Audit 298885

FY End
2023-06-30
Total Expended
$46.88M
Findings
8
Programs
14
Organization: Memorial Hermann Health System (TX)
Year: 2023 Accepted: 2024-03-27

Organization Exclusion Status:

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Contacts

Name Title Type
KDX5Y29YQUL1 Cindy De Moya Auditee
7133384314 Debra Kohnle Auditor
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Notes to SEFA

Title: 1. Organization and Business Accounting Policies: GAAP De Minimis Rate Used: N Rate Explanation: The Health System has not elected to use the 10% de minimis indirect cost rate, as allowed under the Uniform Guidance. Memorial Hermann Health System (the Health System), a Texas nonprofit membership corporation, controls and coordinates the activities of certain other affiliates. The Health System’s Board of Directors exercises governance control for the Health System and retains significant reserved powers regarding its affiliates. The Health System is exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code (IRC). The Health System currently operates 17 hospitals (including 11 general acute care hospitals, one children’s hospital, one orthopedic and spine hospital, two rehabilitation hospitals, and two surgical hospitals), one nursing home, a Medicare-certified home health agency, a comprehensive network of ambulatory care facilities, three physician organizations and an independent practice association, a health plan that underwrites group health coverage, a captive casualty and liability insurance company, and an accountable care organization. Additionally, the Health System is supported by the Memorial Hermann Foundation (the Foundation).
Title: 2. Basis of Presentation Accounting Policies: GAAP De Minimis Rate Used: N Rate Explanation: The Health System has not elected to use the 10% de minimis indirect cost rate, as allowed under the Uniform Guidance. The Schedule presents federal grant activities of the Health System and is reported on the accrual basis of accounting, in accordance with accounting principles generally accepted in the United States of America. The information in the Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).
Title: 3. Indirect Cost Rate Accounting Policies: GAAP De Minimis Rate Used: N Rate Explanation: The Health System has not elected to use the 10% de minimis indirect cost rate, as allowed under the Uniform Guidance. The Health System has not elected to use the 10% de minimis indirect cost rate, as allowed under the Uniform Guidance.
Title: 4. COVID-19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) – 97.036 Accounting Policies: GAAP De Minimis Rate Used: N Rate Explanation: The Health System has not elected to use the 10% de minimis indirect cost rate, as allowed under the Uniform Guidance. In fiscal year 2023, the Health System received approval of Texas COVID-19 Pandemic assistance of $19,877,748 from the Federal Emergency Management Agency (FEMA) against expenditures for the approved projects of $19,877,748 that were incurred in prior fiscal years. Additional projects are currently being reviewed and approved by FEMA.
Title: 5. COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution – 93.498 Accounting Policies: GAAP De Minimis Rate Used: N Rate Explanation: The Health System has not elected to use the 10% de minimis indirect cost rate, as allowed under the Uniform Guidance. On March 11, 2020, the World Health Organization designated COVID-19 as a global pandemic. Patient volumes and the related revenue for most services were significantly impacted beginning in mid-March 2020, as various policies were implemented by federal, state and local governments in response to the COVID-19 pandemic, including stay-at-home orders, business closures, social distancing and suspension of elective and nonemergent procedures. In early May, certain of these policies, such as suspension of elective and non-emergent procedures were lifted, and the Health System experienced gradual improvement in volumes and related revenue. During this time, the Health System has also experienced supply chain disruptions, including significant price increases in medical supplies, particularly personal protective equipment. Sources of pandemic relief include the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which was enacted on March 27, 2020, and the Paycheck Protection Program and Health Care Enhancement Act (PPPHCE Act), which was enacted on April 24, 2020. The amount presented on the Schedule for COVID-19 Provider Relief Fund (PRF) is for the year ended June 30, 2023. The amount presented reconciles to the PRF information reported to HRSA as follows
Title: 5. COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution – 93.498 (Continued) Accounting Policies: GAAP De Minimis Rate Used: N Rate Explanation: The Health System has not elected to use the 10% de minimis indirect cost rate, as allowed under the Uniform Guidance. Health and Human Services (HHS) has indicated the PRF on the Schedule be reported corresponding to reporting requirements of the HRSA PRF reporting portal. Payments from HHS for PRF are assigned to Payment Received Periods (each, a Period), based upon the date each payment from the PRF was received. Each Period has a specified Period of Availability and timing of reporting requirements. Entities report into the HRSA PRF reporting portal after each Period’s deadline to use the funds (i.e., after the end of the Period of Availability). The Schedule includes $20,715,673 of PRF Funds received from HHS from July 1, 2022 through June 30, 2023, plus accrued interest of $273. PRF funds were recognized as other revenue in the fiscal year 2022 consolidated financial statements as shown in the Schedule for the year ended June 30, 2023.

Finding Details

Federal Program:Research and Development Cluster Assistance Listing Nos.93.432, 93.369, 93.433, 93.421 Federal Award Numbers and Grant Period - see Table. Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303 – Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318(i) – General procurement standards states: The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 – Methods of procurement to be followed – the non-Federal entity must have and use documented procurements 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: (a) (2) Small purchases – (i) 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. Condition: The Health System did not maintain records for procurements made with federal funds sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Questioned Costs: $149,194 Context: We selected and tested five procurements with expenditures totaling $149,194 from a population of 12 procurements over $10,000 each with expenditures totaling $411,649. For all five procurements, the Health System did not have sufficient evidence to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. We did not observe multiple quotes or sole source justification for any of the five procurements. The Health System’s total R&D expenditures were $6,288,755. Of this amount, $513,467 related to procurements of good and services. Effect: The Health System did not comply with the general procurement standards per the OMB to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Cause: The Health System did not have effective internal controls and procedures in place to ensure the Health System maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Identification as a repeat finding, if applicable: Not Applicable Recommendation: The Health System should retain written documentation for procurements documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. This would include obtaining quotes from vendors for competitive procurements and documenting sole source justification for procurements, when applicable. Views of responsible officials and planned corrective actions: Management agrees with the finding and has developed a corrective action plan.
Federal Program:Research and Development Cluster Assistance Listing Nos.93.432, 93.369, 93.433, 93.421 Federal Award Numbers and Grant Period - see Table. Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303 – Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318(i) – General procurement standards states: The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 – Methods of procurement to be followed – the non-Federal entity must have and use documented procurements 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: (a) (2) Small purchases – (i) 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. Condition: The Health System did not maintain records for procurements made with federal funds sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Questioned Costs: $149,194 Context: We selected and tested five procurements with expenditures totaling $149,194 from a population of 12 procurements over $10,000 each with expenditures totaling $411,649. For all five procurements, the Health System did not have sufficient evidence to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. We did not observe multiple quotes or sole source justification for any of the five procurements. The Health System’s total R&D expenditures were $6,288,755. Of this amount, $513,467 related to procurements of good and services. Effect: The Health System did not comply with the general procurement standards per the OMB to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Cause: The Health System did not have effective internal controls and procedures in place to ensure the Health System maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Identification as a repeat finding, if applicable: Not Applicable Recommendation: The Health System should retain written documentation for procurements documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. This would include obtaining quotes from vendors for competitive procurements and documenting sole source justification for procurements, when applicable. Views of responsible officials and planned corrective actions: Management agrees with the finding and has developed a corrective action plan.
Federal Program:Research and Development Cluster Assistance Listing Nos.93.432, 93.369, 93.433, 93.421 Federal Award Numbers and Grant Period - see Table. Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303 – Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318(i) – General procurement standards states: The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 – Methods of procurement to be followed – the non-Federal entity must have and use documented procurements 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: (a) (2) Small purchases – (i) 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. Condition: The Health System did not maintain records for procurements made with federal funds sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Questioned Costs: $149,194 Context: We selected and tested five procurements with expenditures totaling $149,194 from a population of 12 procurements over $10,000 each with expenditures totaling $411,649. For all five procurements, the Health System did not have sufficient evidence to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. We did not observe multiple quotes or sole source justification for any of the five procurements. The Health System’s total R&D expenditures were $6,288,755. Of this amount, $513,467 related to procurements of good and services. Effect: The Health System did not comply with the general procurement standards per the OMB to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Cause: The Health System did not have effective internal controls and procedures in place to ensure the Health System maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Identification as a repeat finding, if applicable: Not Applicable Recommendation: The Health System should retain written documentation for procurements documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. This would include obtaining quotes from vendors for competitive procurements and documenting sole source justification for procurements, when applicable. Views of responsible officials and planned corrective actions: Management agrees with the finding and has developed a corrective action plan.
Federal Program:Research and Development Cluster Assistance Listing Nos.93.432, 93.369, 93.433, 93.421 Federal Award Numbers and Grant Period - see Table. Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303 – Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318(i) – General procurement standards states: The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 – Methods of procurement to be followed – the non-Federal entity must have and use documented procurements 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: (a) (2) Small purchases – (i) 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. Condition: The Health System did not maintain records for procurements made with federal funds sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Questioned Costs: $149,194 Context: We selected and tested five procurements with expenditures totaling $149,194 from a population of 12 procurements over $10,000 each with expenditures totaling $411,649. For all five procurements, the Health System did not have sufficient evidence to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. We did not observe multiple quotes or sole source justification for any of the five procurements. The Health System’s total R&D expenditures were $6,288,755. Of this amount, $513,467 related to procurements of good and services. Effect: The Health System did not comply with the general procurement standards per the OMB to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Cause: The Health System did not have effective internal controls and procedures in place to ensure the Health System maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Identification as a repeat finding, if applicable: Not Applicable Recommendation: The Health System should retain written documentation for procurements documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. This would include obtaining quotes from vendors for competitive procurements and documenting sole source justification for procurements, when applicable. Views of responsible officials and planned corrective actions: Management agrees with the finding and has developed a corrective action plan.
Federal Program:Research and Development Cluster Assistance Listing Nos.93.432, 93.369, 93.433, 93.421 Federal Award Numbers and Grant Period - see Table. Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303 – Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318(i) – General procurement standards states: The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 – Methods of procurement to be followed – the non-Federal entity must have and use documented procurements 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: (a) (2) Small purchases – (i) 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. Condition: The Health System did not maintain records for procurements made with federal funds sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Questioned Costs: $149,194 Context: We selected and tested five procurements with expenditures totaling $149,194 from a population of 12 procurements over $10,000 each with expenditures totaling $411,649. For all five procurements, the Health System did not have sufficient evidence to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. We did not observe multiple quotes or sole source justification for any of the five procurements. The Health System’s total R&D expenditures were $6,288,755. Of this amount, $513,467 related to procurements of good and services. Effect: The Health System did not comply with the general procurement standards per the OMB to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Cause: The Health System did not have effective internal controls and procedures in place to ensure the Health System maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Identification as a repeat finding, if applicable: Not Applicable Recommendation: The Health System should retain written documentation for procurements documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. This would include obtaining quotes from vendors for competitive procurements and documenting sole source justification for procurements, when applicable. Views of responsible officials and planned corrective actions: Management agrees with the finding and has developed a corrective action plan.
Federal Program:Research and Development Cluster Assistance Listing Nos.93.432, 93.369, 93.433, 93.421 Federal Award Numbers and Grant Period - see Table. Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303 – Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318(i) – General procurement standards states: The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 – Methods of procurement to be followed – the non-Federal entity must have and use documented procurements 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: (a) (2) Small purchases – (i) 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. Condition: The Health System did not maintain records for procurements made with federal funds sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Questioned Costs: $149,194 Context: We selected and tested five procurements with expenditures totaling $149,194 from a population of 12 procurements over $10,000 each with expenditures totaling $411,649. For all five procurements, the Health System did not have sufficient evidence to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. We did not observe multiple quotes or sole source justification for any of the five procurements. The Health System’s total R&D expenditures were $6,288,755. Of this amount, $513,467 related to procurements of good and services. Effect: The Health System did not comply with the general procurement standards per the OMB to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Cause: The Health System did not have effective internal controls and procedures in place to ensure the Health System maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Identification as a repeat finding, if applicable: Not Applicable Recommendation: The Health System should retain written documentation for procurements documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. This would include obtaining quotes from vendors for competitive procurements and documenting sole source justification for procurements, when applicable. Views of responsible officials and planned corrective actions: Management agrees with the finding and has developed a corrective action plan.
Federal Program:Research and Development Cluster Assistance Listing Nos.93.432, 93.369, 93.433, 93.421 Federal Award Numbers and Grant Period - see Table. Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303 – Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318(i) – General procurement standards states: The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 – Methods of procurement to be followed – the non-Federal entity must have and use documented procurements 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: (a) (2) Small purchases – (i) 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. Condition: The Health System did not maintain records for procurements made with federal funds sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Questioned Costs: $149,194 Context: We selected and tested five procurements with expenditures totaling $149,194 from a population of 12 procurements over $10,000 each with expenditures totaling $411,649. For all five procurements, the Health System did not have sufficient evidence to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. We did not observe multiple quotes or sole source justification for any of the five procurements. The Health System’s total R&D expenditures were $6,288,755. Of this amount, $513,467 related to procurements of good and services. Effect: The Health System did not comply with the general procurement standards per the OMB to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Cause: The Health System did not have effective internal controls and procedures in place to ensure the Health System maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Identification as a repeat finding, if applicable: Not Applicable Recommendation: The Health System should retain written documentation for procurements documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. This would include obtaining quotes from vendors for competitive procurements and documenting sole source justification for procurements, when applicable. Views of responsible officials and planned corrective actions: Management agrees with the finding and has developed a corrective action plan.
Federal Program:Research and Development Cluster Assistance Listing Nos.93.432, 93.369, 93.433, 93.421 Federal Award Numbers and Grant Period - see Table. Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303 – Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318(i) – General procurement standards states: The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 – Methods of procurement to be followed – the non-Federal entity must have and use documented procurements 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: (a) (2) Small purchases – (i) 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. Condition: The Health System did not maintain records for procurements made with federal funds sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Questioned Costs: $149,194 Context: We selected and tested five procurements with expenditures totaling $149,194 from a population of 12 procurements over $10,000 each with expenditures totaling $411,649. For all five procurements, the Health System did not have sufficient evidence to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. We did not observe multiple quotes or sole source justification for any of the five procurements. The Health System’s total R&D expenditures were $6,288,755. Of this amount, $513,467 related to procurements of good and services. Effect: The Health System did not comply with the general procurement standards per the OMB to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. Cause: The Health System did not have effective internal controls and procedures in place to ensure the Health System maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements. Identification as a repeat finding, if applicable: Not Applicable Recommendation: The Health System should retain written documentation for procurements documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. This would include obtaining quotes from vendors for competitive procurements and documenting sole source justification for procurements, when applicable. Views of responsible officials and planned corrective actions: Management agrees with the finding and has developed a corrective action plan.