{"database": "mytown-research", "table": "audit_findings", "rows": [[1, "wa-sao", "1017656", "2015-001", 4, "WA", "City of Seattle", "City/Town", "0433", "5363000", "geoid_place", "Washington State Auditor's Office", "Financial and Federal audit \u2014 City of Seattle", "Financial and Federal", 2015, "2015-01-01", "2015-12-31", "2019-08-19", "federal_award_compliance", "material_weakness", 928647.0, "Questioned Cost Amount: $928,647", "The City did not have adequate internal controls in place to ensure compliance with federal subrecipient monitoring requirements. CFDA Number and Title: 14.218 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U. S. Department of Housing and Urban Development Federal Award/Contract Number: B10MC530005, B11MC530005, B12MC530005, B13MC530005, B14MC530005, B15MC530005 Pass-t", "Description of Condition \nThe objective of the Community Development Block Grant program is to develop \nviable urban communities by providing decent housing, a suitable living \nenvironment, and expanding economic opportunities, principally for persons of low \nand moderate income. The City of Seattle spent $11.6 million in grant funds from \nthe U. S. Department of Housing and Urban Development. The City\u2019s Human \nService Department passed on $3.8 million to five subrecipients during 2015 to \nprovide homeless assistance to City\u2019s residents. \nFederal regulations require the City to perform risk evaluations to evaluate \nsubrecipients\u2019 risk of noncompliance to determine the appropriate level of \nmonitoring. It also requires the City to monitor the subrecipients\u2019 activities to \nensure that the subawards are used for authorized purposes which can be \naccomplished by either requiring subrecipient invoices to contain supporting \ndocumentation or reviewing supporting documentation during on -site visits. That \nmonitoring, particularly the on -site visit s, is important to ensure that the \nsubrecipients\u2019 administration of programs are appropriate and in compliance with \napplicable requirements, including those related to allowable and supported costs. \n \nWashington State Auditor\u2019s Office Page 10 \nThe City requires the subrecipients to submit detailed general ledger reports as part \nof the request for payment and has a policy for semi-annual on-site visits to review \ndocumentation included in the report to ensure the costs are allowable and \nsupported. \nThe City\u2019s process for subrecipient monitoring is not working as intended. During \nour audit, we found: \n\uf0b7 The Human Service Department did not perform risk assessments for the \nthree subrecipients we selected for review. \n\uf0b7 For two of the three subrecipients reviewed, the Human Service Department \ndid not obtain supporting documentation with the requests for payment, nor \ndid they perform on-site visits, where a review of documentation to support \nthe costs reimbursed would have been done. \nWe consider these deficiencies in internal controls to be significant deficiencies. \nCause of Condition \nThe Departments were not aware that risk evaluations are required for all \nsubrecipients receiving money from federal awards. \nThe Grants and Contracts Specialists who are responsible for approving \nsubrecipient payments and performi ng on -site visits did not have the necessary \ntraining and resources to perform adequate reviews. \nEffect of Condition and Questioned Costs \nWithout adequate internal controls in place, the Department cannot ensure that the \nsubrecipients used the program fu nds in accordance with the grant agreement and \nfederal requirements. \nThe Human Service Department paid $928,647 to two subrecipients without \nperforming on-site visits or requiring adequate supporting documentation for costs \nincurred. As a result, we are questioning the total amount paid to these \nsubrecipients. \nRecommendation \nWe recommend that the Departments establish internal controls to ensure \ncompliance with the subrecipient monitoring requirements including: \n\uf0b7 Conduct a risk assessment to evaluate each subrecipient's risk of \nnoncompliance for purposes of determining the appropriate monitoring \nactivities. \n \nWashington State Auditor\u2019s Office Page 11 \n\uf0b7 Provide training to program specialists to ensure they have an adequate \nunderstanding of federal subrecipient monitoring requirements and \nDepartment policies. \n\uf0b7 Require subrecipients to provide adequate documentation to support the \ncosts incurred or perform on -site visits that includes a review of source \ndocumentation. \nCity\u2019s Response \nThe City understands the Auditor\u2019s concerns regarding inadequate internal \ncontrols in place and is taking immediate and long -term corrective actions to \nensure compliance with federal subrecipient monitoring requirements going \nforward. \nAuditor\u2019s Remarks \nWe thank the City for its assistance during the audit and will follow up on corrective \nactions taken during the next audit. \nApplicable Laws and Regulations \nThe American Institute of Certified Public Accountants defines significant \ndeficiencies and material weaknesses in its Codification of Statements on Auditing \nStandards, section 935, as follows: \n.11 For purposes of adapting GAAS to a compliance audit, the \nfollowing terms have the meanings attributed as follows: . . . \nDeficiency in internal control over compliance. A \ndeficiency in internal control over compliance exists w hen \nthe design or operation of a control over compliance does \nnot allow management or employees, in the normal course \nof performing their assigned functions, to prevent, or detect \nand correct, noncompliance on a timely basis. A deficiency \nin design exists when (a) a control necessary to meet the \ncontrol objective is missing, or (b) an existing control is not \nproperly designed so that, even if the control operates as \ndesigned, the control objective would not be met. A \ndeficiency in operation exists when a pr operly designed \ncontrol does not operate as designed or the person \nperforming the control does not possess the necessary \nauthority or competence to perform the control effectively. . \n. \n \nWashington State Auditor\u2019s Office Page 12 \nMaterial weakness in internal control over compliance. \nA deficiency, or combination of deficiencies, in internal \ncontrol over compliance, such that there is a reasonable \npossibility that material noncompliance with a compliance \nrequirement will not be prevented, or detected and corrected, \non a timely basis. In this section, a reasonable possibility \nexists when the likelihood of the event is either reasonably \npossible or probable as defined as follows: \nReasonably possible. The chance of the future event or \nevents occurring is more than remote but less than likely. \nRemote. The c hance of the future event or events \noccurring is slight. \nProbable. The future event or events are likely to occur. \nSignificant deficiency in internal control over \ncompliance. A deficiency, or a combination of deficiencies, \nin internal control over compliance that is less severe than a \nmaterial weakness in internal control over compliance, yet \nimportant enough to merit attention by those charged with \ngovernance. \nTitle 2 Code of Federal Regulations Section 200.303 Internal controls. \nThe non-Federal entity must: \n(a) Establish and maintain effective internal control over the \nFederal award that provides reasonable assurance that the \nnon-Federal entity is managing the Federal award in \ncompliance with Federal statutes, regulations, and the terms \nand conditions of the Federal award. These internal controls \nshould be in compliance with guidance in \u201cStandards for \nInternal Control in the Federal Government\u201d issued by the \nComptroller General of the United States or the \u201cInternal \nControl Integrated Framework\u201d, issued by the Committee of \nSponsoring Organizations of the Treadway Commission \n(COSO). \n(b) Comply with Federal statutes, regulations, and the terms \nand conditions of the Federal awards. \n \nWashington State Auditor\u2019s Office Page 13 \nTitle 2 Code of Federal Regulations Subpart D Post Federal Award Requirements \nSection 200.331 Requirements for pass-through entities states in part: \nAll pass-through entities must: \n(b) Evaluate each subrecipient's risk of noncompliance with \nFederal statutes, regulations, and the terms and conditions of \nthe subaward for purposes of determining the appropriate \nsubrecipient monitoring described in paragraphs (d) and (e) \nof this section, which may include consideration of such \nfactors as: \n(1) The subrecipient's prior experience with the same or \nsimilar subawards; \n(2) The results of previous audits including whether or \nnot the subrecipient receives a Single Audit in \naccordance with Subpart F\u2014Audit Requirements of this \npart, and the extent to which the same or similar \nsubaward has been audited as a major program; \n(3) Whether the subrecipient has new personnel or new \nor substantially changed systems; and \n(4) The extent and results of Federal awarding agency \nmonitoring (e.g., if the subrecipient also receives Federal \nawards directly from a Federal awarding agency). \n(d) Monitor the activities of the subrecipient as necessary to \nensure that the subaward is used for authorized purposes, in \ncompliance with Federal statutes, regulations, and the terms \nand conditions of the subaward; and that subaward \nperformance goals are a chieved. Pass -through entity \nmonitoring of the subrecipient must include: \n(1) Reviewing financial and performance reports \nrequired by the pass-through entity. \n(2) Following-up and ensuring that the subrecipient takes \ntimely and appropriate action on all de ficiencies \npertaining to the Federal award provided to the \nsubrecipient from the pass -through entity detected \nthrough audits, on-site reviews, and other means. \n \nWashington State Auditor\u2019s Office Page 14 \n(3) Issuing a management decision for audit findings \npertaining to the Federal award provided to the \nsubrecipient from the pass-through entity as required by \n\u00a7200.521 Management decision. \n(e) Depending upon the pass -through entity's assessment of \nrisk posed by the subrecipient (as described in paragraph (b) \nof this section), the following monitoring tools may be useful \nfor the pass -through entity to ensure proper accountability \nand compliance with program requirements and \nachievement of performance goals: \n(1) Providing subrecipients with training and technical \nassistance on program-related matters; and \n(2) Performing on -site reviews of the subrecipient's \nprogram operations; \n(3) Arranging for agreed-upon-procedures engagements \nas described in \u00a7200.425 Audit services. \n(f) Verify that every subrecipient is audited as required by \nSubpart F \u2014Audit Requirements of this part when it is \nexpected that the subrecipient's Federal awards expended \nduring the respective fiscal year equaled or exceeded the \nthreshold set forth in \u00a7200.501 Audit requirements. \n(g) Consider whether the results of the subrecipient's audits, \non-site reviews, or other monitoring indicate conditions that \nnecessitate adjustments to the pass -through entity's own \nrecords. \n(h) Consider taking enforcement action against \nnoncompliant subrecipients as described in \u00a7200.338 \nRemedies for noncompliance of this part and in program \nregulations. \n \nWashington State Auditor\u2019s Office Page 15 \nTitle 2 Code of Federal Regulations Subpart E Cost Principles Sections 200.400 \nthrough 200.403 General Provisions and Basic Considerations states in part: \n\u00a7200.400 Policy guide. \nThe application of these cost principles is based on the \nfundamental premises that: \n(a) The non-Federal entity is responsible for the efficient and \neffective administration of the Federal award through the \napplication of sound management practices. \n(b) The non -Federal entity assumes responsibility for \nadministering Federal funds in a manner consistent with \nunderlying agreements, program objectives, and the terms \nand conditions of the Federal award. \n(c) The non-Federal entity, in recognition of its own unique \ncombination of staff, facilities, and experience, has the \nprimary responsibility for employing whatever form of \nsound organization and management techniques may be \nnecessary in order to assure proper and efficient \nadministration of the Federal award. \n(d) The application of these cost principles should require no \nsignificant changes in the internal accounting policies and \npractices of the non-Federal entity. However, the accounting \npractices of the non -Federal entity must be consistent with \nthese cost principles and support the accumulation of costs \nas required by the principles, and must provide for adequate \ndocumentation to support costs charged to the Federal \naward. \n \u00a7200.402 Composition of costs. \nTotal cost. The total cost of a Federal award is the sum of the \nallowable direct and allocable indirect costs less any applicable \ncredits. \n \n \nWashington State Auditor\u2019s Office Page 16 \n\u00a7200.403 Factors affecting allowability of costs. \nExcept where otherwise authorized by statute, costs must meet \nthe following general criteria in order to be allowable under \nFederal awards: \n(a) Be necessary and reasonable for the performance of the \nFederal award and be allocable thereto under these \nprinciples. \n(b) Conform to any limitations or exclusions set forth i n \nthese principles or in the Federal award as to types or amount \nof cost items. \n(c) Be consistent with policies and procedures that apply \nuniformly to both federally -financed and other activities of \nthe non-Federal entity. \n(d) Be accorded consistent treatm ent. A cost may not be \nassigned to a Federal award as a direct cost if any other cost \nincurred for the same purpose in like circumstances has been \nallocated to the Federal award as an indirect cost. \n(e) Be determined in accordance with generally accepted \naccounting principles (GAAP), except, for state and local \ngovernments and Indian tribes only, as otherwise provided \nfor in this part. \n (g) Be adequately documented. See also \u00a7\u00a7200.300 \nStatutory and national policy requirements through 200.309 \nPeriod of performance of this part. \n \n \nWashington State Auditor\u2019s Office Page 17", "https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1017656&isFinding=false&sp=false", "2026-07-30 13:24:54"]], "columns": ["rowid", "source", "report_number", "finding_number", "muni_id", "state", "entity_name", "entity_type", "entity_ext_id", "place_geoid", "match_method", "auditor", "report_title", "audit_type", "fiscal_year", "period_start", "period_end", "published_date", "finding_category", "severity", "questioned_cost", "cost_basis", "finding_title", "finding_text", "report_url", "fetched_at"], "primary_keys": ["rowid"], "primary_key_values": ["1"], "units": {}, "query_ms": 163.42813600203954, "source": "MyTown", "source_url": "https://mytown.theboringparts.com", "license": "CC BY 4.0", "license_url": "https://creativecommons.org/licenses/by/4.0/"}