See Schedule of Findings and Questioned Costs for chart/table 2022-004: Procurement (Significant Deficiency) Criteria: The Authority must design internal controls to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Per 2 CFR 200.317, when procuring property and services under a Federal award, a State must follow the same policies and procedures it uses for procurements from its non-Federal funds. The State will comply with Sections 200.321, 200.322, and 200.323 and ensure that every purchase order or other contact includes any clauses required by Section 200.327. State means any state of the United States and any instrumentality thereof, which would include the Authority. Office of Management and Budget (OMB) Circular A-102 requires that all recipients establish written procurement procedures. Condition/context: During the completion of the fiscal year 2021 audit, it was identified that the Authority did not have an internal control system in place to evaluate purchase requests for compliance with procurement requirements. In January 2022, the Authority rectified the deficiency and established a control system. However, proper controls were not in place for the first six months of the fiscal year under audit. For three out of seven vendors selected for testing with purchases greater than the Authority?s $10,000 procurement threshold, we determined that the Authority had failed to properly document the procurement of goods and services as required by 2 CFR 200.317 and OMB Circular A-102. However, per our conversations with Authority personnel, each of the three purchases met a requirement for noncompetitive (sole source) procurement as provided for under Section 200.320 of the Uniform Guidance. Cause: The Authority was not aware of the procurement requirements and had not documented its reasons for noncompetitive procurement. Effect: If an entity fails to comply with Federal statutes, regulations, or the terms and conditions of a Federal award, the Federal awarding agency may impose additional conditions. If the Federal awarding agency determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency may take one or more of the following actions, as appropriate in the circumstances: (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings. (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. Questioned costs: $0 Identification as a repeat finding: Yes; see prior-year finding 2021-002. Recommendation: As the Authority has implemented a control system that evaluates all purchase requests for goods and services for compliance with the Federal procurement requirements, we recommend continued compliance with the established control system. Views of responsible officials and planned corrective actions: Management concurs with the finding. See Exhibit I.
See Schedule of Findings and Questioned Costs for chart/table 2022-005: Suspension and Debarment (Significant Deficiency) Criteria: The Authority must design internal controls to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Per 2 CFR 200.214, non-Federal entities are prohibited from contracting with or making sub-awards under covered transactions to parties that are suspended or debarred or whose principals are suspended or debarred. Covered transactions include contracts for goods and services awarded under a nonprocurement transaction that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR Section 180.220. All nonprocurement transactions entered into by a pass-through entity (i.e., sub-awards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR Section 180.215. OMB Circular A-102 (2 CFR Part 180) requires that recipients ?shall comply with the nonprocurement debarment and suspension common rule implementing Executive Orders 12549 and 12689, Debarment and Suspension.? Condition/context: During the completion of the fiscal year 2021 audit, it was identified that the Authority did not have an internal control system in place to review suspension and debarment on funding decisions made for any purpose other than grant awards. In January 2022, the Authority rectified the deficiency and established a control system. However, proper controls were not in place for the first six months of the fiscal year under audit. For three out of seven vendors selected for testing with purchases greater than $25,000, we determined that the Authority had failed to review two of the vendors (non-grant recipients) for suspension and debarment. However, we independently verified the two vendors were not suspended or debarred. Cause: The Authority was not aware that suspension and debarment requirements applied to all covered transactions. Effect: If the Authority is not verifying that vendors with which it contracts are neither suspended nor debarred, it is possible that the Authority could contract with a vendor that is suspended or debarred, in which case the Authority may be required to return the funds expended to that vendor to the U.S. Department of Energy. Questioned costs: $0 Identification as a repeat finding: Yes; see prior-year finding 2021-003. Recommendation: As the Authority expanded its internal control policies and procedures related to suspension and debarment for grant awards to all covered transactions, we recommend continued compliance with the established policies and procedures. Views of responsible officials and planned corrective actions: Management concurs with the finding. See Exhibit I.
See Schedule of Findings and Questioned Costs for chart/table 2022-006: Reporting (Significant Deficiency) Criteria: An internal control structure should be designed to identify possible reporting errors. A fundamental concept in an adequate system of internal control is independent review. Condition/context: During the completion of the fiscal year 2021 audit, it was identified that the Authority did not have a control system in place that allows for independent review and approval of the SF-425 financial reports. In January 2022, the Authority rectified the deficiency and established a control system. However, proper controls were not in place for the first six months of the fiscal year under audit. Cause: The concentration of closely related duties and responsibilities by a small staff can pose challenges within the Authority to establish an adequate system of independent reviews and approvals. Effect: If the Authority does not complete an independent review of its financial reports prior to submission, it is possible that the Authority could submit inaccurate or incomplete information to the U.S. Department of Energy. Questioned costs: $0 Identification as a repeat finding: Yes; see prior-year finding 2021-004. Recommendation: As the Authority has implemented a control system to ensure the independent review and approval of the SF-425 financial reports, we recommend continued compliance with the established control system. Views of responsible officials and planned corrective actions: Management concurs with the finding. See Exhibit I.
See Schedule of Findings and Questioned Costs for chart/table 2022-004: Procurement (Significant Deficiency) Criteria: The Authority must design internal controls to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Per 2 CFR 200.317, when procuring property and services under a Federal award, a State must follow the same policies and procedures it uses for procurements from its non-Federal funds. The State will comply with Sections 200.321, 200.322, and 200.323 and ensure that every purchase order or other contact includes any clauses required by Section 200.327. State means any state of the United States and any instrumentality thereof, which would include the Authority. Office of Management and Budget (OMB) Circular A-102 requires that all recipients establish written procurement procedures. Condition/context: During the completion of the fiscal year 2021 audit, it was identified that the Authority did not have an internal control system in place to evaluate purchase requests for compliance with procurement requirements. In January 2022, the Authority rectified the deficiency and established a control system. However, proper controls were not in place for the first six months of the fiscal year under audit. For three out of seven vendors selected for testing with purchases greater than the Authority?s $10,000 procurement threshold, we determined that the Authority had failed to properly document the procurement of goods and services as required by 2 CFR 200.317 and OMB Circular A-102. However, per our conversations with Authority personnel, each of the three purchases met a requirement for noncompetitive (sole source) procurement as provided for under Section 200.320 of the Uniform Guidance. Cause: The Authority was not aware of the procurement requirements and had not documented its reasons for noncompetitive procurement. Effect: If an entity fails to comply with Federal statutes, regulations, or the terms and conditions of a Federal award, the Federal awarding agency may impose additional conditions. If the Federal awarding agency determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency may take one or more of the following actions, as appropriate in the circumstances: (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency. (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partly suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings. (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. Questioned costs: $0 Identification as a repeat finding: Yes; see prior-year finding 2021-002. Recommendation: As the Authority has implemented a control system that evaluates all purchase requests for goods and services for compliance with the Federal procurement requirements, we recommend continued compliance with the established control system. Views of responsible officials and planned corrective actions: Management concurs with the finding. See Exhibit I.
See Schedule of Findings and Questioned Costs for chart/table 2022-005: Suspension and Debarment (Significant Deficiency) Criteria: The Authority must design internal controls to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Per 2 CFR 200.214, non-Federal entities are prohibited from contracting with or making sub-awards under covered transactions to parties that are suspended or debarred or whose principals are suspended or debarred. Covered transactions include contracts for goods and services awarded under a nonprocurement transaction that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR Section 180.220. All nonprocurement transactions entered into by a pass-through entity (i.e., sub-awards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR Section 180.215. OMB Circular A-102 (2 CFR Part 180) requires that recipients ?shall comply with the nonprocurement debarment and suspension common rule implementing Executive Orders 12549 and 12689, Debarment and Suspension.? Condition/context: During the completion of the fiscal year 2021 audit, it was identified that the Authority did not have an internal control system in place to review suspension and debarment on funding decisions made for any purpose other than grant awards. In January 2022, the Authority rectified the deficiency and established a control system. However, proper controls were not in place for the first six months of the fiscal year under audit. For three out of seven vendors selected for testing with purchases greater than $25,000, we determined that the Authority had failed to review two of the vendors (non-grant recipients) for suspension and debarment. However, we independently verified the two vendors were not suspended or debarred. Cause: The Authority was not aware that suspension and debarment requirements applied to all covered transactions. Effect: If the Authority is not verifying that vendors with which it contracts are neither suspended nor debarred, it is possible that the Authority could contract with a vendor that is suspended or debarred, in which case the Authority may be required to return the funds expended to that vendor to the U.S. Department of Energy. Questioned costs: $0 Identification as a repeat finding: Yes; see prior-year finding 2021-003. Recommendation: As the Authority expanded its internal control policies and procedures related to suspension and debarment for grant awards to all covered transactions, we recommend continued compliance with the established policies and procedures. Views of responsible officials and planned corrective actions: Management concurs with the finding. See Exhibit I.
See Schedule of Findings and Questioned Costs for chart/table 2022-006: Reporting (Significant Deficiency) Criteria: An internal control structure should be designed to identify possible reporting errors. A fundamental concept in an adequate system of internal control is independent review. Condition/context: During the completion of the fiscal year 2021 audit, it was identified that the Authority did not have a control system in place that allows for independent review and approval of the SF-425 financial reports. In January 2022, the Authority rectified the deficiency and established a control system. However, proper controls were not in place for the first six months of the fiscal year under audit. Cause: The concentration of closely related duties and responsibilities by a small staff can pose challenges within the Authority to establish an adequate system of independent reviews and approvals. Effect: If the Authority does not complete an independent review of its financial reports prior to submission, it is possible that the Authority could submit inaccurate or incomplete information to the U.S. Department of Energy. Questioned costs: $0 Identification as a repeat finding: Yes; see prior-year finding 2021-004. Recommendation: As the Authority has implemented a control system to ensure the independent review and approval of the SF-425 financial reports, we recommend continued compliance with the established control system. Views of responsible officials and planned corrective actions: Management concurs with the finding. See Exhibit I.