OIG Ca 25 025 Desk Review Of The State Of Washington S Use Of Coronavirus Relief Fund Proceeds
Summary
A Department of the Treasury Office of Inspector General memorandum dated December 19, 2024, Desk Review of the State of Washington's Use of Coronavirus Relief Fund Proceeds (OIG-CA-25-025), from Assistant Inspector General for Audit Deborah L. Harker, transmitting a desk review performed by Castro & Company, LLC. Castro reviewed a non-statistical selection of 25 transactions and identified unsupported and ineligible questioned costs of $14,085,335 and $283,599, with total questioned costs of $14,368,934. It found that the Contracts and Aggregate Reporting payment types complied with the CARES Act and Treasury's Guidance, while the Grants, Transfers, Direct Payments and Aggregate Payments to Individuals types did not, and it rated Washington's risk of unallowable use of funds as high. Castro recommends follow-up, recoupment if support is not provided, and consideration of an audit.
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DEPARTMENT OF THE TREASURY
W ASHINGTON, D.C. 20220
OFFICE OF
INSPECTOR GENERAL
December 19, 2024
MEMORANDUM FOR JESSICA MILANO, CHIEF PROGRAM OFFICER, OFFICE OF
CAPITAL ACCESS, DEPARTMENT OF THE TREASURY
FROM: Deborah L. Harker /s/
Assistant Inspector General for Audit
SUBJECT: Desk Review of the State of Washington’s Use of
Coronavirus Relief Fund Proceeds (OIG-CA-25-025)
Please find the attached desk review memorandum1 on State of Washington’s
(Washington) use of Coronavirus Relief Fund (CRF) proceeds. The CRF is
authorized under Title VI of the Social Security Act, as amended by Title V,
Division A of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).
Under a contract monitored by our office, Castro & Company, LLC (Castro), a
certified independent public accounting firm, performed the desk review. Castro
performed the desk review in accordance with the Council of the Inspectors
General on Integrity and Efficiency Quality Standards for Federal Offices of
Inspector General standards of independence, due professional care, and quality
assurance.
In its desk review, Castro personnel reviewed documentation for a non-statistical
selection of 25 transactions reported in the quarterly Financial Progress Reports
(FPR) and identified unsupported and ineligible questioned costs of $14,085,335
and $283,599, respectively, with total questioned costs of $14,368,934. (see
attached schedule of monetary benefits).
1
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) assigned the Department of
the Treasury Office of Inspector General with responsibility for compliance monitoring and
oversight of the receipt, disbursement, and use of Coronavirus Relief Fund (CRF) payments. The
purpose of the desk review is to perform monitoring procedures of the prime recipient’s receipt,
disbursement, and use of CRF proceeds as reported in the grant-reporting portal on a quarterly
basis.
Page 2
Castro determined that the expenditures related to the Contracts greater than or
equal to $50,000 and Aggregate Reporting less than $50,000 2 payment types
complied with the CARES Act and the Department of the Treasury’s (Treasury)
Guidance. Also, Castro determined that expenditures related to the Grants greater
than or equal to $50,000, Transfers greater than or equal to $50,000, 3 Direct
Payments greater than or equal to $50,000, and Aggregate Payments to
Individuals4 payment types did not comply with the CARES Act and Treasury’s
Guidance. Additionally, Castro determined Washington’s risk of unallowable use
of funds is high.
Castro recommends that Treasury Office of Inspector General (OIG) follow-up with
Washington’s management to confirm if the $14,085,335 noted as unsupported
expenditures within the Grants greater than or equal to $50,000, Transfers greater
than or equal to $50,000, Direct Payments greater than or equal to $50,000, and
Aggregate Payments to Individuals payment types can be supported. If support is
not provided, Treasury OIG should recoup the funds or request Washington
management to provide support for replacement expenses, not previously
charged, that were eligible during the CRF period of performance.
In addition, Castro recommends that Treasury OIG request Washington
management to provide support for replacement expenses, not previously
charged, that were eligible during the CRF period of performance for the $283,599
of ineligible costs charged to the Grants greater than or equal to $50,000,
Transfers greater than or equal to $50,000, and Aggregate Payments to Individuals
payment types. If support is not provided, Treasury OIG should recoup the funds.
Further, based on Washington management’s responsiveness to Treasury OIG’s
requests and management’s ability to provide sufficient documentation and/or
replace unsupported and ineligible transactions charged to CRF with valid
expenditures, Castro recommends Treasury OIG determine the feasibility of
conducting an audit for the Grants greater than or equal to $50,000, Transfers
greater than or equal to $50,000, Direct Payments greater than or equal to $50,000,
and Aggregate Payments to Individuals payment types.
2
Recipients are required to report CRF transactions greater than or equal to $50,000 in detail in the
grant-reporting portal. Transactions less than $50,000 can be reported as an aggregate lump-sum
amount by type (contracts, grants, loans, direct payments, and transfers to other government
entities).
3
A transfer to another government entity is a disbursement or payment to a government entity
that is legally distinct from the prime recipient.
4
Obligations and expenditures for payments made to individuals, regardless of amount, are
required to be reported in the aggregate in the grant-reporting portal to prevent inappropriate
disclosure of personally identifiable information.
Page 3
At the time of desk review fieldwork, Castro noted that Washington had findings
in their Single Audit Act Reports for fiscal years 2020, 2021, and 2022, as
summarized below:
• Washington’s fiscal year 2020 Single Audit Act report was published on
December 17, 2020, and the auditor identified unsupported questioned
costs specific to the CRF in the amount of $49,228,368.
• Washington’s fiscal year 2021 Single Audit Act report was published on
December 21, 2021, and the auditor identified unsupported questioned
costs specific to the CRF in the amount of $4,124,518.
• Washington’s fiscal year 2022 Single Audit Act report was published on
December 20, 2022, and the auditor identified unsupported questioned
costs specific to the CRF in the amount of $74,784.
• Washington’s fiscal year 2023 Single Audit Act report was published on
December 7, 2023, and did not include any CRF related questioned costs.
Castro recommends that Treasury OIG follow-up with Treasury’s Office of Capital
Access to ensure that management decision letters are issued on the CRF specific
findings identified by the auditor in these Single Audit Act reports.
Castro also identified eleven other matters detailed in Castro’s report which
warrant recommendations to Treasury OIG for additional action. Castro
recommends Treasury OIG follow-up on these issues.
Treasury OIG and Castro met with Washington management to discuss the
report. Washington management stated they would provide
additional documentation to Treasury OIG to support the questioned costs or
replace them with other eligible expenditures.
In connection with our contract with Castro, we reviewed Castro’s desk review
memorandum and related documentation and inquired of its representatives. Our
review, as differentiated from an audit performed in accordance with generally
accepted government auditing standards, was not intended to enable us to
express an opinion on Washington’s use of the CRF proceeds. Castro is
responsible for the attached desk review memorandum and the conclusions
expressed therein. Our review found no instances in which Castro did not comply
in all material respects with the Quality Standards for Federal Offices of Inspectors
General.
We appreciate the courtesies and cooperation provided to Castro and our staff
during the desk review. If you have any questions or require further information,
please contact me at (202) 486-1420, or a member of your staff may contact Lisa
DeAngelis, Audit Director, at (202) 487-8371.
Page 4
cc:
Michelle. A. Dickerman, Deputy Assistant General Counsel, Department of
the Treasury
Danielle Christensen, Deputy Chief Program Officer, Office of Capital
Access, Department of the Treasury
Wayne Ference, Partner, Castro & Company, LLC
Brian Tinney, Director of Accounting, State of Washington
Page 5
Attachment
Schedule of Monetary Benefits
According to the Code of Federal Regulations,5 a questioned cost is a cost that is
questioned due to a finding:
(a) which resulted from a violation or possible violation of a statute,
regulation, or the terms and conditions of a Federal award, including for
funds used to match Federal funds;
(b) where the costs, at the time of the review, are not supported by
adequate documentation; or
(c) where the costs incurred appear unreasonable and do not reflect the
actions a prudent person would take in the circumstances.
Questioned costs are to be recorded in the Department of the Treasury’s
(Treasury) Joint Audit Management Enterprise System (JAMES).6 The amount will
also be included in the Office of Inspector General (OIG) Semiannual Report to
Congress. It is Treasury management's responsibility to report to Congress on the
status of the agreed to recommendations with monetary benefits in accordance
with 5 USC 405.
Recommendation Questioned Costs
Recommendation No. 1 $14,368,934
The questioned cost represents amounts provided by Treasury under the
Coronavirus Relief Fund. As discussed in the attached desk review, $14,368,934 is
Washington’s total expenditures reported in the grant-reporting portal that were
ineligible or lacked supporting documentation.
5
2 CFR § 200.84 – Questioned Cost
6
JAMES is Treasury’s audit recommendation tracking system.
1635 King Street
Alexandria, VA 22314
Phone: 703.229.4440
Fax: 703.859.7603
www.castroco.com
Desk Review of the State of Washington
December 19, 2024
OIG-CA-25-025
MEMORANDUM FOR DEBORAH L. HARKER,
ASSISTANT INSPECTOR GENERAL FOR AUDIT
FROM: Wayne Ference
Partner, Castro & Company, LLC
SUBJECT: Desk Review of the State of Washington
On November 7, 2023, we initiated a desk review of the State of Washington’s
(Washington) use of the Coronavirus Relief Fund (CRF) authorized under Title VI of
the Social Security Act, as amended by Title V, Division A of the Coronavirus Aid,
Relief, and Economic Security Act (CARES Act).1 The objective of our desk review
was to evaluate Washington’s documentation supporting its uses of CRF proceeds
as reported in the GrantSolutions2 portal and to assess the risk of unallowable use
of funds. The scope of our desk review was limited to obligation and expenditure
data for the period of March 1, 2020 through September 30, 2023, 3 as reported in
the GrantSolutions portal.
As part of our desk review, we performed the following:
1) reviewed Washington’s quarterly Financial Progress Reports (FPRs)
submitted in the GrantSolutions portal through September 30, 2023;
2) reviewed the Department of the Treasury’s (Treasury) Coronavirus Relief
Fund Guidance as published in the Federal Register on January 15, 2021; 4
1
P.L. 116-136 (March 27, 2020).
2
GrantSolutions, a grant and program management Federal shared service provider under the
United States (U.S.) Department of Health and Human Services, developed a customized and user-
friendly reporting solution to capture the use of CRF payments from prime recipients.
3
Washington fully expended their total CRF proceeds as of September 30, 2023. Castro set the
scope end date to September 30, 2023, which was the date of Washington’s last reporting
submission within the GrantSolutions portal.
4
Coronavirus Relief Fund Guidance as published in the Federal Register (January 15, 2021).
https://home.treasury.gov/system/files/136/CRF-Guidance-Federal-Register_2021-00827.pdf
1
Desk Review of the State of Washington
3) reviewed Treasury Office of Inspector General’s (OIG) Coronavirus Relief
Fund Frequently Asked Questions Related to Reporting and
Recordkeeping;5
4) reviewed Treasury OIG’s monitoring checklists6 of Washington’s quarterly
FPR submissions for reporting deficiencies;
5) reviewed other audit reports issued, such as Single Audit Act reports,7 and
those issued by the Government Accountability Office and other applicable
Federal agency OIGs for internal control or other deficiencies that may
pose risk or impact Washington’s uses of CRF proceeds;
6) reviewed Treasury OIG Office of Investigations, the Council of the
Inspectors General on Integrity and Efficiency Pandemic Response
Accountability Committee,8 and Treasury OIG Office of Counsel input on
issues that may pose risk or impact Washington’s use of CRF proceeds;
7) interviewed key personnel responsible for preparing and certifying
Washington’s GrantSolutions portal quarterly FPR submissions, as well as
officials responsible for obligating and expending CRF proceeds;
5
Department of the Treasury Office of Inspector General Coronavirus Relief Fund Frequently Asked
Questions Related to Reporting and Recordkeeping OIG-20-028R; March 2, 2021.
6
The checklists were used by Treasury OIG personnel to monitor the progress of prime recipient
reporting in the GrantSolutions portal. GrantSolutions quarterly submission reviews were
designed to identify material omissions and significant errors, and where necessary, included
procedures for notifying prime recipients of misreported data for timely correction. Treasury OIG
followed the CRF Prime Recipient Quarterly GrantSolutions Submissions Monitoring and Review
Procedures Guide, OIG-CA-20-029R to monitor the prime recipients on a quarterly basis.
7
P. L. 104-156 (July 5, 1996) The Single Audit Act of 1984, as amended in 1996, requires entities
who receive federal funds in excess of $750,000 to undergo an annual audit of those Federal funds.
The act was enacted for the purpose of promoting sound financial management, including
effective internal controls, with respect to Federal awards administered by non-Federal entities and
to establish uniform requirements for audits. This prime recipient was subject to those audit
requirements, and Castro reviewed applicable prior year single audit reports as part of our desk
review risk assessment procedures.
8
Section 15010 of P.L. 116-136, the CARES Act, established the Pandemic Response Accountability
Committee within the Council of the Inspectors General on Integrity and Efficiency to promote
transparency and conduct and support oversight of covered funds (see Footnote 15 for a definition
of covered funds) and the coronavirus response to (1) prevent and detect fraud, waste, abuse, and
mismanagement; and (2) mitigate major risks that cut across program and agency boundaries.
2
Desk Review of the State of Washington
8) made a non-statistical selection of Contracts, Grants, Transfers,9 Direct
Payments, Aggregate Reporting, 10 and Aggregate Payments to Individuals11
F
data identified through GrantSolutions portal reporting; and
9) evaluated documentation and records used to support Washington’s
quarterly FPRs.
Based on our review of Washington’s documentation supporting the uses of its
CRF proceeds as reported in the GrantSolutions portal, we determined that the
expenditures related to the Contracts greater than or equal to $50,000 and
Aggregate Reporting less than $50,000 payment types complied with the CARES
Act and Treasury’s Guidance. Also, we determined that the expenditures related
to the Grants greater than or equal to $50,000, Transfers greater than or equal to
$50,000, Direct Payments greater than or equal to $50,000, and Aggregate
Payments to Individuals payment types did not comply with the CARES Act and
Treasury’s Guidance.
We identified unsupported and ineligible questioned costs of $14,085,335 and
$283,599, respectively, with total questioned costs of $14,368,934. We also
determined Washington’s risk of unallowable use of funds is high.
Castro recommends that Treasury OIG follow-up with Washington’s
management to confirm if the $14,085,335 noted as unsupported expenditures
within the Grants greater than or equal to $50,000, Transfers greater than or equal
to $50,000, Direct Payments greater than or equal to $50,000, and Aggregate
Payments to Individuals payment types can be supported. If support is not
provided, Treasury OIG should recoup the funds or request Washington
management to provide support for replacement expenses, not previously
charged, that were eligible during the CRF period of performance.
9
A transfer to another government entity is a disbursement or payment to a government entity
that is legally distinct from the prime recipient.
10
Prime recipients were required to report CRF transactions greater than or equal to $50,000 in
detail in the GrantSolutions portal. Transactions less than $50,000 could be reported as an
aggregate lump-sum amount by type (contracts, grants, loans, direct payments, and transfers to
other government entities).
11
Obligations and expenditures for payments made to individuals, regardless of amount, were
required to be reported in the aggregate in the GrantSolutions portal to prevent inappropriate
disclosure of personally identifiable information.
3
Desk Review of the State of Washington
In addition, Castro recommends that Treasury OIG request Washington
management to provide support for replacement expenses, not previously
charged, that were eligible during the CRF period of performance for the
$283,599 of ineligible costs charged to the Grants greater than or equal to $50,000,
Transfers greater than or equal to $50,000, and Aggregate Payments to Individuals
payment types. If support is not provided, Treasury OIG should recoup the funds.
Further, based on Washington’s responsiveness to Treasury OIG’s requests and
its ability to provide sufficient documentation and/or replace unsupported and
ineligible transactions charged to CRF with valid expenditures, Castro
recommends Treasury OIG determine the feasibility of conducting an audit for the
Grants greater than or equal to $50,000, Transfers greater than or equal to
$50,000, Direct Payments greater than or equal to $50,000, and Aggregate
Payments to Individuals payment types.
At the time of desk review fieldwork, Castro noted that Washington had findings
in their Single Audit Reports for fiscal years 2020, 2021, and 2022, which we have
summarized below:
Washington’s fiscal year 2020 Single Audit report was published on
December 17, 2020, and the auditor determined unsupported questioned
costs specific to the CRF in the amount of $49,228,368.
Washington’s fiscal year 2021 Single Audit report was published on
December 21, 2021, and the auditor determined unsupported questioned
costs specific to the CRF in the amount of $4,124,518.
Washington’s fiscal year 2022 Single Audit report was published on
December 20, 2022, and the auditor determined unsupported questioned
costs specific to the CRF in the amount of $74,784.
Castro recommends that Treasury OIG follow-up with Treasury’s Office of Capital
Access to ensure that management decision letters are issued on the CRF specific
findings identified by the auditor in these Single Audit reports. Washington’s fiscal
year 2023 Single Audit report was published on December 7, 2023, and did not
include any CRF related questioned costs. We recommend Treasury OIG follow-up
on any CRF specific questioned costs reported in the fiscal year 2020, 2021, and
2022 Single Audit reports.
4
Desk Review of the State of Washington
Non-Statistical Transaction Selection Methodology
Treasury issued a $2,167,079,311 CRF payment to Washington. As of
September 30, 2023, Washington’s cumulative obligations and expenditures were
both $2,166,901,344, which reflected a total of $177,967 in CRF proceeds that was
returned to Treasury. Washington’s cumulative obligations and expenditures by
payment type are summarized below.
Cumulative Cumulative
Payment Type
Obligations Expenditures
Contracts >= $50,000 $ 14,819,088 $ 14,819,088
Grants >= $50,000 $ 420,637,672 $ 420,637,672
Loans >= $50,000 $ - $ -
Transfers >= $50,000 $ 135,621,280 $ 135,621,280
Direct Payments >= $50,000 $ 7,954,638 $ 7,954,638
Aggregate Reporting < $50,000 $ 2,576,812 $ 2,576,812
Aggregate Payments to
Individuals (in any amount) $ 1,585,291,854 $ 1,585,291,854
Totals $ 2,166,901,344 $ 2,166,901,344
Castro made a non-statistical selection of payments in the Contracts greater than
or equal to $50,000, Grants greater than or equal to $50,000, Transfers greater
than or equal to $50,000, Direct Payments greater than or equal to $50,000,
Aggregate Reporting less than $50,000, and Aggregate Payments to Individuals
payment types. Selections were made using auditor judgment based on
information and risks identified in reviewing audit reports, the GrantSolutions
portal reporting anomalies 12 identified by the Treasury OIG CRF monitoring team,
and review of Washington’s FPR submissions. Washington did not obligate or
expend CRF proceeds to the Loans greater than or equal to $50,000 payment type;
therefore, we did not select transactions from this payment type.
The number of transactions (25) we selected to test were based on Washington’s
total CRF award amount and Castro’s overall risk assessment of Washington. To
allocate the number of transactions (25) by payment type (Contracts greater than
or equal to $50,000, Grants greater than or equal to $50,000, Transfers greater
than or equal to $50,000, Direct Payments greater than or equal to $50,000,
Aggregate Reporting less than $50,000, and Aggregate Payments to Individuals),
we compared the total payment type dollar amounts as a percentage of
cumulative expenditures as of September 30, 2023. The transactions tested were
not selected statistically, and therefore results could not be extrapolated to the
total universe of transactions.
12
Treasury OIG had a pre-defined list of risk indicators that were triggered based on data
submitted by prime recipients in the FPR submissions that met certain criteria. Castro reviewed
these results provided by Treasury OIG for the prime recipient.
5
Desk Review of the State of Washington
Background
The CARES Act appropriated $150 billion to establish the CRF. Under the CRF,
Treasury made payments for specified uses to States and certain local
governments; the District of Columbia and U.S. Territories, including the
Commonwealth of Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa,
and the Commonwealth of the Northern Mariana Islands; and Tribal governments
(collectively referred to as “prime recipients”). Treasury issued a $2,167,079,311
CRF payment to Washington. The CARES Act stipulates that a prime recipient may
only use the funds to cover costs that —
(1) were necessary expenditures incurred due to the public health
emergency with respect to the coronavirus disease 2019 (COVID-19);
(2) were not accounted for in the budget most recently approved as of
March 27, 2020; and
(3) were incurred during the covered period between March 1, 2020 and
December 31, 2021. 13
Section 15011 of the CARES Act required each covered recipient 14 to submit to
Treasury and the Pandemic Response Accountability Committee, no later than 10
days after the end of each calendar quarter, a report that contained (1) the total
amount of large, covered funds15,16 received from Treasury; (2) the amount of
large, covered funds received that were expended or obligated for each project or
activity; (3) a detailed list of all projects or activities for which large, covered funds
were expended or obligated; and (4) detailed information on any level of sub-
contracts or sub-grants awarded by the covered recipient or its sub-recipients.
The CARES Act assigned Treasury OIG the responsibility for compliance
monitoring and oversight of the receipt, disbursement, and use of CRF proceeds.
Treasury OIG also has the authority to recoup funds in the event it is determined a
13
P.L. 116-260 (December 27, 2020). The period of performance end date of the CRF was extended
through December 31, 2021 by the Consolidated Appropriations Act, 2021. The period of
performance end date for tribal entities was further extended to December 31, 2022 by the State,
Local, Tribal, and Territorial Fiscal Recovery, Infrastructure, and Disaster Relief Flexibility Act,
Division LL of the Consolidated Appropriations Act, 2023, P.L. 117-328, December 29, 2022, 136
Stat. 4459.
14
Section 15011 of P.L. 116-136, the CARES Act, defined a covered recipient as any entity that
received large, covered funds and included any State, the District of Columbia, and any territory or
possession of the United States.
15
Section 15010 of P.L. 116-136, the CARES Act, defined covered funds as any funds, including
loans, that were made available in any form to any non-Federal entity, not including an individual,
under Public Laws 116-123, 127, and 136, as well as any other law which primarily made
appropriations for Coronavirus response and related activities.
16
Section 15011 of P.L. 116-136, the CARES Act, defined large, covered funds as covered funds that
amounted to more than $150,000.
6
Desk Review of the State of Washington
prime recipient failed to comply with requirements of subsection 601(d) of the
Social Security Act, as amended, (42 U.S.C. 801(d)).
Desk Review Results
Financial Progress Reports
We reviewed Washington’s quarterly FPRs through September 30, 2023, and
found that Washington timely filed quarterly FPRs in the GrantSolutions portal in
compliance with Treasury OIG’s reporting requirements for the periods ending
June 30, 2020 through December 31, 2022 and the period ending
September 30, 2023. Further, FPRs for periods ending March 31, 2023 and
June 30, 2023 were not submitted by Washington because Washington completed
the closeout section of the FPR as of December 31, 2022. We confirmed the
September 30, 2023 FPR was submitted due to significant adjustments that
Washington made to that FPR. In addition, Washington checked the completion
box in the FPR as of September 30, 2023 indicating Washington completed CRF
reporting.
Summary of Testing Results
We found that Contracts greater than or equal to $50,000 and Aggregate
Reporting less than $50,000 payment types complied with the CARES Act and
Treasury’s Guidance. In addition, we found that the Grants greater than or equal
to $50,000, Transfers greater than or equal to $50,000, Direct Payments greater
than or equal to $50,000, and Aggregate Payments to Individuals payment types
did not comply with the CARES Act and Treasury’s Guidance because we were
unable to determine if all tested expenditures were necessary due to the COVID-19
public health emergency, were not accounted for in the budget most recently
approved as of March 27, 2020, and were incurred during the covered period. The
transactions selected for testing were not selected statistically, and therefore
results could not be extrapolated to the total universe of transactions.
7
Desk Review of the State of Washington
Within Table 1 below, we have included a summary of $2,687,244 in unsupported
and ineligible expenditures identified as questioned costs through our testing of
detailed transactions, which did not comply with the CARES Act and Treasury’s
Guidance. Castro also identified other matters throughout the course of our desk
review procedures which we considered to be questioned costs that were not part
of our testing of detailed transactions. Table 2 below combines the questioned
costs identified in Table 1 with the other questioned costs of $11,681,690
identified separately from our detailed transaction testing to account for total
questioned costs of $14,368,934. See the Desk Review Results section below Table
2 for a detailed discussion of questioned costs and other issues identified
throughout the course of our desk review.
Table 1 - Summary of Expenditures Testing and Recommended Results
As of September 30, 2023
Cumulative Unsupported Ineligible
Expenditure Cumulative Tested Tested Total Tested
Population Expenditure Questioned Questioned Questioned
Payment Type Amount Tested Amount Costs Costs Costs
Contracts >= $50,000 $ 14,819,088 $ 926,026 $ - $ - $ -
Grants >= $50,000 $ 420,637,672 $ 309,267 $ - $ 240,920 $ 240,920
Loans >= $50,000 $ - $ - $ - $ - $ -
Transfers >= $50,000 $ 135,621,280 $ 8,333 $ 2,100 $ 6,233 $ 8,333
Direct Payments >=
$50,000 $ 7,954,638 $ 120,000 $ - $ - $ -
Aggregate Reporting <
$50,000
$ 2,576,812 $ 36,379 $ - $ - $ -
Aggregate Payments to
Individuals (in any
amount) $ 1,585,291,854 $ 2,880,163 $ 2,401,545 $ 36,446 $ 2,437,991
Totals $ 2,166,901,344 $ 4,280,168 $ 2,403,645 $ 283,599 $ 2,687,244
8
Desk Review of the State of Washington
Table 2 – Summary of Expenditures Tested and Other Matters and Recommended Results
As of September 30, 2023
(B) (C=A+B) (E)
(A) Unsupported Total (D) Ineligible (F=D+E) (G=C+F)
Unsupported Questioned Unsupported Ineligible Questioned Total Ineligible Total
Questioned Costs (Other Questioned Questioned Costs Questioned Questioned
Payment Type Costs (Tested) Matters) Costs Costs (Tested) (Other Matters) Costs Costs
Contracts >= $50,000 $ - $ - $ - $ - $ - $ - $ -
Grants >= $50,000
$ - $ 10,772,591 $ 10,772,591 $ 240,920 $ - $ 240,920 $ 11,013,511
Loans >= $50,000
$ - $ - $ - $ - $ - $ - $ -
Transfers >= $50,000
$ 2,100 $ 492,084 $ 494,184 $ 6,233 $ - $ 6,233 $ 500,417
Direct Payments >= $50,000
$ - $ 417,015 $ 417,015 $ - $ - $ - $ 417,015
Aggregate Reporting < $50,000
$ - $ - $ - $ - $ - $ - $ -
Aggregate Payments to
Individuals (in any amount)
$ 2,401,545 $ - $ 2,401,545 $ 36,446 $ - $ 36,446 $ 2,437,991
Totals $ 2,403,645 $ 11,681,690 $ 14,085,335 $ 283,599 $ - $ 283,599 $ 14,368,934
9
Desk Review of the State of Washington
Contracts Greater Than or Equal to $50,000
We determined Washington’s Contracts greater than or equal to $50,000 complied
with the CARES Act and Treasury’s Guidance. We tested one contract totaling
$926,026 and identified no exceptions. The contract tested included expenditures
for the purchase of a one-year online search engine subscription within the
covered period to implement a chat bot which immediately responded to
unemployment insurance applicants to improve response times during the
COVID-19 pandemic.
Grants Greater Than or Equal to $50,000
We determined Washington’s Grants greater than or equal to $50,000 did not
comply with the CARES Act and Treasury’s Guidance. We tested five grants
totaling $309,267. The grants tested included expenditures for small business
assistance grants to reimburse for reopening or maintenance costs, and rental
assistance programs that prevented eviction for tenants with past due payments
during the COVID-19 pandemic. We identified exceptions related to three tested
grants; however, only one resulted in ineligible questioned costs of $240,920, as
detailed below.
Additionally, we identified unsupported questioned costs of $10,772,591 outside
of our detailed testing of transactions. These questioned costs related to
Washington’s GrantSolutions portal reconciliation errors, as detailed below.
Grant Exception #1 - Working Washington Small Business Grant Program17
Washington claimed $236,183,530 and we tested $35,000 in expenses for the
Working Washington Small Business Grant Program created by the Washington
Department of Commerce to assist businesses with operating expenses for
reopening during the pandemic. The Working Washington Small Business Grant
Program established a maximum amount of up to $25,000 for each awardee. We
noted the transaction amount we tested exceeded the maximum award amount
by $10,000 per the Working Washington Small Business Grant Program
guidelines.
17
Grant Exception #1 – Working Washington Small Business Grant Program section did not
contribute to the combined unsupported and ineligible questioned costs as part of Washington’s
CRF Desk Review. Washington management completed their corrective action plan to return the
duplicate payment of $17,500 to Treasury. However, the return to Treasury occurred subsequent to
Washington’s last submission within the GrantSolutions portal of September 30, 2023, which was
Castro’s scope end date for our desk review. Since there were still exceptions identified related to
this grant program during our scope period for our desk review, this grant program contributed to
a matter for Treasury OIG consideration.
10
Desk Review of the State of Washington
We requested Washington management to explain the $10,000 excess payment
amount beyond the $25,000 maximum amount allotted per awardee. Washington
management elaborated that the small business received two payments of
$17,500 at different times. Due to our fieldwork procedures, Washington
management returned the $17,500 to Treasury, and Treasury OIG confirmed the
return occurred after the close of the GrantSolutions portal reporting as of
September 30, 2023. We concluded Washington management completed their
corrective action plan, which resulted in no ineligible questioned costs noted for
the purpose of this desk review report.
Castro noted that Washington awarded 11,713 small businesses a total of
$236,183,530 in granted funds within its Working Washington Small Business
Grant Program. Since Castro identified ineligible balances during our fieldwork
procedures within the Working Washington Small Business Grant Program
payments, we recommend that Treasury OIG perform additional follow-up with
Washington to determine if there were other instances of ineligible balances
resulting from exceeding the maximum award amount within the Working
Washington Small Business Grant Program.
Grant Exception #2 – Eviction Rent Assistance Grant Program
Washington claimed and we tested $240,920 in expenses to Clark County for
COVID-19 related rental assistance programs. We noted the expenditure support
provided by Washington for the Clark County grant referenced another Treasury
federal program, Treasury Rental Assistance Program (T-RAP). Washington failed
to provide the requested obligation support such as grant agreements, scope of
work, period of performance, and consideration amount for Washington’s Eviction
Rent Assistance Program (ERAP).18 Due to the lack of evidence, we determined
Washington used CRF proceeds to reimburse other federal program expenditures,
resulting in ineligible questioned costs of $240,920, as detailed further below.
Based on the support provided, we requested Washington provide additional
support for T-RAP to gain a better understanding of whether this was a clerical
error or other federal funding program expenditures were reimbursed with CRF
proceeds. In response, Washington stated that the “CRF funds were first used for
ERAP ended June 2021. The T-RAP started March 2021, so there were 3 months of
18
The Eviction Rent Assistance Program (ERAP) Grant was part of Washington State’s response to
the COVID-19 disaster, intended to prevent evictions that would contribute to the spread of the
virus by paying past due, current due, and future rent, targeting limited resources to those with the
greatest needs while working to distribute funds equitably. The Office of Homeless Youth and the
Office of Family and Adult Homelessness in the Housing Assistance Unit at the Washington
Department of Commerce administered state and federal funds to support homeless crisis
response systems in Washington.
11
Desk Review of the State of Washington
overlap between the programs. T-RAP/CRF funds provided rental assistance
payments directly to landlords, and utility payments directly to utility companies.
The T-RAP program mostly provided payments to those entities directly as well;
however, Treasury allowed payments to be made directly to tenants if the
landlord was unresponsive. Even so, most subrecipients opted not to provide
funds to tenants, so most T-RAP payments only went to landlords and utility
companies.” We noted Washington’s elaborations corroborated that the two
rental assistance programs overlapped, which indicated Washington’s controls
surrounding financial reporting were not efficient or effective for tracking federal
funding sources/expenditures. As a result, we determined Washington did not
adhere to Department of the Treasury’s (Treasury) Coronavirus Relief Fund
Guidance as published in the Federal Register on January 15, 2021, FAQ’s #7 &
8. 19
We were unable to determine if this incident of using CRF proceeds to pay for
another federal funding program’s expenditures was isolated. Therefore, we
recommend Treasury OIG perform additional follow-up with Washington to
determine if there were other instances of commingling of funds where CRF
proceeds were claimed for other federal programs.
Grant Exception #3 – Eviction Rent Assistance Grant Program
Washington claimed $29,416,663 in grant expenses related to Washington’s
Department of Commerce ERAP for King County. We tested $15,305 in
expenditures passed through by Washington’s Department of Commerce to
residents and/or tenants who were awarded funds under ERAP during the COVID-
19 pandemic.
We noted the supporting documentation was sufficient to justify the allowable use
of CRF proceeds in accordance with the CARES Act and Treasury’s Guidance. The
ERAP guidelines required two documents to be submitted to review the eligibility
criteria of an applicant: the payment agreement and household information and
19
FAQ #7: Are recipients required to use other federal funds or seek reimbursement under other
federal programs before using Fund payments to satisfy eligible expenses? No. Recipients may
use Fund payments for any expenses eligible under section 601(d) of the Social Security Act
outlined in the Guidance. Fund payments are not required to be used as the source of funding of
last resort. However, as noted below [in FAQ #8], recipients may not use payments from the Fund
to cover expenditures for which they will receive reimbursement.
FAQ #8: Are there prohibitions on combining a transaction supported with Fund payments with
other CARES Act funding or COVID–19 relief Federal funding? Recipients will need to consider the
applicable restrictions and limitations of such other sources of funding. In addition, expenses that
have been or will be reimbursed under any federal program, such as the reimbursement by the
federal government pursuant to the CARES Act of contributions by States to State unemployment
funds, are not eligible uses of Fund payments.
12
Desk Review of the State of Washington
eligibility forms. The required documents were completed and submitted with the
application; however, we noted an error in the approved months of rent in
comparison to the payment details. The ERAP form only approved the application
for five months in arrears and one future rent payment for a total of six months.
Based on Castro’s review of the applicant’s ERAP form, the landlord was paid for
eight months of rent instead of six. This would have resulted in ineligible
questioned costs of $3,666. Due to our fieldwork procedures, Washington
management returned the $3,666 to Treasury, and Treasury OIG confirmed the
return occurred after the close of the GrantSolutions portal reporting as of
September 30, 2023. We concluded Washington management completed their
corrective action plan which resulted in no questioned costs noted for the purpose
of this desk review report.
Grants Greater Than or Equal to $50,000 Reconciliation Errors
Additionally, our initial transaction selections related to Grants greater than or
equal to $50,000 were reported at the aggregate level and required Castro to
select transactions at a more detailed level. After reviewing the supporting
documentation for the grant selections obtained from Washington, we noted
material variances between the expenditures provided from the general ledger
(GL), and the amounts claimed in the GrantSolutions portal, overstating the
Grants greater than or equal to $50,000 balances as of September 30, 2023 by
$10,772,591. After further review, it appeared that Washington management
overstated the amounts claimed in the GrantSolutions portal when compared to
the actual expenditures the state agencies reported. We asked Washington
management to elaborate on the issue; and Washington management was unable
to provide the cause of the error. Further, we were unable to determine if the
overstatement of claimed costs was an isolated incident. As a result, we estimated
this reporting discrepancy potentially occurred in multiple payment types as
Washington failed to ensure the cumulative obligations and expenditures
reported within the GrantSolutions portal were accurate and complete. For
example, Washington management was not able to reconcile its Aggregate
Payments to Individuals balances into the different category types. Refer to
Aggregate Payments to Individuals Review Results section.
We determined Washington management's internal controls surrounding the
GrantSolutions portal reporting were ineffective, which was consistent with the
material weaknesses and significant deficiencies identified in the fiscal years (FY)
2020 through 2022 State of Washington Single Audit report findings. In addition,
Washington operated in a decentralized manner resulting in the cumulative level
expenditures being tracked and maintained by multiple state agencies.
13
Desk Review of the State of Washington
Washington's management stated that its CRF reporting processes prevented
them from performing a quality control review of the support provided by the
agencies prior to certifying each GrantSolutions portal quarterly submission.
Washington also noted that its CRF reporting process lacked proper
communication between state agencies. As a result, we identified material
variances between the GL details and amounts claimed in the GrantSolutions
portal as of September 30, 2023 that represented overstated unsupported
questioned costs of $10,772,591. We recommend Treasury OIG determine the
feasibility of performing additional procedures over Washington’s Grants greater
than or equal to $50,000 payment type GrantSolutions portal reconciliation
procedures.
Transfers Greater Than or Equal to $50,000
We determined Washington’s Transfers greater than or equal to $50,000 did not
comply with the CARES Act and Treasury’s Guidance. We tested two transfers
totaling $8,333. The transfers tested included expenditures for the purchase of
student economic relief programs to assist students with education stabilization,
and civil legal services to families and individuals in core areas of primary need
during the COVID-19 pandemic. We identified exceptions related to both transfers
tested, which resulted in ineligible questioned costs of $6,233, and $2,100 in
unsupported questioned costs, respectively, for a total of $8,333 of questioned
costs, as detailed below.
Additionally, we identified unsupported questioned costs of $492,084 separate
from our testing of detailed transactions. These questioned costs resulted from
our review of expenditures categorized as “Items Not Listed Above” (INLA) 20 in
the transfers payment type. This increased the grand total of unsupported
questioned costs from $8,333 to $500,417.
Further, we identified two reporting misclassifications related to Transfers greater
than or equal to $50,000 that we determined should have been reported as Grants
greater than or equal to $50,000 in the GrantSolutions portal, resulting in non-
compliance with Treasury’s Guidance.
20
The GrantSolutions portal required expenditures to be categorized by the type of expenditure
(for example, nursing home assistance, contact tracing and testing, small business assistance,
etc.). For those expenditures that did not fit in one of the pre-defined categories, the prime
recipient was allowed to choose the category “Items Not Listed Above”.
14
Desk Review of the State of Washington
Transfer Exception #1 – Office of Civil and Legal Aid Transfers to the Northwest
Justice Project to Mitigate Social and Economic Consequences of COVID-19
Washington claimed $2,300,000 in expenditures passed through by the
Washington Office of Civil Legal Aid21 (sub-recipient) to the Northwest Justice
Project (NJP) for services to help mitigate the social and economic consequences
of the COVID-19 pandemic by:
• protecting employee rights to safe working conditions, reemployment
rights during recovery, and access to unemployment insurance and state
Family Medical Leave Act benefits for those with a legal entitlement to the
same;
• protecting the rights of tenants and homeowners to live in their homes and
access critically needed rental and mortgage assistance programs;
• protecting the health and safety of domestic violence and sexual assault
victims and their family members from the exponential rise in such crimes
as a result of the economic, social distancing, and other stresses directly
associated with the COVID-19 emergency; and
• ensuring that COVID-19 affected families and individuals had access to
federal, state, and local income, food, and housing assistance.
For the $6,233 transaction tested, we noted NJP used the CRF proceeds to pay
rent expense allocations using indirect rates which was not an eligible or
allowable use of CRF proceeds, resulting in ineligible questioned costs of $6,233.
Treasury’s CRF Guidance published in the Federal Register 22 stated that recipients
may not apply their indirect costs rates to payments received from the fund.
Additionally, for the one transaction tested, Washington management erroneously
reported a payment to themselves, which we identified as a reporting error that
was non-compliant with Treasury’s Guidance. We confirmed Washington
management entered the Office of Civil Legal Aid as the sub-recipient’s name,
which was not properly reported in the GrantSolutions portal as of
September 30, 2023, as the Office of Civil Legal Aid is an arm of the Washington
state government. We also noted this transaction claimed under Transfers greater
than or equal to $50,000 was a reporting misclassification that should have been
correctly reported under Grants greater than or equal to $50,000.
21
The Office of Civil Legal Aid is a state agency that is part of the prime recipient, Washington’s,
government.
22
Coronavirus Relief Fund Guidance as published in the Federal Register (January 15, 2021)
https://home.treasury.gov/system/files/136/CRF-Guidance-Federal-Register_2021-00827.pdf
15
Desk Review of the State of Washington
Additionally, Castro noted that Washington claimed $2,300,000 in expenditures
passed through by the Washington Office of Civil Legal Aid to the NJP for services
to help mitigate the social and economic consequences of the COVID-19 health
and economic disaster, including our reported Transfer greater than equal to
$50,000 ineligible questioned costs of $6,233. Since Castro identified ineligible
questioned costs within the Office of Civil and Legal Aid to the NJP transfer
payment we tested, we recommend Treasury OIG determine if there were other
instances of ineligible balances related to indirect costs within the expenditures
claimed for the Office of Civil and Legal Aid to the NJP.
Transfer Exception #2 – Transfer to Community and Technical Colleges to
Columbia Basin Community College for Student Economic Pandemic Assistance
Washington claimed $258,300, and we tested $2,100 in expenditures passed
through by the Community and Technical Colleges23 (sub-recipient) to Columbia
Basin Community College for student economic assistance during the COVID-19
pandemic. We noted the grant award notification assigned funding to the
Washington Office of Superintendent of Public Instruction/U.S. Department of
Education’s (U.S. DOE) Education Stabilization Fund. We asked Washington
management for additional information regarding the total claimed amount and to
verify these costs weren’t reimbursed with U.S. DOE funding; however,
management was unable to provide adequate supporting documentation to justify
the eligible and allowable use of CRF proceeds, resulting in unsupported
questioned costs of $2,100.
Additionally, for the one transaction tested, Washington management erroneously
reported a payment to themselves as the Community and Technical Colleges are
part of the state government. We identified this reporting as non-compliant with
Treasury’s Guidance. We confirmed Washington management entered the
Community and Technical Colleges as the sub-recipient’s name which was not
properly reported in the GrantSolutions portal as of September 30, 2023. We also
noted this transaction claimed under Transfers greater than or equal to $50,000 as
a reporting misclassification that should have been correctly reported under
Grants greater than or equal to $50,000.
Castro noted the support for the student economic assistance transfer transaction
totaling $258,300 referenced the U.S. DOE’s Education Stabilization Fund and that
the agreement made no mention of the CARES Act. Washington management did
not respond to our requests for confirmation that there was no duplication of
benefits between CRF and U.S. DOE Education Stabilization Fund for these CRF
23
The Washington Community and Technical Colleges is a state agency that is part of the prime
recipient, Washington’s, government.
16
Desk Review of the State of Washington
expenses claimed. Based on the lack of adequate supporting documentation to
justify the eligible and allowable use of CRF proceeds, we recommend Treasury
OIG follow-up with Washington management to determine if the remaining
balance was funded from another federal program and was similarly unsupported
and should be recouped or replaced by other eligible expenditures, not previously
charged to CRF, that were incurred during the period of performance.
Items Not Listed Above Transfers Exception
During our review of the Transfers greater than or equal to $50,000 INLA
expenditure category descriptions from the GrantSolutions portal separate from
our detailed transaction testing, we noted Washington provided insufficient
responses to our follow-up requests for certain INLA’s totaling $492,084.
Specifically, Washington provided GL details to support the INLA descriptions that
were outstanding instead of providing a formally written response or other
supporting documentation related to the eligible use of the transactions. We had
multiple iterations of follow-up discussions to clear the outstanding items;
however, Washington failed to sufficiently respond to our requests. Within the
INLA expenditure categories for Transfers greater than or equal to $50,000,
Washington reported the following vague expenditure category description: “To
include eligible expenses that are not captured in the available expenditure
categories”. Due to the lack of responses or further supporting documentation
provided by Washington about this vague expenditure category description and
our inability to determine the eligibility of these expenditures, we identified these
items as unsupported questioned costs totaling $492,084.
Direct Payments Greater Than or Equal to $50,000
We determined Washington’s Direct Payments greater than or equal to $50,000
did not comply with the CARES Act and Treasury’s Guidance. We tested one
transaction totaling $120,000 and identified no testing exceptions. The purpose of
the transaction tested was to provide incentives to facilities that agreed to accept
difficult-to discharge and Medicaid-eligible hospital patients during the pandemic.
However, our review of INLA transactions, outside of our original detailed
transaction selected for testing, found unsupported questioned costs of $417,015.
Items Not Listed Above Direct Payments Exception
During our review of the Direct Payments greater than or equal to $50,000 INLA
expenditure category descriptions, we noted Washington provided insufficient
responses to our follow-up requests for certain INLAs totaling $417,015.
Specifically, Washington provided GL details to support the INLA descriptions that
17
Desk Review of the State of Washington
were outstanding instead of providing a formally written response or other
supporting documentation related to the eligible use of the transactions. We had
multiple iterations of follow-up discussions to clear the outstanding items;
however, Washington failed to sufficiently respond to our requests. Within the
INLA expenditure categories for Direct Payments greater than or equal to $50,000,
Washington reported a vague expenditure category description as “Various”. Due
to the lack of responses provided by Washington to our questions about this INLA
expenditure description and our inability to determine the eligibility of these
expenditures, we identified these items as unsupported questioned costs totaling
$417,015.
Aggregate Reporting Less Than $50,000
We determined Washington’s Aggregate Reporting less than $50,000 complied
with the CARES Act and Treasury’s Guidance. We tested one transaction totaling
$36,379 and identified no exceptions. The transaction tested was for the purchase
of technology to improve telework capabilities of public employees during the
pandemic, and the purchase of personal protective equipment.
Aggregate Payments to Individuals
CRF payments made to individuals, regardless of amount, were required to be
reported in the aggregate in the GrantSolutions portal to prevent inappropriate
disclosure of personally identifiable information. Castro notes that the Aggregate
Payments to Individuals payment type consisted of the below broad types of
potential costs, which we have defined from Treasury’s guidance as published in
the Federal Register. 24 Prime recipients may or may not have claimed all of these
types of expenditures.
24
Coronavirus Relief Fund Guidance as published in the Federal Register (January 15, 2021)
https://home.treasury.gov/system/files/136/CRF-Guidance-Federal-Register_2021-00827.pdf
18
Desk Review of the State of Washington
Public Health and Safety Payroll25 – consisted of payroll costs for public
health and safety department personnel.
Substantially Dedicated Payroll26 – consisted of payroll costs for non-
public health and safety personnel who were substantially dedicated to
mitigating or responding to the COVID-19 public health emergency.
Non-Substantially Dedicated Payroll27 – consisted of payroll costs for
personnel who performed COVID-19 related tasks on a part-time basis.
Non-Payroll Expenditures – consisted of financial assistance payments to
citizens due to hardship or loss of income, unemployment claims, and
other non-payroll related expenditures made to individuals.
25
Treasury’s Federal Register guidance provided the following examples of public health and
safety employees: “police officers (including state police officers), sheriffs and deputy sheriffs,
firefighters, emergency medical responders, correctional and detention officers, and those who
directly support such employees such as dispatchers and supervisory personnel…employees
involved in providing medical and other health services to patients and supervisory personnel,
including medical staff assigned to schools, prisons, and other such institutions, and other support
services essential for patient care (e.g., laboratory technicians) as well as employees of public
health departments directly engaged in matters related to public health and related supervisory
personnel.”
26
Substantially dedicated payroll costs meant that personnel must have dedicated over 50 percent
of their time to responding or mitigating COVID-19. Treasury’s Federal Register guidance stated:
“The full amount of payroll and benefits expenses of substantially dedicated employees may be
covered using payments from the Fund. Treasury has not developed a precise definition of what
"substantially dedicated" means given that there is not a precise way to define this term across
different employment types. The relevant unit of government should maintain documentation of
the "substantially dedicated" conclusion with respect to its employees.”
27
Payroll costs that were not substantially dedicated were payroll costs that were not public health
and safety, and which were not substantially dedicated to performing COVID-19 related tasks.
Treasury’s Federal Register guidance defined more stringent tracking requirements for these types
of payroll costs. Specifically, Treasury’s Federal Register stated: “track time spent by employees
related to COVID-19 and apply Fund payments on that basis but would need to do so consistently
within the relevant agency or department. This means, for example, that a government could
cover payroll expenses allocated on an hourly basis to employees' time dedicated to mitigating or
responding to the COVID-19 public health emergency.”
19
Desk Review of the State of Washington
Castro noted that public health and safety payroll transactions were subject to
Treasury’s administrative accommodation,28 and therefore, were subject to less
detailed documentation requirements. Castro tested public health and safety
payroll transactions by reviewing itemized payroll distribution reports to support
these balances. Substantially dedicated and non-substantially dedicated payroll
balances were not subject to this administrative accommodation, and therefore,
Castro tested these transactions by reviewing documentation of the "substantially
dedicated" conclusion with respect to the State’s employees, payroll distribution
files, and also by performing tests over specific employee timesheet submissions.
Transactions classified as non-payroll expenditures vary depending on the type of
expenses that were reimbursed with CRF proceeds, and therefore, Castro
performed analytical procedures and testing on transactions by reviewing the
applicable underlying guidelines and details provided as support by Washington.
Castro requested Washington’s Aggregate Payments to Individuals (API) analysis
with the breakout of API category types described above; however, Washington
was unable to complete an accurate analysis. As a result, we performed
alternative procedures to make the API transaction selections and obtain adequate
coverage for testing purposes. We confirmed the GL details reconciled to the
amounts claimed in the GrantSolutions portal as of September 30, 2023. We
considered the universe of the GL population categorized as API to be subject to
selection as part of the transaction selection methodology. We recommend
Treasury OIG require Washington management to properly segregate the API
expenditures based on the defined categories above. In addition, based on those
details and the significant number of API testing errors detailed below, we
recommend Treasury OIG determine the feasibility of performing a limited scope
review of the API payment type transactions that were not subject to our desk
review procedures.
28
Treasury’s Federal Register guidance stated that an administrative accommodation was, “In
recognition of the particular importance of public health and public safety workers to State, local,
and tribal government responses to the public health emergency, Treasury has provided, as an
administrative accommodation, that a State, local, or tribal government may presume that public
health and public safety employees meet the substantially dedicated test…This means that, if this
presumption applies, work performed by such employees is considered to be a substantially
different use than accounted for in the most recently approved budget as of March 27, 2020. All
costs of such employees may be covered using payments from the Fund for services provided
during the period that begins on March 1, 2020, and ends on December 31, 2021.”
20
Desk Review of the State of Washington
We determined that Washington’s Aggregate Payments to Individuals did not
comply with the CARES Act and Treasury’s Guidance. We tested 15 transactions29
totaling $2,880,163. We identified seven exceptions, resulting in unsupported
questioned costs of $2,401,545 and ineligible questioned costs of $36,446,
respectively, for total questioned costs of $2,437,991 as detailed below.
Unemployment Replenishment Analysis
Castro noted Washington reported total CRF expenses of $74,956,300 in
Unemployment Insurance (UI) Trust Fund Balance replenishment payments. Of
this amount, we tested a total of $2,372,051 in UI related transactions.
Washington’s Employment Security Department performed a UI Trust Fund
replenishment trend analysis supporting how it determined that the change in this
balance (UI claims paid) occurred due to COVID-19 pandemic and not due to UI
claims that would have been paid regardless of the pandemic.
Washington experienced a significant decline of $3,234,271,140 in the UI Trust
Fund balance from March 2020 through March 2021. In addition, by
September 2022, the UI Trust Fund Balance was still $1,753,540,915 less than at
the start of the pandemic. Castro obtained and inspected the bank statements to
support key UI Trust Fund balances included within Washington’s UI
replenishment trend analysis. We noted the UI replenishment trend analysis
summarized the inflows and outflows of the UI Trust Fund balance during the
covered period. Castro inquired whether Washington utilized other federal
funding sources to reimburse unemployment related expenditures, however,
Washington management was unable to provide an analysis that segregated the
other federal funding sources. While Castro noted the UI Trust Fund Balance was
still $1,753,540,915 less than at the start of the pandemic, Castro determined that
without Washington’s detailed unemployment claims analysis that segregated the
29
Of the 15 API transactions tested, five were for substantially dedicated or public health and
safety personnel, one was non-substantially dedicated, and nine were non-payroll related costs.
The five substantially dedicated or public health and safety personnel transactions consisted of
payroll costs for the Office of Civil Legal Aid employees who supported legal matters related to
massive economic disruption due to the COVID-19 pandemic; payroll costs for Department of
Corrections officers; payroll costs for Department of Health employees who specialized in medical
epidemiology, laboratories, infectious diseases, and environmental research related to the COVID-
19 pandemic; payroll costs for University of Washington medical facilities; and payroll costs for
registered nurses and clinical directors at Rainer State School’s residential habilitation center. We
noted the one non-substantially dedicated payroll cost was for the Office of Attorney General
consumer protection division employees who charged time to COVID-19 related topics, such as
vaccines, masking, gyms, healthcare, price gouging, complaints, reporting, investigation, and
research. Further, the nine non-payroll related costs were for unemployment benefit claims;
unemployment offset charges to businesses; and per diem for COVID-19 related tasks including
lodging, meals, and mileage.
21
Desk Review of the State of Washington
other federal funding sources, we were unable to conclude upon whether
Washington duplicated benefits with other federal funding sources. Therefore,
Castro recommends Treasury OIG follow-up with Washington management and
request Washington perform an assessment of the unemployment claims analysis
that includes the breakout of all other federal funding sources used to pay UI
related expenses. Additionally, we recommend Treasury OIG review the analysis
performed by Washington to determine whether Washington duplicated benefits
or augmented the UI Trust Fund balance using CRF proceeds.
API Exception #1 – Unemployment Claims and Benefit Payments Managed by
Washington’s Employment Security Department
Washington claimed $49,956,300 in expenditures for unemployment claims and
benefit payments managed by Washington’s Employment Security Department
(ESD) issued to state residents who were unemployed during the COVID-19
pandemic. We were unable to determine if the unemployment expenditures
claimed by Washington in the GrantSolutions portal were disbursed for CRF
specific programs. In the supporting documentation provided by Washington,
ESD referenced the U.S. Department of Labor’s (DOL) Pandemic Unemployment
Assistance (PUA) Program. After external research, we determined that the PUA
was related to the DOL Unemployment Insurance Program.
Per Washington’s FY 2020 Single Audit Report, the PUA program was funded by
other Treasury or pandemic relief funding sources, including the DOL. As a result,
since the supporting documentation provided for the transaction referenced the
PUA program, it appeared CRF proceeds were utilized to cover unemployment
costs for another federal program resulting in likely ineligible payments of
$49,956,300. We also noted that an FY 2020 single audit finding 2020-010
identified questioned costs and likely improper payments related to the PUA
program. In addition, Washington’s state auditors identified several instances of
fraudulent unemployment claims under the PUA. ESD disclosed information
about the unemployment claim fraud in its management response to the Single
Audit finding. According to ESD management, they transparently shared
information about the imposter fraud and its response and by prompt and
extensive effort, ESD had recovered a total of $356.4 million as of November 2020.
ESD continues to conduct investigations into suspected fraudulent claims and
work with federal law enforcement and the banking industry to recover additional
fraudulent payments.
We were unable to substantiate the suspected fraudulent claims mentioned above
related to our transaction selections. Castro tested five transactions totaling
$2,750. We requested applications, unemployment program
guidelines/requirements, and evidence that the individuals were eligible for
22
Desk Review of the State of Washington
unemployment claims. Washington did not provide the requested support by our
end of fieldwork, resulting in unsupported questioned costs of the entire $2,750.
As noted above, it appeared that Washington commingled federal funding
sources and reported expenditures under the CRF. For instance, it appeared
Washington used CRF proceeds to pay for PUA unemployment expenditures.
Castro noted during our review of the $49,956,300 in expenditures for
unemployment claims and benefit payments, including our reported API
unsupported questioned costs of $2,750, the supporting documentation
referenced the DOL’s PUA and made no mention of the CRF or the CARES Act.
Castro asked Washington management to confirm the CRF claimed
unemployment expenditures provided were not also claimed using PUA funds.
Washington did not respond to our requests for confirmation that there was no
duplication of benefits between CRF and other federal funding for these CRF
expenses claimed. Based on the lack of adequate supporting documentation to
justify the eligible and allowable use of CRF proceeds, we recommend Treasury
OIG follow-up with Washington management to determine if the remaining
balance was similarly unsupported and should be recouped or replaced by other
eligible expenditures, not previously charged to CRF, that were incurred during
the period of performance.
API Exception #2 – Unemployment Offset Charges
Washington claimed $25,000,000 in expenditures managed by Washington’s ESD,
issued to employers for unemployment offset charges 30 to current account
balances. ESD notified employers that a new law was passed appropriating
$25,000,000 in CRF proceeds to offset benefit charges 31 that would not count
towards the employer’s Experience Rating32 for FY 2021. The offset was applied to
unemployment benefits paid in quarters one and two of FY 2020 (January 1, 2020
through June 30, 2020) for employees that were temporarily laid off due to
COVID-19 or had since returned to work for their employer. ESD determined the
offset amount by utilizing a formula that included the employer’s qualifying
benefit charges in the first and second quarters of 2020, the amount of money in
30
Unemployment Offset Charges represented the unemployment contributions from the employer
within the current fiscal year to the state’s Unemployment Insurance Trust Fund balance; however,
Washington passed a law that authorized a program that allowed employers to reduce the amount
of unemployment contributions. This program was known as the unemployment offset charge in
response to the COVID-19 pandemic.
31
Benefit charges are the employers’ share of unemployment benefits that the State of
Washington Employment Security Department paid to the employers’ former employees.
32
Experience Ratings are used by government agencies and insurance providers to calculate the
employers’ tax rate or premiums based on those employers past claims or contributions. The
purpose of the program authorized by legislation was to offset part of the benefit charges, which
could reduce the employers’ 2021 tax rate.
23
Desk Review of the State of Washington
the COVID-19 unemployment account, and the total amount of benefit charges in
all the applications approved.
For eight transactions tested totaling $2,369,301, we did not receive sufficient
supporting documentation to justify the unemployment offset charges were an
appropriate use of CRF proceeds in accordance with the CARES Act and
Treasury’s Guidance, resulting in unsupported questioned costs of $2,369,301, as
detailed below.
For five transactions tested totaling $2,236,604, ESD gathered the relevant raw
data for these transactions, which were comprised of the listing of employers,
whether the charges were incurred in FY 2020 quarter one or quarter two, the
total quarterly benefit charges, and the offset charges. We inspected the raw
data and reperformed the calculation and arrived at the same offset charges;
however, we requested that Washington management provide the employers’
official source documentation to evidence the employers’ outstanding benefit
charges were approved and offset by ESD using CRF. As part of the program’s
requirements, Washington’s regular process was to notify the employers of the
tax rate changes with a letter detailing that their unemployment benefit
charges were offset. Castro requested that Washington provide us with these
letters so we that we could corroborate these CRF claims were a necessary
expense due to the pandemic; however, Washington did not respond to our
request. Without the official source documentation, Castro questioned
$2,236,604 as unsupported.
For two transactions tested totaling $126,536, Castro issued follow-up
questions to clarify the nature of the expenditures. Washington management
provided email correspondence and described that the employers’ benefit
charges were zero; therefore, no balances were available to offset. Washington
did not reverse this expense from the GrantSolutions portal as of
September 30, 2023. As a result, it appeared ESD disbursed unemployment
offset payments to employers with net zero balances. This resulted in
unsupported questioned costs of $126,536.
For one transaction tested totaling $6,161, we noted the evidence for
unemployment offset charges provided by Washington did not agree to the
transaction selection, resulting in unsupported questioned costs of $6,161.
Without proper supporting documentation, we were unable to determine the
correct amounts that were disbursed to the employer’s unemployment account
balances to offset previously incurred costs.
24
Desk Review of the State of Washington
Castro noted Washington claimed $25,000,000 in expenditures managed by
Washington’s ESD, issued to employers for unemployment offset charges to
account balances, including our reported API unsupported questioned costs of
$2,369,301. Since Castro identified unsupported questioned costs within the
unemployment offset charges we tested, we recommend Treasury OIG determine
the feasibility of performing additional follow-up with Washington to determine if
there were other instances of unsupported balances within these expenditures
claimed.
API Exception #3 – COVID-19 Related Civil Legal Needs Non-Substantially
Dedicated Payroll Expenditures
Washington claimed $553,915 in non-substantially dedicated payroll expenditures
related to the State of Washington’s Office of Attorney General (ATG) for civil
legal needs related to COVID-19. The ATG directed that for every COVID-19 related
complaint the State of Washington’s Consumer Resource Center received about a
business, a consumer protection attorney was to call the business and reach an
authorized representative to discuss the business's COVID-19 related compliance.
The complaints concerned a wide range of issues such as refusal to issue travel or
gym membership refunds, ticket/show cancellations and refunds, price-gouging,
COVID-19 testing issues, fake COVID-19 cures, and mask-exemption cards. The
time recorded by these non-substantially dedicated employees was spent calling
various businesses, addressing the complaints with the business or their counsel,
sending warning letters, and preparing daily COVID-19 reports for the ATG’s
information and use. We noted some ATG positions were not directly coded to
COVID-19 related activities in the statewide –payroll system. The time charged by
staff ranged between 15 minutes to over 174 hours per month for approximately
1,800 employees.
For five transactions tested totaling $77,922, we identified sufficient payroll
supporting documentation related to $50,812 of the transactions; however, we did
not obtain and review sufficient evidence for the remaining $27,110, resulting in
unsupported questioned costs of $27,110.
Washington claimed $553,915 and we tested $77,922 of the State of Washington’s
Office of ATG’s non-substantially dedicated payroll expenditures for civil legal
needs related to COVID-19. Since Castro identified unsupported questioned costs
of $27,110, we recommend Treasury OIG follow-up on the untested balance to
determine if the remaining balance of $475,993 was similarly unsupported and
should be recouped or replaced by other eligible expenditures, not previously
charged to CRF, that were incurred during the period of performance.
25
Desk Review of the State of Washington
API Exception #4 – Non-Payroll Expenses, Including Per Diem Travel Costs
Washington claimed $109,812 in expenditures managed by the Washington
Department of Health (DOH) for non-payroll expenses such as per diem travel
costs, including lodging. Due to the COVID-19 pandemic, DOH initiated a resource
request for a blanket purchase order for hotel rooms for vaccine teams,
quarantine, and social distancing. The state was responsible for supplying staff
with hotel rooms to support response efforts and because of the large request, the
agency filled out blanket forms to ensure DOH documented the need of the
agency during the pandemic response. We had a number of exceptions resulting
in unsupported questioned costs of $2,150, and $2,571 in ineligible questioned
costs, respectively, as detailed below.
For two transactions tested totaling $2,150, Washington provided
documentation such as invoices accompanied by other payment details that
evidenced partial support. Specifically, Washington provided a reconciliation
of the invoices to each selection. We determined that Washington’s
reconciliation was incomplete and did not substantiate an invoice with each
itemized expense. DOH did not maintain all supporting documentation
(invoices) for the lodging expenses resulting in unsupported questioned costs
of $2,150.
For one transaction tested totaling $2,571, DOH indicated the costs were
reimbursed with Department of Homeland Security Federal Emergency
Management Agency (FEMA) funds, not CRF proceeds. However, Washington
did not provide evidence to verify the costs were reimbursed through FEMA.
These costs were included in the population linked to the GL details, which
were used by Washington to populate the amounts claimed in the
GrantSolutions portal FPR as of September 30, 2023. We also reviewed the
supporting documentation which demonstrated the costs were not incurred
between March 1, 2020 and December 31, 2021, resulting in ineligible out of
covered period questioned costs of $2,571.
API Exception #’s 5 and 6 – Non-Payroll Expenses, Including Per Diem Travel
Costs
Washington claimed $151,673 in expenditures managed by DOH for non-payroll
related costs such as per diem travel costs including lodging expenses. For two
transactions tested totaling $33,441, we noted the non-payroll related costs were
incurred outside the scope of the covered period, with the earliest date of
February 7, 2020, resulting in ineligible questioned costs of $33,441.
We noted Washington provided additional support evidencing the costs were
previously identified by the Washington State Auditor’s Office in the FY 2020
26
Desk Review of the State of Washington
Single Audit Report. DOH did not ensure payments from CRF proceeds were
incurred during the CRF covered period. In the FY 2022 Single Audit Report, the
State Auditor’s Office confirmed Washington’s corrective action plan had been
completed. Castro requested that Washington provide us evidence that the CRF
expenditures were reduced or reversed from the population covered by FEMA
funding, however, we were not provided this evidence by Washington. The
corrective action plan stated that FEMA expanded the scope of eligible
reimbursements to include all allowable expenditures from the beginning of the
COVID-19 response. The CRF expenditures incurred outside the period of
performance were subsequently included in the FEMA recovery calculation. DOH
also worked with Washington’s Office of Financial Management to reduce the CRF
expenditures on the FY 2021 Schedule of Expenditures of Federal Awards. Our
assessment of the response and observations of the single audit reports indicated
that FEMA costs did replace the amounts previously reported as CRF proceeds;
however, these costs were still included in the GrantSolutions portal FPR as of
September 30, 2023 and were not reversed as they should have been. These
expenses were also not specifically identified at the transaction level. We
considered these expenditures ineligible questioned costs totaling $33,441.
Castro recommends Treasury OIG follow-up to request that Washington
management performs an assessment over the remaining untested amount of
$118,232 to determine if the DOH non-payroll related FEMA costs claimed as CRF
expenses were replaced with other eligible CRF costs. We also recommend
Treasury OIG review the assessment for accuracy and completeness to confirm all
FEMA related expenses claimed using CRF proceeds were reversed and replaced
with other eligible CRF costs. If support is not provided, Treasury OIG should
recoup the funds or request Washington management to provide support for
replacement expenses, not previously charged, that were eligible during the CRF
period of performance.
API Exception #7 – Non-Payroll COVID-19 Infection Control Services
Washington claimed $12,049 in non-payroll related expenditures managed by the
Washington Department of Social and Health Services. The Department of Social
and Health Services worked with higher risk groups of individuals during the
COVID-19 pandemic and provided services such as on-site visits to adult family
homes to ensure there were adequate preventive measures and controls in place
to stop the spread of COVID-19. Each employee was required to travel in order to
complete assigned specialty service tasks, such as conducting investigations,
educating, and gathering data on COVID-19 cases. We identified questioned costs
of $434 as ineligible, and $234 as unsupported, respectively, as detailed below.
27
Desk Review of the State of Washington
For one of the transactions tested totaling $434, the Department of Social and
Health Services confirmed that the scope of work performed by the state
employee was not related to COVID-19. The employee diverted his normal
work functions/duties to conduct a non-COVID-19 survey because the members
of the team originally performing the survey were exposed to COVID-19.
Therefore, we determined the costs reimbursed for travel expenses of $434 to
be ineligible.
For one of the transactions tested totaling $234, the receipts were not
maintained, resulting in unsupported questioned costs. Washington explained
that meal receipts less than $75 per the U.S. General Services Administration
guidance were usually not documented. However, Washington charged these
costs to the CRF program, which required all supporting documentation to be
maintained. Since no additional support was provided regarding the receipts
for meals to evidence the expenditures, we question the entire $234 as
unsupported.
Conclusion
We determined that the expenditures related to the Contracts greater than or
equal to $50,000 and Aggregate Reporting less than $50,000 payment types
complied with the CARES Act and Treasury’s Guidance. Also, we determined that
expenditures related to the Grants greater than or equal to $50,000, Transfers
greater than or equal to $50,000, Direct Payments greater than or equal to $50,000,
and Aggregate Payments to Individuals payment types did not comply with the
CARES Act and Treasury’s Guidance.
We identified unsupported and ineligible questioned costs of $14,085,335 and
$283,599, respectively, with total questioned costs of $14,368,934. Additionally, we
determined Washington’s risk of unallowable use of funds is high.
Castro recommends that Treasury OIG follow-up with Washington’s
management to confirm if the $14,085,335 noted as unsupported expenditures
within the Grants greater than or equal to $50,000, Transfers greater than or equal
to $50,000, Direct Payments greater than or equal to $50,000, and Aggregate
Payments to Individuals payment types can be supported. If support is not
provided, Treasury OIG should recoup the funds or request Washington
management to provide support for replacement expenses, not previously
charged, that were eligible during the CRF period of performance.
28
Desk Review of the State of Washington
In addition, Castro recommends that Treasury OIG request Washington
management to provide support for replacement expenses, not previously
charged, that were eligible during the CRF period of performance for the $283,599
of ineligible costs charged to the Grants greater than or equal to $50,000,
Transfers greater than or equal to $50,000, and Aggregate Payments to Individuals
payment types. If support is not provided, Treasury OIG should recoup the funds.
Further, based on Washington management’s responsiveness to Treasury OIG’s
requests and management’s ability to provide sufficient documentation and/or
replace unsupported and ineligible transactions charged to CRF with valid
expenditures, Castro recommends Treasury OIG determine the feasibility of
conducting an audit for the Grants greater than or equal to $50,000, Transfers
greater than or equal to $50,000, Direct Payments greater than or equal to $50,000,
and Aggregate Payments to Individuals payment types.
At the time of desk review fieldwork, Castro noted that Washington had findings
in their Single Audit Reports for fiscal years 2020, 2021, and 2022, which we have
summarized below:
o Washington’s fiscal year 2020 Single Audit report was published on
December 17, 2020, and the auditor identified unsupported
questioned costs specific to the CRF in the amount of $49,228,368.
o Washington’s fiscal year 2021 Single Audit report was published on
December 21, 2021, and the auditor identified unsupported
questioned costs specific to the CRF in the amount of $4,124,518.
o Washington’s fiscal year 2022 Single Audit report was published on
December 20, 2022, and the auditor identified unsupported
questioned costs specific to the CRF in the amount of $74,784.
Castro recommends that Treasury OIG follow-up with Treasury’s Office of Capital
Access to ensure that management decision letters are issued on the CRF specific
findings identified by the auditor in these Single Audit reports. Washington’s fiscal
year 2023 Single Audit report was published on December 7, 2023, and did not
include any CRF related questioned costs. We recommend Treasury OIG follow-up
on any CRF specific questioned costs reported in the fiscal year 2020, 2021, and
2022 Single Audit reports.
29
Desk Review of the State of Washington
Castro also identified other matters throughout the course of our desk review,
which warrant recommendations to Treasury OIG for additional action. Castro
recommends Treasury OIG follow-up on these issues:
Castro noted that Washington awarded 11,713 small businesses a total of
$236,183,530 in granted funds within its Working Washington Small
Business Grant Program. Since Castro identified ineligible balances
during our fieldwork procedures within the Working Washington Small
Business Grant Program payments, we recommend that Treasury OIG
perform additional follow-up with Washington to determine if there were
other instances of ineligible balances resulting from exceeding the
maximum award amount within the Working Washington Small Business
Grant Program.
Washington claimed and we tested $240,920 in expenses to Clark County
for COVID-19 related rental assistance programs. We noted the
expenditure support provided by Washington for the Clark County grant
referenced another Treasury federal program, Treasury Rental Assistance
Program. We were unable to determine if this incident of using CRF
proceeds to pay for another federal funding program’s expenditures was
isolated. Therefore, we recommend Treasury OIG perform additional
follow-up with Washington to determine if there were other instances of
commingling of funds where CRF proceeds were claimed for other
federal programs.
We identified material variances between the general ledger details and
amounts claimed in the GrantSolutions portal as of September 30, 2023
that represented overstated unsupported questioned costs of $10,772,591
claimed under the Grants greater than or equal to $50,000 payment type.
We recommend Treasury OIG determine the feasibility of performing
additional procedures over Washington’s Grants payment type
GrantSolutions portal reconciliation procedures.
Castro noted that Washington claimed $2,300,000 in expenditures passed
through by the Washington Office of Civil and Legal Aid to the Northwest
Justice Project for services to help mitigate the social and economic
consequences of the COVID-19 health and economic disaster, including
our reported Transfers greater than equal to $50,000 ineligible
questioned costs of $6,233. Since Castro identified ineligible questioned
costs within the Office of Civil and Legal Aid to the NJP transfer payment
we tested, we recommend Treasury OIG determine if there were other
instances of ineligible balances related to indirect costs within the
expenditures claimed for the Office of Civil and Legal Aid to the NJP.
30
Desk Review of the State of Washington
Castro noted the support for the student economic assistance transfer
transaction totaling $258,300 referenced the U.S. DOE’s Education
Stabilization Fund and that the agreement made no mention of the
CARES Act. Washington did not respond to our requests for confirmation
that there was no duplication of benefits between CRF and the U.S. DOE
Education Stabilization Fund for these CRF expenses claimed. Based on
the lack of adequate supporting documentation to justify the eligible and
allowable use of CRF proceeds, we recommend Treasury OIG follow-up
with Washington management to determine if the remaining balance was
similarly unsupported and should be recouped or replaced by other
eligible expenditures, not previously charged to CRF, that were incurred
during the period of performance.
Require Washington management to properly segregate the Aggregate
Payments to Individuals expenditures based on the defined categories as
discussed above. In addition, based on those details and the significant
number of Aggregate Payments to Individuals testing errors, we
recommend Treasury OIG determine the feasibility of performing a
limited scope review of the Aggregate Payments to Individuals payment
type transactions that were not subject to our desk review procedures.
Castro noted during our review of the $49,956,300 in expenditures for
unemployment claims and benefit payments, including our reported
Aggregate Payments to Individuals unsupported questioned costs of
$2,750, the supporting documentation referenced the DOL’s PUA and
made no mention of the CARES Act. Castro asked Washington
management to confirm the CRF claimed unemployment expenditures
provided were not also claimed using PUA funds. Washington did not
respond to our requests for confirmation that there was no duplication of
benefits between CRF and other federal funding for these CRF expenses
claimed. Based on the lack of adequate supporting documentation to
justify the eligible and allowable use of CRF proceeds, we recommend
Treasury OIG follow-up with Washington management to determine if
the remaining balance was funded with other federal funds and whether
the costs was similarly unsupported and should be recouped or replaced
by other eligible expenditures, not previously charged to CRF, that were
incurred during the period of performance.
Castro noted Washington claimed $25,000,000 in expenditures managed
by Washington’s Employment Security Department, issued to employers
for unemployment offset charges to current account balances, including
our reported Aggregate Payments to Individuals unsupported questioned
costs of $2,369,301. Since Castro identified unsupported questioned costs
within the unemployment offset charges we tested, we recommend
Treasury OIG determine the feasibility of performing additional follow-up
31
Desk Review of the State of Washington
with Washington to determine if there were other instances of
unsupported balances within these expenditures claimed.
Washington claimed $553,915 and we tested $77,922 in non-substantially
dedicated payroll expenditures related to the State of Washington’s
Office of Attorney General for civil legal needs related to COVID-19. Since
Castro identified unsupported questioned costs of $27,110, we
recommend Treasury OIG follow-up on the untested balance to
determine if the remaining balance of $475,993 was similarly
unsupported and should be recouped or replaced by other eligible
expenditures, not previously charged to CRF, that were incurred during
the period of performance.
Washington claimed $151,673 and we tested $33,441 in per diem travel
expenditures, resulting in ineligible questioned costs of $33,441. Castro
recommends Treasury OIG follow-up to request Washington
management perform an assessment over the remaining untested
amount of $118,232 to determine if the Washington Department of Health
non-payroll related FEMA costs claimed as CRF expenses were replaced
with other eligible CRF costs. We also recommend Treasury OIG review
the assessment for accuracy and completeness to confirm all FEMA
related expenses claimed using CRF proceeds were reversed and
replaced with other eligible CRF costs. If support is not provided,
Treasury OIG should recoup the funds or request Washington
management to provide support for replacement expenses, not
previously charged, that were eligible during the CRF period of
performance.
Castro determined that without Washington’s detailed unemployment
claims analysis that segregated the other federal funding sources, we
were unable to conclude upon whether Washington duplicated benefits
with other federal funding sources. Therefore, Castro recommends
Treasury OIG follow-up with Washington management and request that
Washington perform an assessment of the unemployment claims
analysis that includes the breakout of all other federal funding sources
used to pay UI related expenses. Additionally, we recommend Treasury
OIG review the analysis performed by Washington to determine whether
Washington duplicated benefits or augmented the UI Trust Fund balance
using CRF proceeds.
32
Desk Review of the State of Washington
*****
All work completed with this letter complies with the Council of the Inspectors
General on Integrity and Efficiency’s Quality Standards for Federal Offices of
Inspectors General, which require that the work adheres to the professional
standards of independence, due professional care, and quality assurance to
ensure the accuracy of the information presented.33 We appreciate the courtesies
and cooperation provided to our staff during the desk review.
Sincerely,
Wayne Ference
Partner, Castro & Company, LLC
33
https://www.ignet.gov/sites/default/files/files/Silver%20Book%20Revision%20-%208-20-12r.pdf
33
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- OIG-CA-25-025-desk-review-of-the-state-of-washington-s-use-of-coronavirus-relief-fund-proceeds.pdf
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- oig.treasury.gov