2023-002 – PROCUREMENT, SUSPENSION, AND DEBARMENT COMPLIANCE Type of Finding: (F) – Significant Deficiency in Internal Control Over Compliance of Federal Awards Funding Agency: National Endowment for the Humanities Title: State Humanities Program and Humanities Councils American Rescue Plan Funding AL #: 45.129 Award #s: ZSO-283159-21 ARP, SO-268668-20 and SO-289867-23 Award Period: November 1, 2022 – October 31, 2023 Questioned Costs: None Statement of Condition
The Council did not consistently follow the suspension and debarment policy and did not keep backup documentation for some of the procurement transactions over $10,000. Context
The Council purchased goods and services exceeding $25,000 and documentation was not available to substantiate that the vendors were screened for suspension and debarment prior to expenditure. Note: All the vendors were screened during the audit and none of them had any exclusions. Also, the Council had documentation for all 6 sub-awardees tested (non-procurement clause of the award.) Criteria
Per 2 CFR 200.320(a)(2)(i) 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 ($10,000 in fiscal year 2023) but does not exceed the simplified acquisition threshold ($249,999 in fiscal year 2023). 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.
Additionally, 2 CFR 200.214 requires vendors awarded contracts expected to equal or exceed $25,000 to be checked for suspension and debarment via the System for Award Management Exclusions (SAM.gov). According to §180.300 of Subpart C–Responsibilities of Participants Regarding Transactions Doing Business with Other Persons of 2 CFR Part 180, when the grantee enters into a covered transaction with another person at the next lower tier, they must verify that the person with whom they intend to do business is not excluded or disqualified.
This can be done by:
(a) Checking SAM Exclusions; or
(b) Collecting a certification from that person; or
(c) Adding a clause or condition to the covered transaction with that person.
While the Council has policies in place and links in the policies to the appropriate CFRs, it seems that the policies might need to be updated to specify the thresholds for debarment and suspension checks for vendor and the updated threshold for micro-purchasing. Cause
The Council had turnover in employment for staff in charge of obtaining 3 bids and documentation could not be located. The policies might need to be updated with the new micro-purchasing thresholds and clearly specify the thresholds for vendor check-ups in sam.gov. Effect
There is the risk that the Council could contract with a party that is suspended or debarred. The Council is not following consistently the policies. Recommendation
Design and implement internal controls to ensure that contracts expected to equal or exceed $25,000, or meet certain other criteria as specified in 2 CFR 180.220, are checked for suspension and debarment.
Improve the policies and procedures manual by updating the thresholds for micro-purchases and small purchases, and adding explicit reference to the $25,000 threshold for vendors under procurement regulations regarding debarment and suspension. View of Responsible Official and Corrective Action Plan:
NMHC management is in agreement with this finding. Management has reviewed the existing federal procurement policies and procedures found in 2 CFR 200 and will enforce the policies and procedures to ensure existing suspension and debarment policies and procedures are followed. NMHC’s Executive Director or Deputy Director will review all potential purchases and contracts for compliance with the policies. The Executive Director or Deputy Director will also provide an additional check by reviewing all vendors paid $25,000 or more against the SAM website. Proof of the SAM website review and approval will be maintained in each vendor file. All future contracts of any size will also include a clause or condition to the covered transaction with the contractor/vendor that must be signed by that person.
The Executive Director will update the existing NMHC policies and procedures manual by adding the new thresholds for micro-purchases and small purchases. The Executive Director will also add explicit reference to the $25,000 threshold for vendors under procurement regulations regarding debarment and suspension. Corrective Action Plan Timeline:
Management anticipates the above corrective action plan to be fully implemented by July 31, 2024. Designation Of Employee Position Responsible For Meeting Deadline:
Personnel responsible for ensuring implementation include the Executive Director and Deputy Director.
2023-002 – PROCUREMENT, SUSPENSION, AND DEBARMENT COMPLIANCE Type of Finding: (F) – Significant Deficiency in Internal Control Over Compliance of Federal Awards Funding Agency: National Endowment for the Humanities Title: State Humanities Program and Humanities Councils American Rescue Plan Funding AL #: 45.129 Award #s: ZSO-283159-21 ARP, SO-268668-20 and SO-289867-23 Award Period: November 1, 2022 – October 31, 2023 Questioned Costs: None Statement of Condition
The Council did not consistently follow the suspension and debarment policy and did not keep backup documentation for some of the procurement transactions over $10,000. Context
The Council purchased goods and services exceeding $25,000 and documentation was not available to substantiate that the vendors were screened for suspension and debarment prior to expenditure. Note: All the vendors were screened during the audit and none of them had any exclusions. Also, the Council had documentation for all 6 sub-awardees tested (non-procurement clause of the award.) Criteria
Per 2 CFR 200.320(a)(2)(i) 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 ($10,000 in fiscal year 2023) but does not exceed the simplified acquisition threshold ($249,999 in fiscal year 2023). 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.
Additionally, 2 CFR 200.214 requires vendors awarded contracts expected to equal or exceed $25,000 to be checked for suspension and debarment via the System for Award Management Exclusions (SAM.gov). According to §180.300 of Subpart C–Responsibilities of Participants Regarding Transactions Doing Business with Other Persons of 2 CFR Part 180, when the grantee enters into a covered transaction with another person at the next lower tier, they must verify that the person with whom they intend to do business is not excluded or disqualified.
This can be done by:
(a) Checking SAM Exclusions; or
(b) Collecting a certification from that person; or
(c) Adding a clause or condition to the covered transaction with that person.
While the Council has policies in place and links in the policies to the appropriate CFRs, it seems that the policies might need to be updated to specify the thresholds for debarment and suspension checks for vendor and the updated threshold for micro-purchasing. Cause
The Council had turnover in employment for staff in charge of obtaining 3 bids and documentation could not be located. The policies might need to be updated with the new micro-purchasing thresholds and clearly specify the thresholds for vendor check-ups in sam.gov. Effect
There is the risk that the Council could contract with a party that is suspended or debarred. The Council is not following consistently the policies. Recommendation
Design and implement internal controls to ensure that contracts expected to equal or exceed $25,000, or meet certain other criteria as specified in 2 CFR 180.220, are checked for suspension and debarment.
Improve the policies and procedures manual by updating the thresholds for micro-purchases and small purchases, and adding explicit reference to the $25,000 threshold for vendors under procurement regulations regarding debarment and suspension. View of Responsible Official and Corrective Action Plan:
NMHC management is in agreement with this finding. Management has reviewed the existing federal procurement policies and procedures found in 2 CFR 200 and will enforce the policies and procedures to ensure existing suspension and debarment policies and procedures are followed. NMHC’s Executive Director or Deputy Director will review all potential purchases and contracts for compliance with the policies. The Executive Director or Deputy Director will also provide an additional check by reviewing all vendors paid $25,000 or more against the SAM website. Proof of the SAM website review and approval will be maintained in each vendor file. All future contracts of any size will also include a clause or condition to the covered transaction with the contractor/vendor that must be signed by that person.
The Executive Director will update the existing NMHC policies and procedures manual by adding the new thresholds for micro-purchases and small purchases. The Executive Director will also add explicit reference to the $25,000 threshold for vendors under procurement regulations regarding debarment and suspension. Corrective Action Plan Timeline:
Management anticipates the above corrective action plan to be fully implemented by July 31, 2024. Designation Of Employee Position Responsible For Meeting Deadline:
Personnel responsible for ensuring implementation include the Executive Director and Deputy Director.
2023-002 – PROCUREMENT, SUSPENSION, AND DEBARMENT COMPLIANCE Type of Finding: (F) – Significant Deficiency in Internal Control Over Compliance of Federal Awards Funding Agency: National Endowment for the Humanities Title: State Humanities Program and Humanities Councils American Rescue Plan Funding AL #: 45.129 Award #s: ZSO-283159-21 ARP, SO-268668-20 and SO-289867-23 Award Period: November 1, 2022 – October 31, 2023 Questioned Costs: None Statement of Condition
The Council did not consistently follow the suspension and debarment policy and did not keep backup documentation for some of the procurement transactions over $10,000. Context
The Council purchased goods and services exceeding $25,000 and documentation was not available to substantiate that the vendors were screened for suspension and debarment prior to expenditure. Note: All the vendors were screened during the audit and none of them had any exclusions. Also, the Council had documentation for all 6 sub-awardees tested (non-procurement clause of the award.) Criteria
Per 2 CFR 200.320(a)(2)(i) 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 ($10,000 in fiscal year 2023) but does not exceed the simplified acquisition threshold ($249,999 in fiscal year 2023). 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.
Additionally, 2 CFR 200.214 requires vendors awarded contracts expected to equal or exceed $25,000 to be checked for suspension and debarment via the System for Award Management Exclusions (SAM.gov). According to §180.300 of Subpart C–Responsibilities of Participants Regarding Transactions Doing Business with Other Persons of 2 CFR Part 180, when the grantee enters into a covered transaction with another person at the next lower tier, they must verify that the person with whom they intend to do business is not excluded or disqualified.
This can be done by:
(a) Checking SAM Exclusions; or
(b) Collecting a certification from that person; or
(c) Adding a clause or condition to the covered transaction with that person.
While the Council has policies in place and links in the policies to the appropriate CFRs, it seems that the policies might need to be updated to specify the thresholds for debarment and suspension checks for vendor and the updated threshold for micro-purchasing. Cause
The Council had turnover in employment for staff in charge of obtaining 3 bids and documentation could not be located. The policies might need to be updated with the new micro-purchasing thresholds and clearly specify the thresholds for vendor check-ups in sam.gov. Effect
There is the risk that the Council could contract with a party that is suspended or debarred. The Council is not following consistently the policies. Recommendation
Design and implement internal controls to ensure that contracts expected to equal or exceed $25,000, or meet certain other criteria as specified in 2 CFR 180.220, are checked for suspension and debarment.
Improve the policies and procedures manual by updating the thresholds for micro-purchases and small purchases, and adding explicit reference to the $25,000 threshold for vendors under procurement regulations regarding debarment and suspension. View of Responsible Official and Corrective Action Plan:
NMHC management is in agreement with this finding. Management has reviewed the existing federal procurement policies and procedures found in 2 CFR 200 and will enforce the policies and procedures to ensure existing suspension and debarment policies and procedures are followed. NMHC’s Executive Director or Deputy Director will review all potential purchases and contracts for compliance with the policies. The Executive Director or Deputy Director will also provide an additional check by reviewing all vendors paid $25,000 or more against the SAM website. Proof of the SAM website review and approval will be maintained in each vendor file. All future contracts of any size will also include a clause or condition to the covered transaction with the contractor/vendor that must be signed by that person.
The Executive Director will update the existing NMHC policies and procedures manual by adding the new thresholds for micro-purchases and small purchases. The Executive Director will also add explicit reference to the $25,000 threshold for vendors under procurement regulations regarding debarment and suspension. Corrective Action Plan Timeline:
Management anticipates the above corrective action plan to be fully implemented by July 31, 2024. Designation Of Employee Position Responsible For Meeting Deadline:
Personnel responsible for ensuring implementation include the Executive Director and Deputy Director.
2023-001 – REPORTING- ARPA GRANT Type of Finding: (F) –Significant Deficiency in Internal Control Over Compliance of Federal Awards Funding Agency: National Endowment for the Humanities Title: Humanities Councils American Rescue Plan Funding (COVID-19 American Rescue Plan - Promotion of the Humanities - Federal/State Partnership) AL #: 45.129 Award #: ZSO-283159-21 ARP Award Period: November 1, 2021 – April 30, 2023. Questioned Costs: None Statement of Condition
NMHC did not have adequate controls over the SF-425. The data in SF-425 financial report for the reporting period end date of April 30, 2023 did not agree to the NMHC’s accounting records. Management’s review of the report did not identify that the amounts reported under line 10(c) (cash on hand) were understated by $35,126 as of April 30, 2023. Additionally, 2 checks with unspent funds were received from subgrantees in the amount of $6,985 after the due date of the report, bringing the total amount to be returned to the grantor to $42,111. (The subrecipients, due to deficiencies in their own internal controls, had attested in writing at the time of the closing of their grants that they had spent their total subawarded ARPA dollars in an appropriate fashion.) Criteria
In accordance with 24 CFR Part 85.41, the Federal Financial Report (SF-425) is required to be submitted for the Promotion of the Humanities - Federal/State Partnership (ARP) program. Recipients use the SF-425 as a standardized format to report expenditures under Federal awards, as well as, when applicable, cash status. Recipients are required to report both cash management information on lines 10(a) through 10(c) and financial status information on lines 10(d) through 10(o). In addition, 2 CFR Part 200.303 requires the program to establish and maintain effective internal controls over Federal awards that provides reasonable assurance of compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. Cause
NMHC did not properly report cash on hand and the reviewer did not detect these errors or errors in the amounts due to be returned. The grant was not consistently tracked in the accounting system, making it hard to produce meaningful reports that could give accurate numbers for the report. Effect
Weaknesses in internal controls related to the reporting requirements could result in sanctions by the National Endowment for the Humanities. Questioned costs are not applicable to this finding. Recommendation
NMHC staff should perform more detailed reviews of the reports to ensure they properly reflect grant receipts and expenditures. The accounting records should track all revenue and expenses by grant to be able to perform timely and accurate reconciliation. This review should be performed by someone other than the preparer and should include documented evidence of agreeing the reported data to the accounting records. We further recommend training for those individuals involved in the preparation and review of the reports to ensure they are fully aware of the requirements. View of Responsible Official and Corrective Action Plan:
NMHC management will perform more detailed reviews of future SF-425 forms to ensure they accurately reflect grant receipts and expenditures. NMHC ‘s Executive Director has already ensured that accounting records track all revenue and expenses by grant in order to be able to perform timely and accurate reconciliation through more regular reviews. The Executive Director will seek further training to ensure they are fully aware of the requirements.
NMHC will quickly return to the National Endowment for the Humanities the understated amount, deemed to be $42,111. The NMHC Financial Officer will amend the current SF-425 for the NEH ARPA grant and the Executive Director will submit it to the NEH Office of Grant Management. Corrective Action Plan Timeline:
Management anticipates the above corrective action plan to be fully implemented by July 31, 2024. Designation Of Employee Position Responsible For Meeting Deadline:
The Executive Director will be responsible for ensuring implementation.
2023-002 – PROCUREMENT, SUSPENSION, AND DEBARMENT COMPLIANCE Type of Finding: (F) – Significant Deficiency in Internal Control Over Compliance of Federal Awards Funding Agency: National Endowment for the Humanities Title: State Humanities Program and Humanities Councils American Rescue Plan Funding AL #: 45.129 Award #s: ZSO-283159-21 ARP, SO-268668-20 and SO-289867-23 Award Period: November 1, 2022 – October 31, 2023 Questioned Costs: None Statement of Condition
The Council did not consistently follow the suspension and debarment policy and did not keep backup documentation for some of the procurement transactions over $10,000. Context
The Council purchased goods and services exceeding $25,000 and documentation was not available to substantiate that the vendors were screened for suspension and debarment prior to expenditure. Note: All the vendors were screened during the audit and none of them had any exclusions. Also, the Council had documentation for all 6 sub-awardees tested (non-procurement clause of the award.) Criteria
Per 2 CFR 200.320(a)(2)(i) 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 ($10,000 in fiscal year 2023) but does not exceed the simplified acquisition threshold ($249,999 in fiscal year 2023). 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.
Additionally, 2 CFR 200.214 requires vendors awarded contracts expected to equal or exceed $25,000 to be checked for suspension and debarment via the System for Award Management Exclusions (SAM.gov). According to §180.300 of Subpart C–Responsibilities of Participants Regarding Transactions Doing Business with Other Persons of 2 CFR Part 180, when the grantee enters into a covered transaction with another person at the next lower tier, they must verify that the person with whom they intend to do business is not excluded or disqualified.
This can be done by:
(a) Checking SAM Exclusions; or
(b) Collecting a certification from that person; or
(c) Adding a clause or condition to the covered transaction with that person.
While the Council has policies in place and links in the policies to the appropriate CFRs, it seems that the policies might need to be updated to specify the thresholds for debarment and suspension checks for vendor and the updated threshold for micro-purchasing. Cause
The Council had turnover in employment for staff in charge of obtaining 3 bids and documentation could not be located. The policies might need to be updated with the new micro-purchasing thresholds and clearly specify the thresholds for vendor check-ups in sam.gov. Effect
There is the risk that the Council could contract with a party that is suspended or debarred. The Council is not following consistently the policies. Recommendation
Design and implement internal controls to ensure that contracts expected to equal or exceed $25,000, or meet certain other criteria as specified in 2 CFR 180.220, are checked for suspension and debarment.
Improve the policies and procedures manual by updating the thresholds for micro-purchases and small purchases, and adding explicit reference to the $25,000 threshold for vendors under procurement regulations regarding debarment and suspension. View of Responsible Official and Corrective Action Plan:
NMHC management is in agreement with this finding. Management has reviewed the existing federal procurement policies and procedures found in 2 CFR 200 and will enforce the policies and procedures to ensure existing suspension and debarment policies and procedures are followed. NMHC’s Executive Director or Deputy Director will review all potential purchases and contracts for compliance with the policies. The Executive Director or Deputy Director will also provide an additional check by reviewing all vendors paid $25,000 or more against the SAM website. Proof of the SAM website review and approval will be maintained in each vendor file. All future contracts of any size will also include a clause or condition to the covered transaction with the contractor/vendor that must be signed by that person.
The Executive Director will update the existing NMHC policies and procedures manual by adding the new thresholds for micro-purchases and small purchases. The Executive Director will also add explicit reference to the $25,000 threshold for vendors under procurement regulations regarding debarment and suspension. Corrective Action Plan Timeline:
Management anticipates the above corrective action plan to be fully implemented by July 31, 2024. Designation Of Employee Position Responsible For Meeting Deadline:
Personnel responsible for ensuring implementation include the Executive Director and Deputy Director.
2023-002 – PROCUREMENT, SUSPENSION, AND DEBARMENT COMPLIANCE Type of Finding: (F) – Significant Deficiency in Internal Control Over Compliance of Federal Awards Funding Agency: National Endowment for the Humanities Title: State Humanities Program and Humanities Councils American Rescue Plan Funding AL #: 45.129 Award #s: ZSO-283159-21 ARP, SO-268668-20 and SO-289867-23 Award Period: November 1, 2022 – October 31, 2023 Questioned Costs: None Statement of Condition
The Council did not consistently follow the suspension and debarment policy and did not keep backup documentation for some of the procurement transactions over $10,000. Context
The Council purchased goods and services exceeding $25,000 and documentation was not available to substantiate that the vendors were screened for suspension and debarment prior to expenditure. Note: All the vendors were screened during the audit and none of them had any exclusions. Also, the Council had documentation for all 6 sub-awardees tested (non-procurement clause of the award.) Criteria
Per 2 CFR 200.320(a)(2)(i) 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 ($10,000 in fiscal year 2023) but does not exceed the simplified acquisition threshold ($249,999 in fiscal year 2023). 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.
Additionally, 2 CFR 200.214 requires vendors awarded contracts expected to equal or exceed $25,000 to be checked for suspension and debarment via the System for Award Management Exclusions (SAM.gov). According to §180.300 of Subpart C–Responsibilities of Participants Regarding Transactions Doing Business with Other Persons of 2 CFR Part 180, when the grantee enters into a covered transaction with another person at the next lower tier, they must verify that the person with whom they intend to do business is not excluded or disqualified.
This can be done by:
(a) Checking SAM Exclusions; or
(b) Collecting a certification from that person; or
(c) Adding a clause or condition to the covered transaction with that person.
While the Council has policies in place and links in the policies to the appropriate CFRs, it seems that the policies might need to be updated to specify the thresholds for debarment and suspension checks for vendor and the updated threshold for micro-purchasing. Cause
The Council had turnover in employment for staff in charge of obtaining 3 bids and documentation could not be located. The policies might need to be updated with the new micro-purchasing thresholds and clearly specify the thresholds for vendor check-ups in sam.gov. Effect
There is the risk that the Council could contract with a party that is suspended or debarred. The Council is not following consistently the policies. Recommendation
Design and implement internal controls to ensure that contracts expected to equal or exceed $25,000, or meet certain other criteria as specified in 2 CFR 180.220, are checked for suspension and debarment.
Improve the policies and procedures manual by updating the thresholds for micro-purchases and small purchases, and adding explicit reference to the $25,000 threshold for vendors under procurement regulations regarding debarment and suspension. View of Responsible Official and Corrective Action Plan:
NMHC management is in agreement with this finding. Management has reviewed the existing federal procurement policies and procedures found in 2 CFR 200 and will enforce the policies and procedures to ensure existing suspension and debarment policies and procedures are followed. NMHC’s Executive Director or Deputy Director will review all potential purchases and contracts for compliance with the policies. The Executive Director or Deputy Director will also provide an additional check by reviewing all vendors paid $25,000 or more against the SAM website. Proof of the SAM website review and approval will be maintained in each vendor file. All future contracts of any size will also include a clause or condition to the covered transaction with the contractor/vendor that must be signed by that person.
The Executive Director will update the existing NMHC policies and procedures manual by adding the new thresholds for micro-purchases and small purchases. The Executive Director will also add explicit reference to the $25,000 threshold for vendors under procurement regulations regarding debarment and suspension. Corrective Action Plan Timeline:
Management anticipates the above corrective action plan to be fully implemented by July 31, 2024. Designation Of Employee Position Responsible For Meeting Deadline:
Personnel responsible for ensuring implementation include the Executive Director and Deputy Director.
2023-002 – PROCUREMENT, SUSPENSION, AND DEBARMENT COMPLIANCE Type of Finding: (F) – Significant Deficiency in Internal Control Over Compliance of Federal Awards Funding Agency: National Endowment for the Humanities Title: State Humanities Program and Humanities Councils American Rescue Plan Funding AL #: 45.129 Award #s: ZSO-283159-21 ARP, SO-268668-20 and SO-289867-23 Award Period: November 1, 2022 – October 31, 2023 Questioned Costs: None Statement of Condition
The Council did not consistently follow the suspension and debarment policy and did not keep backup documentation for some of the procurement transactions over $10,000. Context
The Council purchased goods and services exceeding $25,000 and documentation was not available to substantiate that the vendors were screened for suspension and debarment prior to expenditure. Note: All the vendors were screened during the audit and none of them had any exclusions. Also, the Council had documentation for all 6 sub-awardees tested (non-procurement clause of the award.) Criteria
Per 2 CFR 200.320(a)(2)(i) 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 ($10,000 in fiscal year 2023) but does not exceed the simplified acquisition threshold ($249,999 in fiscal year 2023). 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.
Additionally, 2 CFR 200.214 requires vendors awarded contracts expected to equal or exceed $25,000 to be checked for suspension and debarment via the System for Award Management Exclusions (SAM.gov). According to §180.300 of Subpart C–Responsibilities of Participants Regarding Transactions Doing Business with Other Persons of 2 CFR Part 180, when the grantee enters into a covered transaction with another person at the next lower tier, they must verify that the person with whom they intend to do business is not excluded or disqualified.
This can be done by:
(a) Checking SAM Exclusions; or
(b) Collecting a certification from that person; or
(c) Adding a clause or condition to the covered transaction with that person.
While the Council has policies in place and links in the policies to the appropriate CFRs, it seems that the policies might need to be updated to specify the thresholds for debarment and suspension checks for vendor and the updated threshold for micro-purchasing. Cause
The Council had turnover in employment for staff in charge of obtaining 3 bids and documentation could not be located. The policies might need to be updated with the new micro-purchasing thresholds and clearly specify the thresholds for vendor check-ups in sam.gov. Effect
There is the risk that the Council could contract with a party that is suspended or debarred. The Council is not following consistently the policies. Recommendation
Design and implement internal controls to ensure that contracts expected to equal or exceed $25,000, or meet certain other criteria as specified in 2 CFR 180.220, are checked for suspension and debarment.
Improve the policies and procedures manual by updating the thresholds for micro-purchases and small purchases, and adding explicit reference to the $25,000 threshold for vendors under procurement regulations regarding debarment and suspension. View of Responsible Official and Corrective Action Plan:
NMHC management is in agreement with this finding. Management has reviewed the existing federal procurement policies and procedures found in 2 CFR 200 and will enforce the policies and procedures to ensure existing suspension and debarment policies and procedures are followed. NMHC’s Executive Director or Deputy Director will review all potential purchases and contracts for compliance with the policies. The Executive Director or Deputy Director will also provide an additional check by reviewing all vendors paid $25,000 or more against the SAM website. Proof of the SAM website review and approval will be maintained in each vendor file. All future contracts of any size will also include a clause or condition to the covered transaction with the contractor/vendor that must be signed by that person.
The Executive Director will update the existing NMHC policies and procedures manual by adding the new thresholds for micro-purchases and small purchases. The Executive Director will also add explicit reference to the $25,000 threshold for vendors under procurement regulations regarding debarment and suspension. Corrective Action Plan Timeline:
Management anticipates the above corrective action plan to be fully implemented by July 31, 2024. Designation Of Employee Position Responsible For Meeting Deadline:
Personnel responsible for ensuring implementation include the Executive Director and Deputy Director.
2023-001 – REPORTING- ARPA GRANT Type of Finding: (F) –Significant Deficiency in Internal Control Over Compliance of Federal Awards Funding Agency: National Endowment for the Humanities Title: Humanities Councils American Rescue Plan Funding (COVID-19 American Rescue Plan - Promotion of the Humanities - Federal/State Partnership) AL #: 45.129 Award #: ZSO-283159-21 ARP Award Period: November 1, 2021 – April 30, 2023. Questioned Costs: None Statement of Condition
NMHC did not have adequate controls over the SF-425. The data in SF-425 financial report for the reporting period end date of April 30, 2023 did not agree to the NMHC’s accounting records. Management’s review of the report did not identify that the amounts reported under line 10(c) (cash on hand) were understated by $35,126 as of April 30, 2023. Additionally, 2 checks with unspent funds were received from subgrantees in the amount of $6,985 after the due date of the report, bringing the total amount to be returned to the grantor to $42,111. (The subrecipients, due to deficiencies in their own internal controls, had attested in writing at the time of the closing of their grants that they had spent their total subawarded ARPA dollars in an appropriate fashion.) Criteria
In accordance with 24 CFR Part 85.41, the Federal Financial Report (SF-425) is required to be submitted for the Promotion of the Humanities - Federal/State Partnership (ARP) program. Recipients use the SF-425 as a standardized format to report expenditures under Federal awards, as well as, when applicable, cash status. Recipients are required to report both cash management information on lines 10(a) through 10(c) and financial status information on lines 10(d) through 10(o). In addition, 2 CFR Part 200.303 requires the program to establish and maintain effective internal controls over Federal awards that provides reasonable assurance of compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. Cause
NMHC did not properly report cash on hand and the reviewer did not detect these errors or errors in the amounts due to be returned. The grant was not consistently tracked in the accounting system, making it hard to produce meaningful reports that could give accurate numbers for the report. Effect
Weaknesses in internal controls related to the reporting requirements could result in sanctions by the National Endowment for the Humanities. Questioned costs are not applicable to this finding. Recommendation
NMHC staff should perform more detailed reviews of the reports to ensure they properly reflect grant receipts and expenditures. The accounting records should track all revenue and expenses by grant to be able to perform timely and accurate reconciliation. This review should be performed by someone other than the preparer and should include documented evidence of agreeing the reported data to the accounting records. We further recommend training for those individuals involved in the preparation and review of the reports to ensure they are fully aware of the requirements. View of Responsible Official and Corrective Action Plan:
NMHC management will perform more detailed reviews of future SF-425 forms to ensure they accurately reflect grant receipts and expenditures. NMHC ‘s Executive Director has already ensured that accounting records track all revenue and expenses by grant in order to be able to perform timely and accurate reconciliation through more regular reviews. The Executive Director will seek further training to ensure they are fully aware of the requirements.
NMHC will quickly return to the National Endowment for the Humanities the understated amount, deemed to be $42,111. The NMHC Financial Officer will amend the current SF-425 for the NEH ARPA grant and the Executive Director will submit it to the NEH Office of Grant Management. Corrective Action Plan Timeline:
Management anticipates the above corrective action plan to be fully implemented by July 31, 2024. Designation Of Employee Position Responsible For Meeting Deadline:
The Executive Director will be responsible for ensuring implementation.