Audit 33920

U.S. Department of Environmental Protection Agency Passed-through N.C. Department of Environmental Quality Program Name: Clean Water State Revolving Fund AL Number: 66.458 Grant Number: CS370489-05 Finding 2022-005: Procurement and Suspension and Debarment Material Weakness, Non-Compliance Criteria: In accordance with Section 602(b)(14) of the Clean Water Act, management should have an adequate system of internal control procedures in place to ensure that procurement policies are implemented and functioning as intended. Projects receiving Clean Water State Revolving Fund funding must comply with engineering procurement guidelines. To comply management must follow North Carolina General Statute 143-64.31, Article 3D procurement of architectural, engineering, and surveying services. Management must monitor activities under federal awards to assure compliance with federal requirements. Condition: The Town?s internal controls over procurement are not functioning as intended. Context: During our testing, we examined one purchase and determined that the required procurements guidelines were not followed. Expenditures were approved prior to payment; however proper procurement documentation was not kept on file as required by procurement guidelines for use of Clean Water State Revolving Fund funding. Effect: Purchases may be made without the proper procurement procedures being followed. Cause: Due to staff turnover at the Town, there were instances where proper procurement documentation was not kept on file. Questioned Cost: None. This finding represents an internal control issue; therefore, questioned costs are not applicable. Recommendation: The Town should have a system in place to ensure that the procurement policies are implemented and functioning as intended. Views of Responsible Officials and Planned Corrective Actions: The Town agrees with this finding. Please refer to the Corrective Action Plan section of this report. 129

U.S. Department of Environmental Protection Agency Passed-through N.C. Department of Environmental Quality Program Name: Clean Water State Revolving Fund AL Number: 66.458 Grant Number: CS370489-05 Finding 2022-005: Procurement and Suspension and Debarment Material Weakness, Non-Compliance Criteria: In accordance with Section 602(b)(14) of the Clean Water Act, management should have an adequate system of internal control procedures in place to ensure that procurement policies are implemented and functioning as intended. Projects receiving Clean Water State Revolving Fund funding must comply with engineering procurement guidelines. To comply management must follow North Carolina General Statute 143-64.31, Article 3D procurement of architectural, engineering, and surveying services. Management must monitor activities under federal awards to assure compliance with federal requirements. Condition: The Town?s internal controls over procurement are not functioning as intended. Context: During our testing, we examined one purchase and determined that the required procurements guidelines were not followed. Expenditures were approved prior to payment; however proper procurement documentation was not kept on file as required by procurement guidelines for use of Clean Water State Revolving Fund funding. Effect: Purchases may be made without the proper procurement procedures being followed. Cause: Due to staff turnover at the Town, there were instances where proper procurement documentation was not kept on file. Questioned Cost: None. This finding represents an internal control issue; therefore, questioned costs are not applicable. Recommendation: The Town should have a system in place to ensure that the procurement policies are implemented and functioning as intended. Views of Responsible Officials and Planned Corrective Actions: The Town agrees with this finding. Please refer to the Corrective Action Plan section of this report. 129