Walla Walla County

Walla Walla County January 1, 2024 through December 31, 2024 2024-001 The County 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 Treasury Federal Award/Contract Number: N/A Pass-through Entity Name: N/A Pass-through Award/Contract Number: 1 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 program (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. SLFRF also allowed for premium pay to essential workers for work they performed before April 10, 2023. During fiscal year 2024, the County spent about $2.45 million in federal funding under the SLFRF 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 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 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, 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 County must verify this before entering into the contract, and must maintain documentation demonstrating compliance with this federal requirement. Description of Condition Our audit found the County did not have effective internal controls to verify all five contractors we tested that it paid more than $25,000 in federal funds were not suspended or debarred from participating in federal programs before entering into contracts with or purchasing from them. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition County staff were not aware of the suspension and debarment requirement until receiving the fiscal year 2022 finding in June 2024. Additionally, staff did not dedicate sufficient time and resources to update procedures and did not verify the contractors’ status for contracts awarded or purchases made after this date. Effect of Condition The County did not obtain a written certification from the five contractors, insert a clause into the contracts or check for exclusion records at SAM.gov to verify contractors it paid $448,014 using federal funds were not suspended or debarred before contracting with or purchasing from them. Without adequate internal controls, the County increases its risk of awarding 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 awarding agency could potentially recover them. We subsequently verified the contractors were not suspended or debarred. Therefore, we are not questioning costs. Recommendation We recommend the County 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 and maintain documentation demonstrating compliance with this requirement. County’s Response Walla Walla County employs a decentralized purchasing model. We have implemented training for departments using federally regulated funds to comply with suspension and debarment requirements. Internal controls and processes will be created and/or updated to comply with Federal Suspension and Debarment requirements and dispersed to all Departments of the County. The updated procurement policy as mentioned in the corrective action in the Management letter will outline how to handle and follow these requirements. The County will determine which allowable action to be taken in our Internal controls and procurement policy: 1) check SAM.GOV, 2) make sure the clause is in the contract, 3) sign a suspension and debarment certification. Documentation will be saved and dated to show this requirement was met before the contract has begun. Auditor’s Remarks We appreciate the County's commitment to resolving this finding. 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.

Walla Walla County January 1, 2024 through December 31, 2024 2024-002 The County did not have adequate internal controls for ensuring compliance with federal activities allowed, allowable costs requirements. Assistance Listing Number and Title: 21.027 – COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of Treasury Federal Award/Contract Number: N/A Pass-through Entity Name: N/A Pass-through Award/Contract Number: 2 N/A Known Questioned Cost Amount: $132,000 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. SLFRF also allowed for premium pay to essential workers for work performed prior to April 10, 2023. During fiscal year 2024, the County spent about $2.45 million in federal funding under the Coronavirus State and Local Fiscal Recovery Funds 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 regulations also require recipients to charge only allowable activities and costs to the SLFRF program. Description of Condition Our audit found the County did not have adequate controls for ensuring activities and costs charged to the program were allowable. Specifically, the County paid employees premium pay for work performed in 2024 and charged these costs to the program, which was not allowed for work performed after April 10, 2023. We consider this deficiency in internal controls to be a significant deficiency. Cause of Condition County staff responsible for reviewing costs charged to the program were not aware that after April 10, 2023, premium pay expenditures were not allowable under the SLFRF program. Effect of Condition and Questioned Costs The County charged $132,000 of costs to the program for retention and bonus pay that were not allowable for fiscal year 2024. Therefore, we are questioning these costs. Federal regulations require the State Auditor’s Office to report known questioned costs that are more 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 implement internal controls to ensure it charges only allowable activities and costs to federal programs. County’s Response Walla Walla County is taking significant steps to address the recent audit finding regarding inadequate internal controls for compliance with federal requirements. To rectify this issue, the county is committed to formulating a new policy specifically tailored to meet federal standards. This development process is already in motion, with the expected completion date set for December 2025. We believe that the new policy will significantly improve our internal controls and ensure full compliance with federal mandates. Additionally, we will seek training opportunities to increase the knowledge of all staff regarding federal programs and compliance requirements, ensuring adherence to these programs and grants Auditor’s Remarks We appreciate the County's commitment to resolving this finding. We will review the corrective action taken during our next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the cost principles for how direct costs should be charged to federal programs. Treasury’s Coronavirus State and Local Fiscal Recovery Funds FAQ 4.11 explains why recipients are not allowed to use the premium pay eligible use category for work performed after the end of the National Emergency on April 10, 2023.

The County had inadequate controls for ensuring compliance with federal subrecipient monitoring requirements. Assistance Listing Number and Title: 21.027 – COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of Treasury Federal Award/Contract Number: 1505-0271 Pass-through Entity Name: Washington State Department of Commerce Pass-through Award/Contract Number: 21-4619C-129 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Description of Condition The purpose of Coronavirus State and Local Fiscal Recovery Funds (SLFRF) is to provide direct payment to states, U.S. territories, tribal governments, metropolitan cities, counties and non-entitlement units of local government through states. The County received an award from the Washington State Department of Commerce for its Eviction Rent Assistance Program (ERAP) 2.0, funded by SLFRF. ERAP is intended to prevent evictions that would contribute to the spread of COVID-19 by paying past-due, due and future rent to those with the greatest needs while distributing funds equitably. During fiscal year 2023, the County spent $5,745,978 of its ERAP award from Commerce. Of this amount, the County passed through $2,889,539 to one subrecipient to administer the 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. When the County passes federal funding onto subrecipients, federal regulations require it to monitor subrecipients to ensure they comply with the federal award’s terms and conditions. For awards dependent on household eligibility, monitoring would include verifying the subrecipients only assisted households that met program eligibility requirements. The amount of verification would depend on each subrecipient’s noncompliance risk. Our audit found the County did not monitor its subrecipient as federal regulations require. Specifically, the County did not perform monitoring procedures to ensure the assisted households were eligible. We consider this internal controls deficiency to be a material weakness that led to material noncompliance. Cause of Condition Although the County received a similar finding for this program in March 2023 for the 2021 audit, County staff did not dedicate the time and resources to monitor the subrecipient in fiscal year 2023 to ensure assisted households were eligible. Effect of Condition The County did not monitor the subrecipient to ensure it complied with the subaward’s terms and conditions and appropriately used federal program funds. Since the County did not monitor its subrecipient, it was unable to confirm only eligible households received assistance. Recommendation We recommend the County monitor its subrecipients to ensure they comply with the terms and conditions of their federal subawards, including providing funds only to eligible program households. County’s Response In response to the finding and consistent with WWDCH's commitment to compliance with applicable laws, rules, regulations, and award terms and conditions, WWDCH obtained training regarding subrecipient monitoring requirements and best practices regarding implementation of the same. In addition, WWDCH established a monitoring program for ERAP 2.0, which included testing of a sample of 25 applications for compliance with programmatic and financial requirements. Testing of the 25 sampled applications is complete; however, final reporting and resolution of monitoring observations are still in_x0002_process. WWDCH anticipates completion of this corrective action to occur during FY25. Auditor’s Remarks We appreciate the County's commitment to resolving this finding. 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, section 332, Requirements for pass through entities, establishes the requirements for subrecipient monitoring and management requirements for pass-through 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.

Walla Walla County January 1, 2022 through December 31, 2022 2022-001       The County had inadequate controls for ensuring compliance with federal subrecipient monitoring requirements. Assistance Listing Number and Title: 21.027 – COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of Treasury Federal Award/Contract Number: 1505-0271 Pass-through Entity Name: Washington State Department of Commerce Pass-through Award/Contract Number: 21-4619C-129   Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-005       Description of Condition The purpose of Coronavirus State and Local Fiscal Recovery Funds (SLFRF) is to provide direct payment to states, U.S. territories, tribal governments, metropolitan cities, counties and non-entitlement units of local government through states. The County received an award from the Washington State Department of Commerce for its Eviction Rent Assistance Program (ERAP) 2.0, funded by SLFRF. ERAP is intended to prevent evictions that would contribute to the spread of COVID-19 by paying past due, current due and future rent to those with the greatest needs while distributing funds equitably. During fiscal year 2022, the County spent $6,534,010 of its ERAP award from Commerce. Of this amount, the County passed through $2,854,117 to one subrecipient to administer the 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. When the County passes federal funding onto subrecipients, federal regulations require the County to monitor subrecipients to ensure they comply with the terms and conditions of the federal award. For awards dependent on household eligibility, monitoring would include verifying the subrecipients only assisted households that met program eligibility requirements. The amount of verification would depend on each subrecipient’s noncompliance risk. Our audit found the County did not monitor its subrecipient as federal regulations require. Specifically, the County did not obtain documentation from the subrecipient to ensure the assisted households were eligible. We consider this internal controls deficiency to be a material weakness that led to material noncompliance. Cause of Condition After receiving the finding in the prior audit, the County began changing its controls. However, monitoring was not performed to ensure assisted households were eligible and thus the County did not comply with federal regulations. Effect of Condition The County did not monitor the subrecipient to ensure it complied with the terms and conditions of the subaward and appropriately used federal program funds. Since the County did not monitor its subrecipient, it was unable to confirm only eligible households received assistance. Recommendation We recommend the County monitor its subrecipients to ensure they comply with the terms and conditions of their federal subawards, including providing funds only to eligible program households. County’s Response We appreciate the auditor's assessment, analysis, and recommendations.  However, we disagree with the conclusion reached and the finding.  The auditor, during oral conversation discussing context, indicated the quantity of program beneficiaries reviewed for eligibility did not reach the auditor's expected quantity for adequate monitoring.  As a management team, we assessed risk and determined the level of appropriate monitoring to consist of: 1) financial monitoring through review of reimbursement requests, which contained eligibility information necessary for oversight; 2) execution of regularly scheduled status and reporting meetings wherein we obtained ongoing programmatic data; and 3) review of audit reports, where applicable.  We note neither our award agreement nor applicable federal regulations require a specific quantity of files to be reviewed as part of subrecipient monitoring.  Accordingly, we do not concur with the presence of a finding.  In addition, no instances of ineligible beneficiaries were identified by the auditor such that a material weakness classification does not appear reasonable or appropriate.   That being said, we will assess our procedures and add greater clarity to help better tell this story going forward.  We will also consider whether testing a specific number of beneficiaries is necessary and may be conducted efficiently.  Auditor’s Remarks We reaffirm our audit finding. Our work is performed in accordance with federal regulations and governmental auditing standards. We will review the correction 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, section 332, Requirements for pass through entities, establishes the requirements for subrecipient monitoring and management requirements for pass-through 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.

Walla Walla County January 1, 2022 through December 31, 2022 2022-002       The County had inadequate controls for ensuring compliance with 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 Treasury Federal Award/Contract Number: 1505-0271 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A   Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-004       Description of Condition During fiscal year 2022, the County spent a total of $6.53 million in federal funding under the Coronavirus State and Local Fiscal Recovery Funds program. Of this amount, the County used $3.68 million to provide government services to the extent that the COVID-19 pandemic caused a reduction in revenue collected in its most recent fiscal year. The County awarded the remaining $2.85 million to a subrecipient to provide emergency rental assistance. 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 program 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, debarred or otherwise excluded. The County may verify this 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 for exclusion records in the U.S. General Services Administration's System for Award Management at sam.gov. The County must perform this verification before entering into the contract or purchasing from contractors. Additionally, the County must keep documentation demonstrating compliance with this federal requirement. Our audit found the County did not have effective internal controls for verifying the suspension and debarment status of contractors before entering into contracts with or purchasing from them. Specifically, the County did not verify that seven contractors it paid $25,000 or more during fiscal year 2022 were not suspended or debarred. We consider this control deficiency to be a material weakness, which led to material noncompliance. Cause of Condition After receiving the finding in the prior audit, the County began changing its controls. However, it did not verify contractors were not suspended or debarred and thus did not comply with federal regulations. Effect of Condition The County did not verify whether seven contractors were suspended or debarred before entering into contracts with or purchasing from them. The County paid these contractors $6,554,795 during fiscal year 2022. Without adequate internal controls, the County cannot ensure contractors paid with federal funds are 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. The County subsequently verified the contractors were not suspended or debarred. Therefore, we are not questioning costs. Recommendation We recommend the County improve its internal controls to ensure it verifies that all contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred before entering into contracts or purchasing from them. County’s Response Noted, the County will work with the departments responsible for administering federal funds to create procedures requiring the review of the System Of Award Management (SAM) for suspended or debarred parties in accordance with Federal Regulation. We agree with the auditor's comments and the county recognizes the challenges with staffing, training, onboarding, and managing unforeseen large amounts of federal funds coming into the county during COVID response. The county will be utilizing a contractor to assist in establishing policies, procedures, training, and strategic improvements to allow quick onboarding of staff in policies, procedures and regulations outlined by CRF 200 for future emergency federal funding and routine federal funding. Walla Walla County is committed to the importance of managing federal funding. Auditor’s Remarks   We appreciate the County's commitment to resolving this finding. 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.

2021-001 The County had inadequate controls for ensuring compliance with federal procurement and suspension and debarment requirements.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 ServicesFederal Award/Contract Number: N/APass-through Entity Name: Washington State Department of HealthPass-through Award/Contract Number: CLH18266Questioned Cost Amount: $0Description of ConditionDuring fiscal year 2021, the County spent $396,425 in federal funding under the Epidemiology and Laboratory Capacity for Infectious Diseases Program to provide quarantine and isolation housing for County residents who needed shelter and accommodation due to the COVID-19 pandemic.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.ProcurementFederal regulations require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR ? 200.318-327. The procedures must reflect the most restrictive of applicable federal requirements, state laws or local policies. When using federal funds to procure goods and services, governments must apply the more restrictive requirements by obtaining quotes or following a competitive procurement process, depending on the estimated cost of the procurement activity. When using a noncompetitive process, such as for emergencies, the documented procurement procedures must include the requirements that allow for using this process.Our audit found the County did not have effective internal controls for ensuring its procurement policy conformed to federal procurement standards. Although the County had a written procurement policy at the time of procurement, it did not conform to the most restrictive methods, and it did not include the required procedures for emergency purchases. Additionally, the County?s policy did not include other required procurement standards, such as contracting with small and minority business owners, and contract cost and price analysis.Additionally, federal regulations require recipients to maintain written standards of conduct covering conflicts of interest and governing the actions of employees involved in selecting, awarding, or administering contracts procured with federal funds. The County?s written policies do not conform to federal regulations because they do not include the following elements:? No employees, officers or agents may participate in selecting, awarding or administering a contact supported by a federal award if they have a real or apparent conflict of interest.? The officers, employees, and agents may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts.? Disciplinary actions for violating these standardsWe consider these internal control deficiencies to be a material weakness, which led to material noncompliance.Suspension and DebarmentFederal 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, 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 for exclusion records in the U.S. General Services Administration?s System for Award Management at SAM.gov. The County must perform this verification before entering into the contract, and it must keep documentation demonstrating compliance with this federal requirement.Our audit found the County did not have effective internal controls for verifying the suspension and debarment status of contractors paid more than $25,000. The County made two months of payments to one contractor before checking its suspension and debarment status.We consider this control deficiency to be a material weakness, which led to material noncompliance.These issues were not reported as findings in the prior audit.Cause of ConditionProcurementCounty staff were unaware of the requirement to update the County?s procurement and standards of conduct policies to conform to federal procurement standards.Suspension and DebarmentAlthough County employees checked the contractor?s suspension and debarment status, they said they did not know about the verification requirement before entering into the contract.Effect of ConditionProcurementThe County?s policy did not conform to Uniform Guidance, and our testing found the County did not comply with federal requirements for noncompetitive purchases of goods and services. Without updated written procurement procedures, the County is at greater risk of noncompliance with the most restrictive procedures when procuring contractors and goods and services with federal funds.Suspension and DebarmentThe County did not obtain a written certification, insert a clause into the contract, or check SAM.gov to verify the contractor was not suspended or debarred before entering into the contract. The County paid this contractor $76,597 during fiscal year 2021.Without adequate internal controls, the County cannot ensure the contractors it pays with federal funds are eligible to participate in federal programs. Any program funds the County made to an ineligible party would be unallowable, and the federal agency could potentially recover them. The County subsequently verified the contractor was not suspended or debarred. Therefore, we are not questioning costs.RecommendationWe recommend the County strengthen internal controls to ensure it:? Verifies that all contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred before entering into contracts with them or making the first payment? Updates its procurement and standards of conduct policies to conform to federal procurement standardsCounty?s ResponseWe agree with the auditor?s comments and the county recognizes the challenges with staffing, training, onboarding, and managing unforeseen large amounts of federal funds coming into the county during COVID response. The county will be utilizing a contractor to assist in establishing policies, procedures, training, and strategic improvements to allow quick onboarding of staff in policies, procedures and regulations outlined by CRF 200 for future emergency federal funding and routine federal funding. Walla Walla County is committed to the importance of managing federal funding.Auditor?s RemarksWe appreciate the County?s commitment to resolving 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 RegulationsTitle 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 written procedures.Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring goods and services, including noncompetitive procurement.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.

2021-002 The County?s internal controls were inadequate for ensuring compliance with federal subrecipient monitoring requirements.CFDA Number and Title: 21.023 ? COVID-19 ? Emergency Rental Assistance ProgramFederal Grantor Name: U.S. Department of the TreasuryFederal Award/Contract Number: N/APass-through Entity Name: Washington State Department of CommercePass-through Award/Contract Number: 21-4616C-129Questioned Cost Amount: $0Description of ConditionThe purpose of the Emergency Rental Assistance (ERA) program is to prevent evictions by providing financial assistance to eligible households that are unable to pay rent or utilities. During fiscal year 2021, the County spent $1,774,410 in program funds. Of this amount, the County provided $1,773,481 to one subrecipient to provide assistance to County households.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.Whenever the County passes on federal funding to subrecipients, federal regulations require the County to monitor them to ensure they comply with the terms and conditions of the federal award. To determine the appropriate level of monitoring, the County must evaluate each subrecipient?s risk of noncompliance with federal requirements. For awards dependent on participant eligibility, monitoring would include verifying the subrecipients only provided assistance to participants who met program eligibility requirements. The amount of verification would depend on each subrecipient?s risk of noncompliance.Our audit found the County did not perform a risk assessment for this subaward and did not sufficiently monitor the subrecipient, as federal regulations require.We consider this deficiency in internal controls to be a material weakness that led to material noncompliance.The issue was not reported as a finding in the prior audit.Cause of ConditionWith the effects of COVID-19, it was urgent for the County to disburse funds to the subrecipient quickly to assist with rental housing needs. Further, County staff responsible for managing the ERA program were not aware of the risk assessment and subrecipient monitoring requirements for awards dependent on participant eligibility.Effect of ConditionThe County did not complete a risk assessment for this subaward. Without conducting a risk assessment, the County risks not adequately monitoring the subrecipient to ensure it has complied with program requirements and used federal funds appropriately. Since the County did not monitor its subrecipient, it was unable to confirm only eligible households received assistance.RecommendationWe recommend the County perform a sufficient risk assessment over subrecipients and monitor them accordingly to verify they are complying with the terms and conditions of the award and only providing funds to eligible participants.County?s ResponseCounty employee did meet with the subrecipient on a weekly basis to touch base and ensure that any questions or concerns regarding program eligibility, forms, requirements, guidelines, etc. could be addressed in a timely manner. The county employee also complied with the file review that Commerce conducted, ensuring that the subrecipient was utilizing the appropriate documents, supporting documentation, and following the guidelines. The County employee worked with the subrecipient to get all necessary files to Commerce in a timely manner and also communicated improvements to the subrecipient after the monitoring.Corrective Action:DCH will be contracting with consultant to develop federal grant management including risk analysis and subrecipient monitoring. Program and fiscal staff will be trained.Auditor?s RemarksWe appreciate the County?s commitment to resolving 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 RegulationsTitle 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, section 331, Subrecipient and contractor determinations, and 332, Requirements for pass-through entities, establishes the requirements for identifying whether the party is a subrecipient or contractor and subrecipient monitoring and management requirements for pass-through 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.

2021-003 The County?s internal controls were inadequate for ensuring compliance with federal subrecipient monitoring requirements.CFDA Number and Title: 21.019 ? COVID-19 ? Coronavirus Relief FundFederal Grantor Name: U.S. Department of the TreasuryFederal Award/Contract Number: N/APass-through Entity Name: Washington State Department of CommercePass-through Award/Contract Number: 21-4614C-129Questioned Cost Amount: $0Description of ConditionThe purpose of the Coronavirus Relief Fund (CRF) is to provide direct payments to state, territorial, tribal, and certain eligible local governments to cover necessary expenditures incurred due to the COVID-19 pandemic. During fiscal year 2021, the County spent $846,677 in program funds. Of this amount, the County awarded $288,565 to two subrecipients to provide rental assistance to County households.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.Whenever the County passes on federal funding to subrecipients, federal regulations require the County to monitor them to ensure they comply with the terms and conditions of the federal award. To determine the appropriate level of monitoring, the County must evaluate each subrecipient?s risk of noncompliance with federal requirements. For awards dependent on participant eligibility, monitoring would include verifying the subrecipients only provided assistance to participants who met program eligibility requirements. The amount of verification would depend on each subrecipient?s risk of noncompliance.Our audit found the County did not perform a risk assessment for this subaward and did not sufficiently monitor the subrecipients, as federal regulations require.We consider this deficiency in internal controls to be a material weakness that led to material noncompliance.The issue was not reported as a finding in the prior audit.Cause of ConditionWith the effects of COVID-19, it was urgent for the County to disburse funds to the subrecipients quickly to assist with rental housing needs. County staff responsible for managing the CRF program were not aware of the risk assessment and subrecipient monitoring requirements for awards dependent on participant eligibility.Effect of ConditionThe County did not complete a risk assessment for this subaward. Without conducting a risk assessment, the County risks not adequately monitoring its subrecipients to ensure they have complied with program requirements and used federal funds appropriately. Since the County did not monitor its subrecipients, it was unable to confirm only eligible households received assistance.RecommendationWe recommend the County perform a sufficient risk assessment over subrecipients and monitor them accordingly to verify they are complying with the terms and conditions of the award and only providing funds to eligible participants.County?s ResponseCounty employee did meet with the subrecipient on a weekly basis to touch base and ensure that any questions or concerns regarding program eligibility, forms, requirements, guidelines, etc. could be addressed in a timely manner. The county employee also complied with the file review that Commerce conducted, ensuring that the subrecipient was utilizing the appropriate documents, supporting documentation, and following the guidelines. The County employee worked with the subrecipient to get all necessary files to Commerce in a timely manner and also communicated improvements to the subrecipient after the monitoring.Corrective Action:DCH will be contracting with consultant to develop federal grant management including risk analysis and subrecipient monitoring. Program and fiscal staff will be trained.Auditor?s RemarksWe appreciate the County?s commitment to resolving 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 RegulationsTitle 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, section 331, Subrecipient and contractor determinations, and 332, Requirements for pass-through entities, establishes the requirements for identifying whether the party is a subrecipient or contractor and subrecipient monitoring and management requirements for pass-through 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.

2021-004 The County had inadequate controls for ensuring compliance with suspension and debarment requirements.CFDA Number and Title: 21.027 ? COVID-19 ? Coronavirus State and Local Fiscal Recovery FundsFederal Grantor Name: U.S. Department of the TreasuryFederal Award/Contract Number: 1505-0271Pass-through Entity Name: NAPass-through Award/Contract Number: N/AQuestioned Cost Amount: $0Description of ConditionDuring fiscal year 2021, the County spent a total $4.35 million in federal funding under the Coronavirus State and Local Fiscal Recovery Funds program. Of this amount, the County used $2.86 million to provide government services to the extent that COVID-19 caused a reduction in revenue collected in its most recent fiscal year. The County awarded the remaining $1.49 million to a subrecipient to provide emergency rental assistance.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, 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 for exclusion records in the U.S. General Services Administration?s System for Award Management at SAM.gov. The County must perform this verification before entering into the contract or, in this specific case, before charging the costs to a federal award. Additionally, the County must keep documentation demonstrating compliance with this federal requirement.Our audit found the County did not have effective internal controls for verifying the suspension and debarment status of contractors for contracts or purchases of $25,000 or more. Specifically, the County did not verify that five contractors it paid $25,000 or more during fiscal year 2021 were not suspended or debarred.We consider this control deficiency to be a material weakness, which led to material noncompliance.The issue was not reported as a finding in the prior audit.Cause of ConditionCounty employees responsible for the purchases said they did not know about the federal requirement to verify the contractors were not suspended or debarred.Effect of ConditionThe County did not verify whether five contractors were not suspended or debarred. The County paid these contractors $2,578,488 during fiscal year 2021.Without adequate internal controls, the County cannot ensure contractors paid with federal funds are 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. The County subsequently verified the contractors were not suspended or debarred. Therefore, we are not questioning costs.RecommendationWe recommend the County ensure all contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred before entering into the contract or making first payment to the contractor.County?s ResponseWe agree with the auditor?s comments and the county recognizes the challenges with staffing, training, onboarding, and managing unforeseen large amounts of federal funds coming into the county during COVID response. The county will be utilizing a contractor to assist in establishing policies, procedures, training, and strategic improvements to allow quick onboarding of staff in policies, procedures and regulations outlined by CRF 200 for future emergency federal funding and routine federal funding. Walla Walla County is committed to the importance of managing federal funding.Auditor?s RemarksWe appreciate the County?s commitment to resolving 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 RegulationsTitle 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.

2021-005 The County lacked internal controls for ensuring compliance with federal subrecipient monitoring requirements.CFDA Number and Title: 21.027 ? COVID-19 ? Coronavirus State and Local Fiscal Recovery FundsFederal Grantor Name: U.S. Department of the TreasuryFederal Award/Contract Number: N/APass-through Entity Name: Washington State Department of CommercePass-through Award/Contract Number: 21-4619C-129Questioned Cost Amount: $0Description of ConditionThe purpose of Coronavirus State and Local Fiscal Recovery Funds (SLFRF) is to provide direct payment to states, U.S. territories, tribal governments, metropolitan cities, counties, and (through states) non-entitlement units of local government.The County received an award from the Washington State Department of Commerce (Commerce) for its Eviction Rent Assistance Program (ERAP) 2.0, funded with SLFRF. ERAP is intended to prevent evictions that would contribute to the spread of COVID-19 by paying past due, current due and future rent, targeting limited resources to those with the greatest needs while working to distribute funds equitably. During fiscal year 2021, the County spent $1,491,699 of its ERAP award from Commerce. Of this amount, the County passed through $1,490,913 to one subrecipient to administer the 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.Whenever the County passes on federal funding to subrecipients, federal regulations require the County to monitor them to ensure they comply with the terms and conditions of the federal award. For awards dependent on participant eligibility, monitoring would include verifying the subrecipients only provided assistance to participants who met program eligibility requirements. The amount of verification would depend on each subrecipient?s risk of noncompliance.Our audit found the County did not monitor its subrecipient, as federal regulations require. Specifically, the County did not obtain documentation from the subrecipient to ensure the assisted households were eligible.We consider this deficiency in internal controls to be a material weakness that led to material noncompliance.The issue was not reported as a finding in the prior audit.Cause of ConditionWith the effects of COVID-19, it was urgent for the County to disburse funds to the subrecipient quickly to assist with rental housing needs. Further, County staff responsible for managing the program were not aware of the subrecipient monitoring requirements.Effect of ConditionThe County did not monitor the subrecipient to ensure it complied with the terms and conditions of the subaward and used federal program funds appropriately. Since the County did not monitor its subrecipient, it was unable to confirm only eligible households received assistance.RecommendationWe recommend the County monitor its subrecipients to ensure they comply with the terms and conditions of their federal subawards, including only providing funds to eligible program participants.County?s ResponseWe agree with the auditor?s comments and the county recognizes the challenges with staffing, training, onboarding, and managing unforeseen large amounts of federal funds coming into the county during COVID response. The county will be utilizing a contractor to assist in establishing policies, procedures, training, and strategic improvements to allow quick onboarding of staff in policies, procedures and regulations outlined by CRF 200 for future emergency federal funding and routine federal funding. Walla Walla County is committed to the importance of managing federal funding.Auditor?s RemarksWe appreciate the County?s commitment to resolving 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 RegulationsTitle 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, section 332, Requirements for pass-through entities, establishes the requirements for subrecipient monitoring and management requirements for pass-through 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.