King County

2024-001 The County’s Facilities Management Division did not have adequate internal controls and did not comply with federal suspension and debarment requirements. Assistance Listing Number and Title: 21.027 COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: SLFRP0152 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The purpose of the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) is to respond to the COVID-19 pandemic’s negative effects on public health and the economy, provide government services to the extent COVID-19 caused a reduction in revenues collected, make necessary investments in water, sewer or broadband infrastructure, provide emergency relief from natural disasters or their negative economic impacts, fund projects eligible under certain programs administered by the U.S. Department of Transportation through three pathways and fund projects eligible under the programs established in Title I of the Housing and Community Development Act of 1974. In 2024, the County spent $138,643,719 in program funds for these activities. Federal regulations require recipients to establish, document and maintain effective 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, purchasing from and making subawards to parties suspended or debarred from doing business with the federal government. Whenever the County enters into contracts or purchases goods and services that it expects to equal or exceed $25,000, and for all subawards regardless of award amount, paid all or in part with federal funds, it must verify the contractors and subrecipients are not suspended, debarred or otherwise excluded from participating in federal programs. The County may verify this by obtaining a written certification from the contractor and subrecipient, adding a clause or condition into the contract that states the contractor or the subrecipient 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 County must verify this before entering into the contract and before making subawards, and must maintain documentation demonstrating compliance with this federal requirement. Description of Condition Although the County has a process to verify the suspension and debarment status for contractors it pays more than $25,000 and for subrecipients, our audit found the County did not follow this process. The County did not verify one contractor out of the nine contractors and subrecipients we tested, using a nonstatistical sample, was not suspended or debarred before purchasing from them. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition Staff were aware of the federal suspension and debarment verification requirements and usually verify this during the procurement process. However, staff were unaware that the requirement applies to contracts executed through the emergency purchase exemption allowing local governments to waive competitive procurement requirements for emergency purchases related to COVID-19, so they did not verify the contractor’s status. Effect of Condition and Questioned Costs The Facilities Management Division 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 a contractor it paid $400,000 using federal funds was not suspended or debarred before contracting. Without adequate internal controls, the Facilities Management Division increases its risk of awarding federal funds to contractors that are excluded from participating in federal programs. Any payments the Facilities Management Division made to an ineligible party would be unallowable, and the awarding agency could potentially recover them. The Facilities Management Division subsequently verified the contractor was not suspended or debarred. Therefore, we are not questioning costs. Recommendation We recommend the Facilities Management Division 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. County’s Response The Facilities Management Division (FMD) thanks the auditor for their work in this audit and agrees that one contractor was not checked for suspension or debarment prior to contract execution. FMD appreciates the auditor’s acknowledgement that the contractor was eligible to receive Federal funds so there was no monetary impact of this procedural lapse. FMD is committed to preventing future occurrences by launching training on procurement requirements for Federal financial assistance as further described in the corrective action plan. Auditor’s Remarks We thank the County for its cooperation and assistance during the audit and acknowledge its commitment to resolve this finding. We will review the corrective action taken 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 on Agencies on Governmentwide Department and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.

King County January 1, 2023 through December 31, 2023 2023-001 Internal controls within the Department of Public Health were inadequate for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 93.495 – COVID-19 Community Health Workers for Public Health Response and Resilient Federal Agency Name: U.S. Department of Health and Human Services Federal Award/Contract Number: NU58DP007045 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Description of Condition The purpose of the Community Health Worker for Public Health Response and Resilient program is to increase community health worker activities across the nation. Specifically, the program focuses on increasing efforts related to public health response in communities hit hardest by an outbreak and among priority populations that are at high risk for exposure, infection and poorer health outcomes. In 2023, the Department spent $2,637,166 in program funds. Of this amount, the Department paid $1,427,327 to four subrecipients. The Department entered into one subaward with a subrecipient in 2023. 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. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System (FSRS). The Department must report subawards by the end of the month following the month in which it made the subaward or subaward amendment. We found the Department’s internal controls were ineffective for ensuring compliance with FFATA reporting requirements. Specifically, the Department of Public Health made one new subaward in 2023 that exceeded $30,000, and did not prepare or submit any FFATA reports for this subaward as federal regulations require. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition The Department of Public Health implemented processes and procedures regarding filing of FFATA reports in FSRS after receiving the prior audit finding. However, the Department did not dedicate enough resources to file the FFATA report in FSRS as required. Effect of Condition Failing to submit the required reports diminishes the federal government’s ability to ensure accountability and transparency of federal spending. The table below summarizes the discrepancies we identified. Recommendation We recommend the Department of Public Health strengthen its internal controls to ensure it prepares and submits FFATA reports for all applicable subawards, as federal law requires. County’s Response The County agrees with the finding that DPH did not submit a FFATA report through the FSRS portal for one subaward, and with the recommendation to strengthen internal controls. The Department implemented an escalation plan incorporating increased communication strategies for non-compliance with DPH leadership to ensure adherence to FFATA reporting requirements. The Department will build upon the corrective action plan established to address the 2022-001 Finding by also reinforcing training and job aids for consistent application of reporting responsibilities and deadlines; the Department’s Financial Compliance and Grant Management Team will also conduct enhanced quarterly monitoring reviews. In addition, DPH will institute quarterly notifications for non-compliance with FFATA requirements to a list of established Department contacts. Auditor’s Remarks We thank the County for its cooperation and assistance during the audit and acknowledge its commitment to resolve this finding. We will review the corrective action taken 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 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS).

2022-001 The County?s internal controls within the Department of Public Health were inadequate for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 93.495 ? COVID-19 Community Health Workers for Public Health Response and Resilient Federal Grantor Name: U.S. Department of Health and Human Services Federal Award/Contract Number: NU58DP007045 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Description of Condition The purpose of the Community Health Worker for Public Health Response and Resilient program is to increase community health worker activities across the nation. Specifically, the program focuses on increasing efforts related to public health response in communities hit hardest by an outbreak and among priority populations that are at high risk for exposure, infection and poorer health outcomes. In 2022, the County spent $1,287,363 in program funds. Of this amount, the County paid $1,059,922 to five subrecipients. The County entered into one subaward with a subrecipient in 2022. Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System (FSRS). The County must report subawards by the end of the month following the month in which it made the subaward or subaward amendment. We found the County?s internal controls were ineffective for ensuring it reported the one subaward obligated in 2022 in the FSRS, as federal regulations require. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition Program staff said they did not know about the FFATA reporting requirements. Effect of Condition Failing to submit the required reports diminishes the federal government?s ability to ensure accountability and transparency of federal spending. Below is a table summarizing the missing report we identified. See Schedule of Findings and Questioned Costs for chart/table. Recommendation We recommend the County strengthen its internal controls to ensure it reports subaward information through the FSRS by the due date, as federal law requires. County?s Response The County agrees with the finding that DPH did not submit a FFATA report through the FSRS portal for one subaward. Public Health Finance will provide continuous training to ensure that personnel are aware of FFATA reporting requirements. Additionally, Public Health Finance will provide management reviews through quarterly monitoring to ensure reporting requirements and deadlines are met. 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 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 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS King County January 1, 2021 through December 31, 2021 2021-001 The County?s internal controls within the Department of Community and Human Services (DCHS) were inadequate for ensuring compliance with federal reporting requirements. CFDA Number and Title: 14.218 ? Community Development Block Grants/Entitlement Grants 14.218 ? COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B-17-UC-53-0001; B-18-UC-53-0001; B-19-UC-53-0001; B-20-UC-53-0001; B-20-UW-53-0001; B-21-UC-53-0001 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Questioned Cost Amount: $0 Background The primary objective of the Community Development Block Grants/Entitlement Grants (CDBG) is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. The County spent $8,481,084 in CDBG funds in 2021. Of this amount, the County subawarded $4,804,276 to 42 subrecipients. Description of Condition The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System (FSRS). The County has until the end of the month, plus one additional month after the subaward is obligated, to fulfill this reporting requirement. During 2021, the County submitted accurate information for all 42 subawards through FSRS. However, our audit found the County did not report the subaward information before the due date for 11 subawards. The number of days the County submitted the reports late ranged from one day to 243 days. We consider these deficiencies in internal controls to be a material weakness that led to material noncompliance. This issue was reported as a finding in the prior audit as finding 2020-002. Cause of Condition County staff were aware of the FFATA reporting requirements. However, the County experienced turnover during the audit period and lacked available staff to file all the reports on time. Effect of Condition Failing to submit the required reports on time diminishes the federal government?s ability to ensure accountability and transparency of federal spending. Below is a summary of the late reports we identified. "See Schedule of Findings and Questioned Costs for chart/table" Transactions tested Subawards not reported Reports not submitted timely Subaward amounts incorrect Subawards missing key elements 42 0 11 0 N/A Dollar amount of tested transactions Dollar amount of subawards not reported Dollar amount of reports not submitted timely Dollar amount of incorrect subaward amounts Dollar amount of subawards missing key elements $4,804,276 $0 $673,088 $0 $0 Recommendation We recommend the County strengthen its internal controls to ensure it reports subaward information through the FSRS before the due date, as federal law requires. County?s Response The County thanks the auditor for their review. Although the vast majority of FFATA reports were submitted timely, a subset of the reports did not meet the requirement. The County appreciates the auditor?s acknowledgement that all expenditures reviewed in the program were spent on allowable activities; however, meeting deadlines for all reports is important as well. Going forward, FFATA reporting will be the responsibility of two full-time fiscal personnel who work closest with the program; they will review subawards monthly and ensure reporting deadlines are met. 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 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 170, Reporting Subaward and Executive Compensation Information Uniform Guidance, section 200 Federal Awarding Agency Reporting Requirements, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS).

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS King County January 1, 2021 through December 31, 2021 2021-002 The County?s internal controls within the Department of Community and Human Services (DCHS) were inadequate for ensuring compliance with federal requirements for obligating grant funds. CFDA Number and Title: 14.231 ? Emergency Solutions Grant Program 14.231 ? COVID-19 Emergency Solutions Grant Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: E-19-UC-53-0001; E-20-UC-53-0001; E-20-UW-53-0001; E-21-UC-53-0001 Pass-through Entity Name: Washington State Department of Commerce Pass-through Award/Contract Number: E-19-DC-53-0001; E-20-DW-53-0001; E-21-DC-53-0001 Questioned Cost Amount: $0 Description of Condition The County spent $4,849,915 in Emergency Solutions Grant Program (ESG) funds in 2021. The ESG Program provides grants to states, metropolitan cities, urban counties, and territories for (1) rehabilitating or converting buildings for use as emergency homeless shelters, (2) paying certain expenses related to operating emergency shelters, (3) providing essential services related to emergency shelters and street outreach for the homeless, and (4) preventing homelessness and providing rapid rehousing assistance. 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 County must obligate or commit ESG funds received through the Coronavirus Aid, Relief, and Economic Security (CARES) Act (ESG-CV) within 240 days of the U.S. Department of Housing and Urban Development (HUD) signing the grant agreement. Our audit found the County?s internal controls were ineffective for ensuring it obligated the ESG-CV grant funds within 240 days. We consider this deficiency in internal controls to be a material weakness, which led to noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition Compared to previous years, the County received 42 times its normal allocation of ESG Program funds due to the additional funding related to the CARES Act. The large increase in funding made it more difficult for the County to find appropriate and allowable designations for all of the funding within 240 days. Effect of Condition We found the County did not obligate $1,484,203 in grants funds within 240 days as required. As of the time of our audit, the County still had not obligated the funds. Since the County has not obligated these funds, it has not received reimbursement from HUD. Further, by not obligating funds within the established timeframes, the County is not advancing the program?s objectives as effectively as it could be. Recommendation We recommend the County establish and follow internal controls to ensure compliance with federal requirements for obligating grant funds. County?s Response The County thanks the auditor for their review and acknowledges that ESG Coronavirus Aid, Relief, and Economic Security (CARES) Act (ESG-CV) funds were not fully obligated within 240 days of signing the grant agreement. The County historically receives less than $300,000 in ESG funds annually. An unprecedented $12.1 million funding increase, coupled with extenuating circumstances of a global pandemic, increased planning efforts and created obligation delays. The deadline to spend ESG-CV funds has been extended by HUD to September 30, 2023, thereby alleviating the auditor?s concern about not advancing the program?s objectives. The deadline extension will improve support for eligible recipients by allowing more coordination with jurisdictional partners, extensive planning, and consideration for program continuity when CARES Act funding has been fully utilized. 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 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 24 CFR Part 576, Uniform Guidance, section 203, Obligation, expenditure, and payment requirements, describes the requirements for obligation of funds, expenditures, and payments to subrecipients.

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS King County January 1, 2021 through December 31, 2021 2021-003 The County?s internal controls were inadequate for ensuring compliance with federal suspension and debarment requirements. CFDA Number and Title: 21.027 COVID 19 ? Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: SLFRP0152 SLFRP0002 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Questioned Cost Amount: $0 Description of Condition The purpose of the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) is to respond to the COVID-19 pandemic?s negative effects on public health and the economy, provide premium pay to essential workers during the pandemic, provide government services to the extent COVID-19 caused a reduction in revenues collected, and make necessary investments in water, sewer or broadband infrastructure. In 2021, the County spent approximately $48.5 million in program funds for these activities. 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 contractors have not been suspended or debarred or otherwise excluded. The County may accomplish this verification by collecting 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 the System for Award Management (SAM.gov) for exclusion records. The County must perform this verification before awarding the contract or paying the contractor more than $25,000, and it must keep documentation demonstrating compliance with this federal requirement. The County has a process in place to verify the suspension and debarment status for contractors paid more than $25,000. However, the County did not follow this process when it purchased grants management software using a contract awarded by another government, a process commonly referred to as ?piggybacking.? We consider this deficiency in internal controls to be a significant deficiency, which led to noncompliance. This issue was not reported as a finding in the prior audit. Cause of Condition When the County purchased through piggybacking, it did not use its standard procurement checklist or include suspension and debarment language in the contract. Instead, the County relied on the awarding agency?s suspension and debarment verification to ensure compliance with this requirement. Effect of Condition The County did not obtain a written certification, insert a clause into the contract, or check exclusion records to verify one of its 13 contractors was not suspended or debarred. The County paid $84,984 to this contractor. Without adequate internal controls, the County cannot ensure the contractor paid with federal funds is eligible to participate in federal programs. Any program funds the County used to pay contractors that have been suspended or debarred would be unallowable, and the federal grantor could potentially recover them. During the audit, we verified the contractor was not suspended or debarred. Therefore, we are not questioning costs for these payments. Recommendation We recommend the County strengthen its internal controls to verify all contractors paid $25,000 or more, all or in part with federal funds, are not suspended or debarred. We also recommend the County establish a process to ensure it verifies the suspension and debarment status of contractors when using piggybacking to purchase from them. County?s Response The County thanks the auditor for their review. For future contracts, the County will undertake its own efforts to confirm or seek certification of the suspension and debarment status of contractors even in instances when another government may also have done this work. The County notes that such efforts would not have changed the outcome of this procurement because the contractor was neither suspended nor debarred. The County appreciates the auditor?s recognition of this outcome. 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 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 on Agencies on Governmentwide Department and Suspension (Nonprocurement) establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.

2020-002 The County lacked adequate internal controls for ensuring compliance with federal reporting requirements. CFDA Number and Title: 14.218 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development (HUD) Federal Award/Contract Number: B-14-UC-53-0001; B-15-UC-53-0001; B-16-UC-53-0001; B-17-UC-53-0001; B-18-UC-53-0001; B-19-UC-53-0001; B-20-UC-53-0001; B-20-UW-53-0001 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Questioned Cost Amount: $0 Description of Condition The primary objective of the Community Development Block Grants/Entitlement Grants (CDBG) is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. 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 County spent $5,178,277 in CDBG funds in 2020. Performance Reporting When the County spends more than $200,000 in a program year for administering covered housing and community development assistance, it must prepare and submit the HUD 60002, Section 3 Summary Report, Economic Opportunities for Low- and Very Low-Income Persons report to the grantor. This report measures each recipient?s efforts to comply with the statutory and regulatory requirements of Section 3 not only in its own operations, but also in the operations of covered contractors, subcontractors and subrecipients. Section 3 of the Housing and Urban Development Act of 1968 requires recipients of certain HUD financial assistance, to the greatest extent possible, provide training, employment, contracting and other economic opportunities to people with low and very low incomes?especially recipients of government assistance for housing?and to businesses that provide economic opportunities to people with low or very low incomes. Section 3 does not apply on a ?per-project? basis. Section 3 applies whenever recipients invest any portion of HUD funding into projects involving housing construction, demolition, rehabilitation, or other public construction (e.g., roads, sewers and community centers). The County did not submit this Section 3 summary report for the grant for fiscal year 2020. Federal Funding Accountability and Transparency Act (FFATA) Reporting The Federal Funding Accountability and Transparency Act (FFATA) requires the County to report its subaward information through the FFATA Subaward Reporting System (FSRS). The FFATA requires the Office of Management and Budget (OMB) to ensure the existence and operation of a single searchable website for federal awards. The County has until the end of the month, plus one additional month after the subaward is obligated, to fulfill this reporting requirement. During 2020, the County awarded 18 subawards totaling $2,999,082. While the County submitted accurate subaward information through FSRS, the County did not report the subaward information before the due date for all 18 subawards. The number of days the County submitted the reports late ranged from one day to 276 days. We consider these deficiencies in internal controls to be a material weakness that led to material noncompliance. These issues were not reported as a finding in the prior audit. Cause of Condition Performance Reporting County staff understood the evaluation requirements of the Section 3 Summary Report and performed review of the projects under the CDBG program noting that none of the projects met the threshold for reporting of information. Since none of the projects met the threshold, staff did not submit the report as the information was not applicable. The County should have submitted a report in HUD?s Section 3 reporting system if the responses are ?not applicable?. Federal Funding Accountability and Transparency Act (FFATA) Reporting The County experienced turnover and lacked available staff to file the reports. Once the County filled the position responsible for this requirement, management decided to report the subaward information starting with the most recent ones before filing for subawards it issued earlier. Effect of Condition Performance Reporting Because the County did not submit the required HUD 60002, Section 3 Summary Report, HUD could not assess the County?s compliance?or its covered contractors, subcontractors and subrecipients? compliance?with the statutory and regulatory requirements of Section 3. Failure to comply with the requirements of Section 3 may result in sanctions, debarment, suspension, or limited denial of participation in HUD programs under federal regulations. Federal Funding Accountability and Transparency Act (FFATA) Reporting When the County does not report its federal subaward information on time, OMB cannot ensure the existence and operation of a single, searchable website for federal awards. This prevents interested parties from accessing information about the County?s subawards in a timely manner. Recommendation We recommend the County strengthen its internal controls for ensuring required reports for each grant are accurate, reviewed and submitted on time. Specifically, the County should: ? Submit the HUD 60002, Section 3 Summary Report, regardless of the amount expended, as the grantor requires ? Report the subaward information through the FSRS before the due date, as federal law requires County?s Response Performance Reporting The County agrees with the finding that staff did not submit the Section 3 report to HUD and the recommendation over the Performance Reporting for 2020. County staff have attended a HUD training and are preparing updated tools and procedure documents to ensure that effective Section 3 reporting is part of normal work routines. These updated tools and procedure documents will help ensure that Section 3 reporting will be included according to HUD requirements. Federal Funding Accountability and Transparency Act (FFATA) Reporting The County agrees with the finding that staff did not timely submit FFATA reports. The County is in the process of implementing corrective action which includes rehiring a contractor to assist with reporting as well as reviewing current staff roles and workflows to determine the most efficient and effective way to ensure timely reporting. 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 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 24 CFR Part 135 Economic Opportunities for Low- and Very Low-Income Persons, section 3 Applicability, describes the applicability of the Section 3 covered assistance. Title 24 CFR Part 135 Economic Opportunities for Low- and Very Low-Income Persons, section 90 Reporting, establishes the HUD 60002, Section 3 Summary Report requirements for Section 3 covered assistance. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information Uniform Guidance, section 200 Federal Awarding Agency Reporting Requirements, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS).

2020-003 The County improperly charged the program for expenditures incurred outside the period of performance. CFDA Number and Title: 14.267 Continuum of Care Program Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: Too numerous to list Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $42,343 Background During fiscal year 2020, the County spent $21.1 million in Continuum of Care Program (COC Program) funds. The COC Program is designed to: (1) promote communitywide commitment to the goal of ending homelessness; (2) provide funding for efforts by nonprofit providers, states and local governments to quickly rehouse homeless people and families while minimizing the trauma and dislocation that homelessness causes; (3) promote access to and effective use of mainstream programs by homeless people and families; and (4) optimize self-sufficiency among people and families experiencing homelessness. During 2020, the U.S. Department of Housing and Urban Development awarded 40 contracts to the County. Each award specifies a performance period during which program costs may be obligated or liquidated. Federal requirements prohibit grant recipients from charging costs incurred outside of the performance period without prior approval from the grantor. Description of Condition ? The County had adequate internal controls for ensuring it materially complied with the period of performance requirement. However, we found the County charged the program $42,343 for subrecipient payroll costs, rental costs, and other costs incurred outside the period of performance. This issue was reported as a finding in the prior audit as finding 2019-002. Cause of Condition Before October 2020, staff did not perform an adequate review of expenditures to ensure all costs the County charged to the program were incurred within the performance period. However, in response to our 2019 audit finding, the County started the process of strengthening its internal controls in October 2020 to ensure all costs it charged to the grant were incurred within the period of performance. Effect of Condition and Questioned Costs Using non-statistical sampling, we tested 11 transactions the County charged to the COC Program at the beginning of the performance period. We found three payments totaling $11,502 for costs incurred outside the performance period. From this, we estimate total overpayments of $51,234. Using non-statistical sampling, we tested seven transactions the County charged to the COC Program at the end of the performance period. We found three payments totaling $30,841 for costs incurred outside the performance period. From this, we estimate total overpayments of $33,429. We are questioning costs of $42,343 incurred outside of the performance period that the County charged to the COC Program. Federal regulations require the State Auditor?s Office to report known questioned costs that are greater than $25,000 for each type of compliance requirement. We question costs when we find the County has not complied with grant regulations and/or when it does not have adequate documentation to support expenditures. Recommendation We recommend the County monitor the costs it charges to federal programs to ensure they are obligated during the performance period. County?s Response We agree with the finding and recommendations over the Period of Performance for 2020. The County considers this repeat finding a timing difference as the issue was brought to the County?s attention in September 2020 during the FY19 Single Audit. The processes outlined below were prospectively implemented in the fourth quarter of 2020. As such, questioned costs noted during the FY20 Single Audit were from the first three quarters prior to the implementation of the corrective action plan. Effective October 1, 2020, the County required all Continuum of Care subrecipients to clearly provide the pay periods included in their request for payment. Additionally, the County amended subrecipient contracts to clearly state that all charges, including payroll, must fall within the grant period of performance. Lastly, the County staff who manage and administer this grant, now include closer review of all invoice service and/or purchase dates against the grant start and end dates. This will ensure that charges from another grant period are not included. 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 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. The American Institute of Certified Public Accountants defines questioned costs in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 309 Period of Performance, establishes requirements for period of performance.

2020-004 The County had inadequate internal controls for ensuring compliance with prevailing wage rate requirements. CFDA Number and Title: 20.106 Airport Improvement Program Federal Grantor Name: U.S. Department of Transportation Federal Aviation Administration Federal Award/Contract Number: DOT-FA18NM-0063; DOT-FA19NM-0059; DOT-FA20NM-K0044 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Questioned Cost Amount: N/A Background The objective of the Airport Improvement Program (AIP) is to assist sponsors, owners, or operators of public-use airports in the development of a nationwide system of airports adequate to meet the needs of civil aeronautics. 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 Davis-Bacon Act requires contractors and subcontractors that work on projects financed with more than $2,000 of federal money to pay laborers and mechanics prevailing wages?the wage rates that the U.S. Department of Labor considers being similar to what local workers have been paid for similar projects. As part of prevailing wage rate requirements, contractors and subcontractors must submit weekly certified payroll reports to the County, which includes copies of their payroll and a signed ?Statement of Compliance.? The County is responsible for complying with these requirements and keeping documents according to records retention schedules. Description of Condition In 2020, the County spent $7.9 million in Airport Improvement Program (AIP) funds. From this award, the County paid over $1 million for one construction project that is subject to prevailing wage rate requirements. The County had a process for collecting the weekly certified payroll reports from the prime contractor, but it did not have a process in place for collecting these reports from the subcontractor that worked on this federally funded project. We consider this internal control deficiency to be a material weakness, which led to material noncompliance. This issue was not reported as a finding in the prior audit. Cause of Condition The County Airport?s staff did not receive adequate training on federal grant requirements and, as a result, was not aware that it needed to monitor and collect weekly certified payroll reports from subcontractors. Effect of Condition and Questioned Costs For this project, the County was required to collect a total of 56 weekly certified payroll reports?40 from the prime contractor and 16 from the subcontractor. The County collected all 40 weekly certified payroll reports for the prime contractor. However, the County did not collect any of the 16 weekly certified payroll reports from the subcontractor. The County subsequently obtained all 16 missing weekly certified payroll reports during our audit. Without adequate internal controls, the County cannot demonstrate it complied with the Davis-Bacon Act and paid workers prevailing wages. If the County did not pay workers prevailing wages, it could be liable for paying additional wages. Recommendation We recommend the County strengthen its internal controls to ensure compliance with the Davis-Bacon Act?s prevailing wage rate requirements. Specifically, we recommend the County establish and follow procedures for collecting all weekly certified payroll reports from its subcontractors in a timely manner. Additionally, we recommend the County adequately train staff on federal grant requirements. County?s Response The County accepts the facts of the SAO Finding 2020-004. The County relied on the prime contractor to be compliant with RCW 39.12.120 for required payroll reporting and attestations for certified payroll and prevailing wage compliance. The County will develop, document, and implement additional internal control procedures per Title 2 CFR Part 200 Uniform Guidance ? 303 to review contractor and subcontractor payroll data for compliance with federal program requirements subject to the 2021 OMB Compliance Supplement Appendix XI Part 4, III. N. Special tests provisions - WAGE RATE REQUIREMENTS CROSS-CUTTING SECTION. Specifically, the County will: ? Implement certified payroll submittal status updates with the contractors during the regularly scheduled construction progress meetings. ? Implement documentation in the contract file that weekly certified payrolls have been submitted. King County?s Contract Specialist shall confirm certified payroll submittals utilizing King County?s Labor and Workforce compliance system. ? Require the relevant agency?s contract and finance staff to attend annual federal grant award compliance requirement training offered and/or sponsored by the Finance Business and Operations Division (FBOD) Financial Systems and Services Team (FSST). 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 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 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 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

2019-002 The County improperly charged the program for expenditures incurred outside the period of performance. In addition, the County did not have adequate internal controls to ensure compliance with federal suspension and debarment requirements. CFDA Number and Title: 14.267 Continuum of Care Program Federal Grantor Name: Department of Housing and Urban Development Federal Award/Contract Number: Too numerous to list Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Questioned Cost Amount: $27,416 Background During the fiscal year 2019, the County spent $18.8 million in Continuum of Care Program (Program) funds. The Program is designed to: (1) promote community-wide commitment to the goal of ending homelessness; (2) provide funding for efforts by non-profit providers, states and local governments to quickly re-house homeless individuals and families while minimizing the trauma and dislocation caused to homeless individuals, families and communities by homelessness; (3) promote access to and effective use of mainstream programs by homeless individuals and families; and (4) optimize self-sufficiency among individuals and families experiencing homelessness. Federal regulations require recipients to establish and maintain internal controls to ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Performance period During 2019, the Department of Housing and Urban Development awarded 32 contracts to the County. Each award specifies a performance period during which program costs may be obligated or liquidated. Federal requirements prohibit grant recipients from charging costs incurred outside of the award period without prior approval from the grantor. Suspension and debarment Federal requirements prohibit grant recipients from contracting with parties suspended or debarred from doing business with the federal government. Whenever the County contracts for goods and services that it expects to equal or exceed $25,000, paid all or in part with federal funds, or makes a subaward regardless of award amount, it must verify the contractor or subrecipient is not suspended or debarred or otherwise excluded. The County can obtain a written certification from the contractor or subrecipient or insert a clause into the contract where the contractor or subrecipient states it is not suspended or debarred. Alternatively, the County may review the federal Excluded Parties List (EPLS) issued by the U.S. General Services Administration. This verification must be performed before entering a contract or making a subaward. Description of Condition Performance period The County had adequate internal controls to ensure it materially complied with the period of performance requirement. However, we found it charged the program $27,416 for subrecipients? payroll costs and other expenses incurred before the award period without prior approval. This issue was not reported as a finding in the prior audit. Suspension and debarment The County has established procedures to include a suspension and debarment clause in its contract templates for contractors and subrecipients. However, for one of 11 contractors and subrecipients tested, it did not follow its established procedures. The County did not obtain a written certification, insert a clause into a contract or review EPLS to verify one subrecipient, a local government, was not suspended or debarred from participating in federal programs. We consider this deficiency in internal controls to be a significant deficiency. This issue was not reported as a finding in the prior audit. Cause of Condition Performance period The County staff did not perform an adequate review of expenditures to ensure all costs charged to the program were incurred within the performance period. Additionally, the County did not require any detailed supporting documentation from one subrecipient for some costs because it considered the subrecipient low risk. Suspension and debarment The County is aware of the suspension and debarment requirements. However, the County did not consider the local government to be a subrecipient or a contractor because they were joint applicants for the program. The County was not aware the grantor considered the local government to be a subrecipient of the County?s program and did not verify the subrecipient?s status. Effect of Condition and Questioned Costs Performance period We tested $1,158,862 out of $1,176,882 in expenditures charged to the program that the County incurred close to the start date of the award period. We are questioning costs of $27,416 charged to the program before the start of the performance period. Federal regulations require us to report known questioned costs that are greater than $25,000 for each type of compliance requirement. We question costs when we find the County has not complied with grant regulations and/or when it does not have adequate documentation to support expenditures. Suspension and debarment Without adequate internal controls over suspension and debarment requirements, the County cannot guarantee it pays federal funds only to eligible subrecipients. Any payments made to an ineligible party would be subject to recovery by the grantor. We verified that the subrecipient was not suspended or debarred. Therefore, we are not questioning the related costs. Recommendations We recommend the County: - Monitor costs charged to the program to ensure they are obligated during the performance period - Follow its established internal controls to comply with suspension and debarment requirements and verify the suspension and debarment status for all subrecipients before it makes subawards County?s Response The County would like to thank the Washington State Auditor?s Office for its conclusions, communications and collaboration during the audit. We agree with the finding and recommendations and have taken the following actions: Period of Performance Effective October 1, 2020, the County required all Continuum of Care subrecipients to clearly provide the pay periods included in their request for payment. Additionally, the County will be amending subrecipient contracts to clearly state that all charges, including payroll, must fall within the grant period of performance. Lastly, the County staff who manage and administer this grant, will review all invoice service and/or purchase dates against the grant start and end dates. This will ensure that charges from another grant period are not included. The process was implemented in the fourth quarter of 2020. Suspension and debarment The County would like to emphasize that there was only one contract in the audit selection that did not include a suspension and debarment clause and did not follow established procedures. This was an isolated incident. In this particular case, the local government acting as a subrecipient was the City of Seattle. The verification process to confirm that the City of Seattle was not suspended or debarred was completed in the fourth quarter of 2020. The County has trained all divisional grants administrators to follow federal requirements for suspension and debarment. 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 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. 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 303 Internal controls, establishes requirements for management of Federal awards to non-Federal entities. Period of performance Title 2 CFR Part 200, Uniform Guidance, section 309 Period of Performance, establishes requirements for period of performance. Suspension and debarment Title 2 CFR Part 200, Uniform Guidance, section 213 ? Suspension and Debarment, establishes suspension and debarment requirements Title 2 CFR Part 180, OMB Guidelines to Agencies on Government wide Department and Suspension (Nonprocurement) establishes non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.

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