Clackamas, County of

FINDING 2024-001 – Reporting – Significant Deficiency in Internal Controls over Compliance and Instance of Noncompliance See the Notes to the SEFA for chart/table. Criteria or specific requirement: Prime grant recipients awarded a federal contract greater than or equal to $30,000 are subject to Federal Funding Accountability and Transparency Act (FFATA) subaward reporting requirements. The prime awardee is required to file a FFATA subaward report by the end of the month following the month in which the prime contractor awards any subcontract greater than or equal to $30,000. In addition, as a condition of the award, the County is required to submit cash-on-hand reports quarterly. Condition: During our testing, the County did not file a FFATA report for one of its subrecipients that was granted the sub-award during the fiscal year. In addition, we were provided with documentation that indicated the County did not file two of its quarterly cash-on-hand reports by the due date specified in the award document. Context: Of the six subrecipients that received funding, only one subrecipient was awarded funds in the current fiscal year, and no FFATA report was filed. Of the four cash-on-hand reports, two of four reports was not filed by the due date. Effect: The FFATA report was not filed within 30 days of the sub-award. The failure to have the FFATA reports submitted could result in the submission of inaccurate or incomplete information to federal agencies, potentially leading to non-compliance with federal requirements, mismanagement of funds, and jeopardizing future funding. In addition, two cash-on-hand reports were not filed by the due date specified in the award document. Cause: The County does not have an effective control in place to monitor reporting timelines and submission. Repeat finding: No. Recommendation: We recommend the County work to establish an internal tracking system to memorialize reporting deadlines and track the submission of required reports under the program. Views of responsible officials: Management agrees with the auditor recommendation.

FINDING 2024-002 – Procurement, Suspension and Debarment – Significant Deficiency in Internal Controls over Compliance and Instance of Noncompliance See the Notes to the SEFA for chart/table. Criteria or specific requirement: Federal regulations require that grantees have controls in place to verify that vendors are not suspended or debarred prior to entering into contracts for goods and services exceeding $25,000. Condition: For two of the contracts tested, there was no evidence of verification from sam.gov being obtained to verify vendors were not suspended or debarred prior to conducting business. There was also no evidence in the County’s contract with the vendor that the appropriate language had been included. Context: Of the 39 vendors that had expenditures greater than $25,000, we selected four vendors for procurement testing. Effect: The County could be transacting with parties that are suspended or debarred and may be subject to questioned costs or other sanctions from funding agencies. However, during the course of the audit we verified these vendors were not previously suspended or debarred. Cause: There were ineffective controls in place during the period, along with lack of management oversight. Repeat finding: No Recommendation: We recommend that before the County executes contracts with vendors that exceed $25,000, the vendor is compared to the listing of suspended and debarred vendors on the sam.gov website and that this verification is properly documented. Views of responsible officials: Management agrees with the auditor recommendation.

FINDING 2024-003 – Allowable Costs – Significant Deficiency in Internal Controls over Compliance and Instance of Noncompliance See the Notes to the SEFA for chart/table. Criteria or specific requirement: Recipients may use State and Local Fiscal Recovery Funds (SLFRF) for any eligible expenses subject to the restrictions set forth in sections 602 and 603 of the Social Security Act as added by section 9901 of the American Rescue Plan Act of 2021, codified at 42 USC sections 802 and 803, and as amended by the 2023 Consolidated Appropriations Act. In general, recipients may use payments from SLFRF to respond to the public health and negative economic impacts of the pandemic, replace lost public sector revenue, provide premium pay for essential workers, invest in water, sewer, and broadband infrastructure, provide emergency relief from natural disasters or the negative economic impacts of natural disasters, fund projects eligible under certain programs administered by the U.S. Department of Transportation, and fund projects eligible under the programs established in Title I of the Housing and Community Development Act of 1974. Condition: For nine of the items tested, we noted the County had charged contracted services for temporary employees to assist with either accounting or Ballot Measure 108, neither of which are considered allowable in accordance with the regulations. Context: Of the 35 disbursements that were tested, 9 items were identified that included detail that did not support that the expenditure was allowable in accordance with the regulations. Effect: The County charged expenditures that were unallowable. Cause: Journal entries were posted to charge the expenditures to the grant without proper review of the supporting documentation, including timesheets, to verify whether the expenditure would be considered allowable in accordance with the regulations. Repeat finding: No Recommendation: We recommend that the County thoroughly review all supporting documentation prior to charging expenditures to a Federal grant to ensure the amount is allowable in accordance with the respective regulations. Views of responsible officials: Management agrees with the auditor recommendation.

FINDING 2023-002 - Reporting - Significant Deficiency in Internal Controls over Compliance See the Notes to the SEFA for chart/table. Criteria or specific requirement: As a condition of the award, the County is required to submit a Federal Financial Report (FFR) annually. Condition: During our testing, we were provided with documentation that indicated the County did not file FFR by the due date specified in the award document. Context: Of the 5 reports available for testing, we randomly selected three FFRs filed during fiscal year 2023 noting all were filed untimely. Effect: The reports were not filed by the due date specified in the award document. Cause: The County does not have an effective control in place to monitor reporting timelines. Repeat funding: No Recommendation: We recommend the County work to establish an internal tracking system to memorialize reporting deadlines and track the submission of required reports under the program. Views of responsible officials: Management agrees with the finding and auditor recommendation.

Federal Assistance Listing Number and Program Name - 21.023 COVID-19 - Emergency Rental Assistance Program Award Number: N/A Award Year: 2022 Questioned Costs: None reported Criteria or specific requirement: Performance and financial monitoring and reporting done post federal award must comply with the post federal award requirements at 45 CFR part 75, subpart D. Condition: We were unable to obtain evidence supporting the timely submission of monthly special reporting required under the program. This issue did not extend to the quarterly reporting required under the program. Context: Of the 12 monthly reports available for testing, we randomly selected three reports filed during fiscal year 2022 noting one of the reports had no support available to substantiate that the reports were submitted timely by the County. If there was an extension granted by the federal agency, the County maintained no evidence of an approved extension. Effect: There could have been delays in required monthly reporting to Treasury. Cause: The County has no control in place to document and maintain extensions granted by the federal agency. Repeat finding: No. Recommendation: We recommend the County work to establish an internal tracking system to memorialize reporting deadlines and track the submission of required reports under the program. Such a system should include a control ensuring evidence of granted extensions for reports are documented and maintained for an appropriate period. Views of responsible officials: Management agrees with the finding and auditor recommendation.

Identification of federal program ? 14.218, CDBG ? Entitlement Grants Cluster Criteria or specific requirement ? Evidence of timesheet approval by the department supervisor should be maintained for all federal programs in accordance with OMB Uniform Guidance ?200.303 ? Internal Controls to ascertain the allowability of costs incurred under the program. Condition ? We identified three timesheets that did not have appropriate approval of the selected timecard. Context ? We selected 14 payroll charges from the entire population of payroll charges for the fiscal year. Of the 14 items selected for testing, three timesheets were identified that did not have an approval noted by the department supervisor to verify the number of hours worked and the allocation of these hours to the grant job code which determines the payroll allocation to grant. Effect ? Hours worked and the allocation of time to federal programs could be inaccurately captured on the timesheet and not discovered and corrected. Questioned costs ? None. Cause ? It is the County?s practice to allow payroll to be processed prior to a timesheet being approved by the department supervisor; however, it is the County?s policy that payroll would follow up with the department subsequent to the pay date to obtain the approval. For the three selections we identified, either the evidence of such approval was not retained or the departments did not perform the timesheet review. Repeat finding ? No. Recommendation ? We recommend that evidence of timesheet approval by the department supervisor be obtained and maintained for Federal programs and for future review. Views of responsible officials and planned corrective actions - Our Payroll department currently makes several attempts to obtain approval from timesheet approvers for time that has not been approved. In addition to continuing with this effort, the Payroll department will follow up with the offending department?s Director if no response is received from the original approver during the following pay period. If the issue can?t be resolved at this level, it will be escalated to the County?s Finance Director in the following period who will address it at the Department and/or County Administrator level and approvals will be obtained and retained.

Identification of federal program ? 97.036, Disaster Grants ? Public Assistance (Presidentially Declared Disasters) Criteria or specific requirement ? The County should ensure the accuracy of grant related payroll calculations for all federal programs in accordance with OMB Uniform Guidance ?200.303 ? Internal Controls to ascertain the allowability of costs incurred under the program. Condition ? We identified five errors in the payroll calculation that resulted in the grant being incorrectly charged due to a lack of review in the payroll calculation. Context ? We selected 40 payroll charges from the entire population of payroll charges for the fiscal year. Of the 40 items selected for testing, the following errors were identified: - One instance where the overtime hours of an employee were included in both the overtime and regular fringe benefits calculations. - One instance of an incorrect longevity rate applied to an employee?s pay rate. - Two instances where an outdated payrate was charged to the grant rather than the current payrate. - One instance where overtime hours were charged at the regular fringe rate, rather than the overtime fringe rate. Known misstatements from the five errors totaled to a $49 undercharge to the program. Effect ? Improperly reviewing payroll calculations could lead to mischarges to the federal program. Questioned costs ? None Cause ? Upon the completion of the timesheet approval, the FEMA accountant manually calculates the appropriate amount to be charged to the grant. The process includes multiplying the hours worked for the FEMA project obtained from the approved timesheet to the corresponding rates (e.g. regular, overtime, fringe benefits). There was no review in this process to verify the accuracy of the calculation in the event of an error. Repeat finding ? No. Recommendation ? We recommend that the payroll calculation be reviewed prior to the FEMA portal submission. Views of responsible officials and planned corrective actions - Following the FEMA accountant?s manual calculation of the appropriate amount to be charged to a grant or reimbursement application, a manager in the Finance Department (a Deputy Director, Accounting Manager, or Grant Manager) will review the numbers, formulas, and calculations in the spreadsheets to verify the accuracy of them.

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