not been suspended, debarred, or otherwise excluded. The County can verify a contractor?s status by checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration and available at SAM.gov, obtaining a written certification from the contractor, or inserting a clause into the contract that states the contractor is not suspended or debarred. The County must perform this verification before entering into the contract or paying the contractor more than $25,000, and it must keep documentation demonstrating compliance with this federal requirement. The County has established controls for verifying suspension and debarment before entering into new contracts or purchases of $25,000 paid all or in part with federal funds. However, these controls were ineffective for ensuring the County had verified two of the four contractors we tested were not suspended or debarred from participating in federal programs. We consider this internal control deficiency to be a material weakness, which lead to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition It is the County?s practice to include a clause in contracts that are $25,000 or greater that states the contractors are not suspended or debarred. Management and staff did not anticipate that the two contracts not verified for suspension and debarment requirements would exceed $25,000. The County did not have an effective process to ensure staff verified the contractors? suspension and debarment status when one of the three verification processes were completed when these contracts were increased. Effect of Condition and Questioned Costs The County did not obtain written certifications, insert a clause into the contracts, or check SAM.gov to verify two contractors were not suspended or debarred. Without this verification, the County increases its risk of providing federal funds to contractors that are excluded from participating in federal programs. Any payments the County made to an ineligible party would be unallowable, and the federal grantor could potentially recover them. The County identified that it did not perform this verification, and staff subsequently checked SAM.gov to determine the contractors were not suspended or debarred. Therefore, we are not questioning costs for these payments. Recommendation We recommend the County improve its internal controls to ensure contractors paid $25,000 or more, all in part with federal funds, are not suspended or debarred before entering into contracts with them. County?s Response Clark County thanks the Washington State Auditor?s Office for their efforts throughout the audit process. The County acknowledges this finding. The primary focus of Clark County Public Health during this time was to limit the spread of a deadly disease that had reached pandemic levels. Department Finance staff had been tasked with filling critical Incident Command Structure (ICS) roles to support response efforts. While Public Health staff are trained to respond to emergencies, it was clear contracted resources to supplement Department staff to respond to the COVID-19 pandemic would be necessary. While Public Health?s boilerplate contract language includes a self-attestation requiring contractors attest they are neither suspended nor debarred, in these cases, due to the urgency of responding to the global pandemic, the contractor?s boilerplate contract was utilized. The initial contracts entered into were for less than the $25,000 threshold; internal protocols to confirm the contractors were not suspended or debarred once the contracts were amended to beyond the $25,000 threshold were inadvertently missed. We feel it is important to note that neither contractor was neither suspended nor debarred from receiving Federal funds and the check was performed following a routine audit of contract files identified the inadvertent issue in the contractor file. Clark County Public Health staff will ensure future contracts include the self attestation requiring contractors attest they are neither suspended nor debarred. Auditor?s Remarks We appreciate the County?s response and commitment to resolving this finding. We thank it 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 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement) establishes nonprocurement debarment and suspension regulations, implementing Executive Orders 12549 and 12689.

The County did not have adequate internal controls to ensure compliance with Davis-Bacon Act (prevailing wage rate) requirements. CFDA Number and Title: 12.600, Community Investment Federal Grantor Name: Department of Defense Federal Award/Contract Number: W9128F-06-2-0160 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Questioned Cost Amount: $0.00 Background In fiscal year 2019, the County spent $7,242,938 in Federal Community Investment funds on the rehabilitation of the Camp Bonneville project. The Davis-Bacon Act (Act) requires all laborers and mechanics employed by contractors or subcontractors to work on construction projects financed with more than $2,000 of federal funds to be paid wages no less than those established for the project?s locality (prevailing wage rates) by the U.S. Department of Labor. The Act includes a requirement for the contractor or subcontractor to submit to the County weekly, for each week in which any contract work was performed, a copy of its payroll and signed ?Statement of Compliance? (weekly-certified payroll). The primary contractor may collect the weekly-certified payrolls for the County during the project, but the County remains responsible for compliance and maintaining the documents according to records retention requirements. Description of Condition The County hired one contractor for cleanup work required at Camp Bonneville. During fiscal year 2019, the County paid $6,493,020 for work performed by the contractor and subcontractor on this project. The County had procedures to ensure it collected certified payrolls. However, from August 2019 through the end of the year, the County did not follow the established procedures to ensure it collected all certified payroll reports from the prime contractor and subcontractor for work performed on the federally funded Camp Bonneville project. We consider this control deficiency to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition The department responsible for overseeing the project experienced staff turnover during the audit period. The new staff did not know the County used a project log as its control process to check for certified payrolls. Therefore, from August through December 2019, the County did not follow its established process to use the project log and did not track and collect certified payrolls as required. Effect of Condition The County did not obtain eight of 95 weeks of weekly certified payrolls or other documentation to demonstrate no work was performed by the prime contractor and/or subcontractor. Without adequate internal controls, the County cannot demonstrate it complied with the Davis-Bacon Act and that workers were paid prevailing wages as the Act requires. The County could be liable for paying additional wages if prevailing wages were not paid. Recommendation We recommend the County ensure it informs new employees about internal controls to ensure compliance with the Act?s requirements, including implementing effective processes to track and collect weekly certified payrolls from prime contractors and subcontractors for all weeks work is performed. County?s Response Clark County thanks the Washington State Auditor?s Office for their efforts throughout the audit process. The County both acknowledges this finding and is committed to making process and policy improvements to fully address the internal control deficiency. As noted, due to staff turnover, key guidance regarding Davis-Bacon compliance was not carried forward to a staff member that was involved in prevailing wage verification for work being performed at Camp Bonneville. As a result of this, the verification log was not updated. Moving forward, the County will work to ensure that the internal control structure is more effectively able to persist through potential changes in staffing. Currently, an initiative is underway to improve communication around the contract management process and clarify roles and responsibilities within the department responsible for overseeing the project. Specific steps to address this finding will be included as a part of this initiative. These steps are summarized as follows ? ? To mitigate the impact of turnover on departmental operations and compliance, the department is currently developing policies and procedures regarding procurement and contract management. Language on compliance with the Davis-Bacon Act will be integrated into a new departmental contracting policy. ? To improve monitoring of Davis-Bacon compliance, supervisors will be required to monitor project logs for certified payroll verification on an ongoing basis. ? Training will be required for supervisors and key staff involved in the contracting process to ensure that they are aware of the prevailing wage verification process and other contract requirements. ? Prevailing wage requirements will be among several key details that will be tracked in a departmental contract management system. This information will be used to ensure that key staff involved in the contracting process are aware of contract compliance guidance. ? Periodically, internal audits will be conducted by departmental finance staff to validate compliance with Davis-Bacon. Auditor?s Remarks We appreciate the County?s commitment to resolve this finding and thank the County for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular audit. Applicable Laws and Regulations 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 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. Title 29, U.S. Code of Federal Regulations (CFR), Section 3.3 ? Weekly statement with respect to payment of wages, and Section 3.4 ? Submission of weekly statements and the preservation an inspection of weekly payroll records, establishes requirements for submission of weekly certified payroll reports.

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