Finding 2024-003: Activiites Allowed or Unallowed & Allowable Costs/Cost Principles & Period of Performance. Clean Energy Demonstrations - ALN 81.255. Cirteria: Pursuant to 2 CFR part 200 section 303, MACH2 is responsible for establishing and maintaining effective internal control over the Federal award that provides reasonable assurance that MACH2 is managing the Federal award in compliance with federal statutes, regulations, and the terms and conditions of the Federal Award. Condition: All of the three invoices selected for testing did not have sufficient audit evidence to demonstrate that they were approved prior to being charged to the award. There were no noted instanced of noncompliance with activities allowed or unallowed, allowable costs/cost principles, and period of performance. Cause: MACH2 was in the process of developing internal control policies when they experienced a turnover of key personnel. Effect: Internal controls are not properly designed to provide reasonable assurance of compliance with the Federal Award. Questioned Costs: None. Recommendation: MACH2 should establish an internal control policy to ensure transactions are reviewed and approved prior to being charged to the grant and the approval should be documented for each transaction. Management's Response: MACH2 did not make any charges to its federal award in 2024. MACH2 created and implemented written policies prior to execution of cooperative agreement in January 2025 regarding the review and approval of grant expenditures. These policies were in place prior to any expenses being charged to the federal award. Please see the corrective action plan for more details on how MACH2 has addressed this finding.
Finding 2024-004: Procurment, Suspension, and Debarment. Clean Energy Demonstrations - ALN 81.255. Criteria: Pursuant to 2 CFR part 200 section 318, MACH2 is responsible for maintaining and using documented procedures for procurement transactions under a Federal award, including the acquisition of property or services. MACH2 must maintain written standards of conduct covering conflicts of interest and governing the action of employees engaged in the selection, award, and administration of contracts. In addition, 2 CFR part 200 section 214 specifies that MACH2 is responsible for ensuring subawards and contracts are not entered into with certain parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal awards. Condition: During testing, it was noted that MACH2 did not have written procurement policies established for the full period in which procurements were entered. For the two vendors selected, ZA did not note evidence of verification that the entity was not suspended or debarred prior to contracting. Cause: MACH2 was in the process of developing procurement policies when they experienced a turnover of key personnel. Effect: Internal controls are not properly designed for the entire year and MACH2 is not in compliance with the Federal Award. Questioned Costs: None. Recommendation: MACH2 should ensure the procurement policy is followed for all procurements under federal awards. In addition, MACH2 should verify that an entity is not suspended or debarred prior to entering into a contract under a Federal award. Management's Response: Prior to execution of its federal award in January 2025, MACH2 had implemented written policies regarding acquisition of property and services and conflicts of interest. Please see the corrective action plan for more details on how MACH2 has addressed this finding.