Audit 385069

U.S. Department of Health and Human Services Congressional Directives, 93.493 Procurement, Suspension, and Debarment Material Weakness in Internal Control over Compliance and Material Noncompliance Grant Award Number: Affects grant award CE152520 under assistance listing 93.493 on the Schedule of Expenditures of Federal Awards. Criteria: 2 CFR Part 200.318 (Uniform Guidance) requires that a recipient of a Federal award must maintain and use its own documented procedures for procurement transactions under a Federal award, including for the acquisition of property or services. These documented procurement procedures must be consistent with State and local laws and regulations, provided that the procurements conform to applicable federal law and standards. Uniform Guidance requires that a non-federal entity obtain quotations for procurements exceeding the micro-purchase threshold of $10,000. Uniform Guidance requires that a nonfederal entity follow competitive bidding procurement methods for contracts that exceed the simplified acquisition threshold of $250,000. Condition: We noted Spokane Guilds' School & Neuromuscular Center dba Joya (the Organization) did not have documented procurement policies and procedures to conform to applicable federal law and standards and did not comply with federal procurement requirements for certain contracts. Cause: The Organization did not have adequate internal controls to determine the need to have its own procurement procedures or to follow federal procurement requirements for certain contracts. Effect: Procurements may not follow federal standards. Questioned Costs: $2,632,267 Context/Sampling: All policies were reviewed for compliance with applicable laws and federal regulations, noting no documented procurement policy was in place. A random sample of nine transactions out of a population of 43 was selected for testing which included seven unique vendors. For three vendors, contract amounts were in the $10,000 - $250,000 range and the simplified acquisition procedures should have been followed with rate quotations obtained. For one vendor, the contract amount exceeded $250,000 and a sealed bid procurement method should have been followed. Cause: The Organization did not have adequate internal controls to determine the need to have its own procurement procedures or to follow federal procurement requirements for certain contracts. Effect: Procurements may not follow federal standards. Questioned Costs: $2,632,267 Context/Sampling: All policies were reviewed for compliance with applicable laws and federal regulations, noting no document procurement policy was in place. A random sample of nine transactions out of a population of 43 was selected for testing which included seven unique vendors. For three vendors, contract amounts were in the $10,000 - $250,000 range and the simplified acquisition procedures should have been followed with rate quotations obtained. For one vendor, the contract amount exceeded $250,000 and a sealed bid procurement method should have been followed. During the year, but subsequent to the contracts being entered into, the Organization discovered that they had not appropriately followed the Uniform Guidance and undertook a process to document procurement procedures and obtained additional quotes and bids from similar vendors to document the reasonableness of vendors used. The award being tested was to build out the shelled space previously built by the Organization, and all four vendors noted above were involved in the initial design and construction of the space. Additionally, the vendor with the contract exceeding $250,000 was named in the grant application, but the Organization does not appear to have received written approval to use a noncompetitive procurement method. Repeat Finding from Prior Year: No Recommendation: We recommend that the Organization enhance internal controls to document their procurement procedures in accordance with Uniform Guidance, and ensure these policies are followed for all procurement transactions entered into. Views of Responsible Officials: The Organization agrees with this finding.

U.S. Department of Health and Human Services Congressional Directives, 93.493 Matching, Level of Effort, and Earmarking Significant Deficiency in Internal Control over Compliance Grant Award Number: Affects grant award CE152520 under assistance listing 93.493 on the Schedule of Expenditures of Federal Awards. Criteria: Specific conditions of the grant award agreement require that grant funds can only be drawn down from the Payment Management System (PMS) as allowable costs are incurred. Unless otherwise authorized, draw down should be done in the same proportion as the grant is to total project costs in the approved budget. For example for a project with a total allowable cost of $100,000, and a federal contribution of $75,000, the federal share is 75 percent. If $100 in allowable costs are incurred, the $75 of grant funds would be drawn down from PMS to pay this incurred cost, while the other $25 will be paid by other sources of funds (the "cost share requirement"). Condition: All expenditures tracked for the cost share requirement were reviewed noting the Organization had $93,986 in eligible cost share expenditures. The proportional amount of cost share required for the fiscal year based on actual expenditures was $105,985. Thus, cost share was not met for period ended June 30, 2025. Cause: The Organization did not have sufficient internal controls to ensure that grant funds were drawn down in proportion to the approved budget and that the cost share requirement was met for the reporting period. Effect: The cost share requirement was not met during the reporting period. Questioned Costs: None Context/Sampling: The cost share requirement was calculated for the entire reporting period, therefore represented the full population. Repeat Finding from Prior Year: No Recommendation: We recommend that the Organization enhance internal controls to ensure cost share requirements are met in accordance with grant award agreements. Views of Responsible Officials: The Organization agrees with this finding.