State audit finds weak procurement and subrecipient monitoring for Edmonds ARPA spending

The Washington State Auditor's Office told the Edmonds City Council at an exit conference that the city lacked adequate internal controls and documentation for certain procurement decisions and for follow-up monitoring of subrecipients paid with Coronavirus State and Local Fiscal Recovery Funds (the federal ARPA program).

The finding, included in the auditors' published report, covered two areas: procurement and subrecipient monitoring. Auditors said the city used allowable alternative procurement methods but did not retain documentation supporting a sole-source determination, and did not retain the bid documentation used by an out-of-state cooperative that supplied police vehicles.

Erica (auditor, State Auditor's Office) said, "we are issuing an unmodified opinion on the city's compliance with the requirements that are applicable to the major program we audited this year," and then described the separate audit finding for internal controls and noncompliance tied to procurement and monitoring for the ARPA program. The auditors selected the Coronavirus State and Local Fiscal Recovery Funds program for testing; Erica said it totaled about $3,600,000 and represented roughly 84% of the city's federal expenditures in fiscal 2023.

Courtney Ammetson, audit manager, told the council the office found improvements in the city's subrecipient monitoring — the city had sent monitoring letters — but auditors "weren't able to see any follow-up beyond those initial emails" and could not confirm whether subrecipients that might have spent more than $750,000 in combined federal awards had been identified for single-audit requirements.

Auditors emphasized that the finding related to documentation and process rather than to use of the funds. Courtney said, "you'll see in the top page of the finding that there were no question costs," meaning auditors did not identify expenditures they considered unallowable in the testing they performed.

Council members asked whether the city could be required to repay funds. Auditors said the Department of the Treasury — the federal grantee — will issue a management decision and make any determination about repayment; the auditors said a repayment request would be unusual given the lack of questioned costs but that the granting agency will decide.

Council members and staff also discussed vehicle purchases that touched the audit procedures. City staff said roughly $380,000 of ARPA funds were used for a small portion of vehicle purchases (police cars and some parks vehicles) while the majority of vehicle spending came from the B-fund (vehicle replacement fund). Auditor remarks noted the portion the auditors could directly tie to federal reimbursements was part of a $719,000 combined listing the office tested as part of the federal audit.

The auditors' recommendations included updating purchasing policies to address alternative procurement methods (sole-source declarations and purchases through cooperatives), improving retention and review of bid documentation, and documenting follow-up steps for subrecipient monitoring. The city included a corrective action plan in the packet; auditors said they will verify implementation at the next audit.

The auditors scheduled follow-up: the next audit of Edmonds is planned for summer 2025 and will include verification of corrective actions. The auditors also reminded the council that their published audit report will be available online and that the granting agency may issue further instructions.

Notes: This article summarizes the auditors' exit conference remarks and questions from council members about vehicle funding sources, procurement documentation, and subrecipient monitoring. It does not infer any repayment or enforcement action beyond what auditors discussed.