Federal Agency: U.S. Department of the Treasury
Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds
Assistance Listing Number: 21.027
Federal Award Identification Number and Year: N/A
Pass-Through Agency: State of Arizona, the Office of the Governor
Pass-Through Number(s): GR-ARPA-AHCA-050122-01
Award Period: May 1, 2022 - June 30, 2024
Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters
Condition/Context: Although management had processes and procedures in place to allocate
budgeted employee time and costs to their grant award program, management either did not maintain
or did not perform procedure to formally track employees' actual time and effort.
Criteria or specific requirement: In accordance with the Compliance Supplement, Part 6 – Internal
Control, 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and
maintain internal control over the federal awards that provides reasonable assurance that the
nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and
the terms and conditions of the federal awards.
In accordance with 2 CFR 200.430 (a), costs of compensation are allowable to the extent that they
satisfy the specific requirements of this part, and that the total compensation for individual employees:
(1) Is reasonable for the services rendered and conforms to the established written policy of the non-
Federal entity consistently applied to both Federal and non-Federal activities;
(2) Follows an appointment made in accordance with a non-Federal entity's laws and/or rules or written
policies and meets the requirements of Federal statute, where applicable; and
(3) Is determined and supported as provided in paragraph (i) of this section, when applicable.
In accordance with 2 CFR 200.430 (g), for compensation to members of nonprofit organizations,
trustees, directors, associates, officers, or the immediate families thereof, determination must be made
that such compensation is reasonable for the actual personal services rendered rather than a
distribution of earnings in excess of costs. This may include director's and executive committee
member's fees, incentive awards, allowances for off-site pay, incentive pay, location allowances,
hardship pay, and cost-of-living differentials.
Questioned costs: None.
Cause: The Organization did not have established internal controls and policies over the
documentation of time and effort related to payroll disbursements. Because of the limited number of
staff participating in the grant, management was aware that the actual time spent by employees met or exceeded the budgeted allocations. Effect: The Organization was not in compliance with the Compliance Supplement and the Code of
Federal Regulations related to the documentation of time and effort provisions for payroll
disbursements.
Repeat Finding: No
Recommendation: We recommend that the Association adopt a formal policy for tracking employee
time and effort supporting grant expenses. Additionally, management should summarize the actual time
employees spend on grant award programs and adjust the budgeted cost allocations to reflect the
actual time spent. A second person knowledgeable of grant award requirements should review the time
and effort summaries for proper completion and recording. This will help ensure that internal controls
over compliance are established and will help ensure that cost charged to grant award programs are
supported and allowable.
Views of responsible officials: Management agrees with the audit condition.
Federal Agency: U.S. Department of the Treasury
Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds
Assistance Listing Number: 21.027
Federal Award Identification Number and Year: N/A
Pass-Through Agency: State of Arizona, the Office of the Governor
Pass-Through Number(s): GR-ARPA-AHCA-050122-01
Award Period: May 1, 2022 - June 30, 2024
Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters
Condition/Context: The following compliance matters were noted over procurement:
1. The Association did not maintain a formalized and written procurement policy.
2. Twelve vendor purchases for workforce development training, with costs between $10,000
and $15,000 each, were selected for testing. However, the Association did not follow the
required solicitation or bidding procedures for any of its workforce development training
vendors or program. The Association awarded contracts to all vendors within the state that
elected to participate in the program.
3. For three of three vendors tested, procedures to determine that the vendors were not
included on the suspended or debarred vendor list maintained by the General Services
Administration were not performed.
Criteria or specific requirement: In accordance with the Compliance Supplement, Part 6 – Internal
Control, 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and
maintain internal control over the federal awards that provides reasonable assurance that the
nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and
the terms and conditions of the federal awards.
In accordance with 2 CFR 200.318 (a), the non-Federal entity must have and use documented
procurement procedures, consistent with State, local, and tribal laws and regulations and the standards
of this section, for the acquisition of property or services required under a Federal award or subaward.
The non-Federal entity's documented procurement procedures must conform to the procurement
standards identified in §§ 200.317 through 200.327.
In accordance with 2 CFR 200.320 (a)(2)(i), the non-Federal entity must have and use documented
procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and
200.319 for any of the following methods of procurement used for the acquisition of property or services
required under a Federal award or sub-award. Small purchase procedures - the acquisition of property
or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does
not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate
quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. Criteria or specific requirement (Continued)
In accordance with 2 CFR 200.320 (b)(1 and 2), the non-Federal entity must have and use documented
procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and
200.319 for any of the following methods of procurement used for the acquisition of property or services
required under a Federal award or sub-award. Formal procurement methods - when the value of the
procurement for property or services under a Federal financial assistance award exceeds the SAT, or a
lower threshold established by a non-Federal entity, formal procurement methods are required. Formal
procurement methods require following documented procedures. Formal procurement methods also
require public advertising unless a non-competitive procurement can be used in accordance with
§ 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for
procurement of property or services above the simplified acquisition threshold or a value below the
simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) sealed bids, or
(2) proposals.
In accordance with 2 CFR 200.320 (c), the non-Federal entity must have and use documented
procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and
200.319 for any of the following methods of procurement used for the acquisition of property or services
required under a Federal award or sub-award. Noncompetitive procurement: there are specific
circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can
only be awarded if one or more of the following circumstances apply:
(1) The acquisition of property or services, the aggregate dollar amount of which does not
exceed the micro-purchase threshold (see paragraph (a)(1) of this section);
(2) The item is available only from a single source;
(3) The public exigency or emergency for the requirement will not permit a delay resulting from
publicizing a competitive solicitation;
(4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive
procurement in response to a written request from the non-Federal entity; or
(5) After solicitation of a number of sources, competition is determined inadequate.
In accordance with 2 CFR 180.220, the non-Federal entities are prohibited from contracting with or
making subawards under covered transactions to parties that are suspended or debarred. “Covered
transactions” include contracts for goods and services awarded under a non-procurement transaction
(e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain
other criteria as specified in 2 CFR section 180.220). All non-procurement transactions entered into by
a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered
covered transactions, unless they are exempt as provided in 2 CFR section 180.215.
Questioned costs: None.
Cause: The Organization did not have established procurement policies and did not have internal
controls designed to ensure compliance with those policies. Management awarded training contracts to all vendors who agreed to participate in the grant award program. Effect: The Organization was not in compliance with the Compliance Supplement and the Code of
Federal Regulations related to procurement and suspension and debarment provisions.
Repeat Finding: No
Recommendation: We recommend that the Organization adopt a formal and written procurement
policy. Additionally, management should develop controls to help ensure procurement procedures are
followed and to monitor the amount spent with vendors throughout the year to ensure procurement
procedures are initiated when the vendor costs exceed the procurement thresholds. These procedures
will help ensure compliance with Compliance Supplement and the Code of Federal Regulations related
to procurement and suspension and debarment provisions.
Views of responsible officials: Management agrees with the audit condition.
Federal Agency: U.S. Department of the Treasury
Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds
Assistance Listing Number: 21.027
Federal Award Identification Number and Year: N/A
Pass-Through Agency: State of Arizona, the Office of the Governor
Pass-Through Number(s): GR-ARPA-AHCA-050122-01
Award Period: May 1, 2022 - June 30, 2024
Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters
Condition/Context: Although management had processes and procedures in place to allocate
budgeted employee time and costs to their grant award program, management either did not maintain
or did not perform procedure to formally track employees' actual time and effort.
Criteria or specific requirement: In accordance with the Compliance Supplement, Part 6 – Internal
Control, 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and
maintain internal control over the federal awards that provides reasonable assurance that the
nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and
the terms and conditions of the federal awards.
In accordance with 2 CFR 200.430 (a), costs of compensation are allowable to the extent that they
satisfy the specific requirements of this part, and that the total compensation for individual employees:
(1) Is reasonable for the services rendered and conforms to the established written policy of the non-
Federal entity consistently applied to both Federal and non-Federal activities;
(2) Follows an appointment made in accordance with a non-Federal entity's laws and/or rules or written
policies and meets the requirements of Federal statute, where applicable; and
(3) Is determined and supported as provided in paragraph (i) of this section, when applicable.
In accordance with 2 CFR 200.430 (g), for compensation to members of nonprofit organizations,
trustees, directors, associates, officers, or the immediate families thereof, determination must be made
that such compensation is reasonable for the actual personal services rendered rather than a
distribution of earnings in excess of costs. This may include director's and executive committee
member's fees, incentive awards, allowances for off-site pay, incentive pay, location allowances,
hardship pay, and cost-of-living differentials.
Questioned costs: None.
Cause: The Organization did not have established internal controls and policies over the
documentation of time and effort related to payroll disbursements. Because of the limited number of
staff participating in the grant, management was aware that the actual time spent by employees met or exceeded the budgeted allocations. Effect: The Organization was not in compliance with the Compliance Supplement and the Code of
Federal Regulations related to the documentation of time and effort provisions for payroll
disbursements.
Repeat Finding: No
Recommendation: We recommend that the Association adopt a formal policy for tracking employee
time and effort supporting grant expenses. Additionally, management should summarize the actual time
employees spend on grant award programs and adjust the budgeted cost allocations to reflect the
actual time spent. A second person knowledgeable of grant award requirements should review the time
and effort summaries for proper completion and recording. This will help ensure that internal controls
over compliance are established and will help ensure that cost charged to grant award programs are
supported and allowable.
Views of responsible officials: Management agrees with the audit condition.
Federal Agency: U.S. Department of the Treasury
Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds
Assistance Listing Number: 21.027
Federal Award Identification Number and Year: N/A
Pass-Through Agency: State of Arizona, the Office of the Governor
Pass-Through Number(s): GR-ARPA-AHCA-050122-01
Award Period: May 1, 2022 - June 30, 2024
Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters
Condition/Context: The following compliance matters were noted over procurement:
1. The Association did not maintain a formalized and written procurement policy.
2. Twelve vendor purchases for workforce development training, with costs between $10,000
and $15,000 each, were selected for testing. However, the Association did not follow the
required solicitation or bidding procedures for any of its workforce development training
vendors or program. The Association awarded contracts to all vendors within the state that
elected to participate in the program.
3. For three of three vendors tested, procedures to determine that the vendors were not
included on the suspended or debarred vendor list maintained by the General Services
Administration were not performed.
Criteria or specific requirement: In accordance with the Compliance Supplement, Part 6 – Internal
Control, 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and
maintain internal control over the federal awards that provides reasonable assurance that the
nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and
the terms and conditions of the federal awards.
In accordance with 2 CFR 200.318 (a), the non-Federal entity must have and use documented
procurement procedures, consistent with State, local, and tribal laws and regulations and the standards
of this section, for the acquisition of property or services required under a Federal award or subaward.
The non-Federal entity's documented procurement procedures must conform to the procurement
standards identified in §§ 200.317 through 200.327.
In accordance with 2 CFR 200.320 (a)(2)(i), the non-Federal entity must have and use documented
procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and
200.319 for any of the following methods of procurement used for the acquisition of property or services
required under a Federal award or sub-award. Small purchase procedures - the acquisition of property
or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does
not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate
quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. Criteria or specific requirement (Continued)
In accordance with 2 CFR 200.320 (b)(1 and 2), the non-Federal entity must have and use documented
procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and
200.319 for any of the following methods of procurement used for the acquisition of property or services
required under a Federal award or sub-award. Formal procurement methods - when the value of the
procurement for property or services under a Federal financial assistance award exceeds the SAT, or a
lower threshold established by a non-Federal entity, formal procurement methods are required. Formal
procurement methods require following documented procedures. Formal procurement methods also
require public advertising unless a non-competitive procurement can be used in accordance with
§ 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for
procurement of property or services above the simplified acquisition threshold or a value below the
simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) sealed bids, or
(2) proposals.
In accordance with 2 CFR 200.320 (c), the non-Federal entity must have and use documented
procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and
200.319 for any of the following methods of procurement used for the acquisition of property or services
required under a Federal award or sub-award. Noncompetitive procurement: there are specific
circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can
only be awarded if one or more of the following circumstances apply:
(1) The acquisition of property or services, the aggregate dollar amount of which does not
exceed the micro-purchase threshold (see paragraph (a)(1) of this section);
(2) The item is available only from a single source;
(3) The public exigency or emergency for the requirement will not permit a delay resulting from
publicizing a competitive solicitation;
(4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive
procurement in response to a written request from the non-Federal entity; or
(5) After solicitation of a number of sources, competition is determined inadequate.
In accordance with 2 CFR 180.220, the non-Federal entities are prohibited from contracting with or
making subawards under covered transactions to parties that are suspended or debarred. “Covered
transactions” include contracts for goods and services awarded under a non-procurement transaction
(e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain
other criteria as specified in 2 CFR section 180.220). All non-procurement transactions entered into by
a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered
covered transactions, unless they are exempt as provided in 2 CFR section 180.215.
Questioned costs: None.
Cause: The Organization did not have established procurement policies and did not have internal
controls designed to ensure compliance with those policies. Management awarded training contracts to all vendors who agreed to participate in the grant award program. Effect: The Organization was not in compliance with the Compliance Supplement and the Code of
Federal Regulations related to procurement and suspension and debarment provisions.
Repeat Finding: No
Recommendation: We recommend that the Organization adopt a formal and written procurement
policy. Additionally, management should develop controls to help ensure procurement procedures are
followed and to monitor the amount spent with vendors throughout the year to ensure procurement
procedures are initiated when the vendor costs exceed the procurement thresholds. These procedures
will help ensure compliance with Compliance Supplement and the Code of Federal Regulations related
to procurement and suspension and debarment provisions.
Views of responsible officials: Management agrees with the audit condition.