Audit 368823

Criteria: Procurement and Suspension & Debarment - In accordance with 2 CFR 200, non-Federalentities must have and use documented procurement procedures, consistent with State and localregulations and the standards of this section, for the acquisition of property or services requiredunder a Federal award or subaward. The non-Federal entity’s documented procurement proceduresmust conform to the procurement standards identified in 2 CFR 200. Condition: During procurement testing, it was noted that Mission Edge did not follow 2 CFR 200required methods of procurement or its internal procurement policy for the purchase of goods orservices using federal funds. Mission Edge did not obtain quotes or bids for certain expenditures asrequired by its procurement policy. In addition, Mission Edge did not verify that vendors were notsuspended, debarred, or otherwise excluded from participation in the program. Cause: Mission Edge does not have procurement policies and procedures in place that allow it tocomply with procurement standards outlined in the Uniform Guidance. Effect: Purchases were made that did not comply with the procurement policy or federalregulations which resulted in non-compliance with program terms and conditions. Questioned costs: It was calculated based on the four contracts tested that $121,614 in expensesdid not have debarment checks on the vendors. This accounted for both reimbursed costs andservices under the contract. Context: This appears to be a systemic issue. Repeat finding: No Recommendation: Management should develop procedures that will provide reasonable assurancethat procurement of goods and services are made in compliance with applicable federal regulationsand other procurement requirements specific to a federal award or subaward, and that nosubaward, contract, or agreement for purchase of goods or services is made with any suspended or debarred party. In addition, the policy should be consistent between Mission Edge and the fiscally sponsored projects. Views of responsible official and planned corrective action: Management’s response is reported in “Management’s View and Corrective Action Plan” included at the end of this report.

Criteria: Allowable Costs - In accordance with the terms of the contract hourly rates in contracts are limited without prior approval. Condition: During allowable cost testing, it was noted that one of the contracts with the vendors included a rate that exceeded the rate cap without prior approval. Upon inquiry no prior approval was obtained. Cause: Mission Edge does not have policies and procedures in place that allow it to comply with specific terms and conditions of agreements. Effect: Purchases were made that did not comply with the grant agreement which resulted in non-compliance with program terms and conditions. Questioned costs: It was calculated that costs incurred in 2024 under this contract exceeding the approved rate totaled approximately $26,000. Context: This appears to be a systemic issue. Repeat finding: No Recommendation: Management should develop procedures that will provide reasonable assurance that specific terms and conditions of grant agreements are followed and complied with. Views of responsible official and planned corrective action: Management’s response is reported in “Management’s View and Corrective Action Plan” included at the end of this report.

Criteria: Allowable Costs – Federal program expenditures must meet the requirements of the Uniform Guidance, contract terms and be adequately documented. Condition: During allowable cost testing, we noted that there was a lack of internal controls over allowable costs. We noted items that did not include proper support, were outside the contract period, or were for the incorrect amount. Cause: There is a significant deficiency in internal controls over the compliance for the allowable costs/cost principles compliance requirement. Mission Edge has not properly considered, designed, implemented, maintained and monitored a system of internal controls that reasonably assures the program is in compliance with the allowable costs/cost principles requirements. Effect: Costs were charged to the federal award that may not be allowable in accordance with the allowable costs/cost principles requirements. Questioned costs: Based on testing and projection of the potential unallowable costs the questioned costs are under the $25,000 threshold. Context: Management did not have sufficient controls over allowable costs in place and instances of unallowable costs were discovered. Repeat finding: No Recommendation: Management should develop procedures that will ensure compliance with the Uniform Guidance and ensure that sufficient documentation is kept for transactions. Views of responsible official and planned corrective action: Management’s response is reported in “Management’s View and Corrective Action Plan” included at the end of this report.