Audit 387942

2025-004 U.S. Department of Agriculture Federal Financial Assistance Listing/ALN #10.855 Distance Learning and Telemedicine Grants Federal Award #IA0714-BI17 2025 Procurement, Suspension and Debarment Material Noncompliance and Material Weakness in Internal Control over Compliance Criteria: Uniform Guidance and 2 CFR §§ 200.318 through 200.326 establish the procurement standards that non-federal entities (other than states) must follow when expending federal awards. These standards require non-federal entities to maintain written procurement policies and procedures that ensure full and open competition, use of appropriate procurement methods based on dollar thresholds, and inclusion of required contract provisions as outlined in Appendix II to Part 200. Condition: The Hospital does not have a written procurement policy that conforms to the procurement standards under Uniform Guidance and 2 CFR §§ 200.318 through 200.326. In addition, testing of the Hospital’s only procurement transaction during the audit period disclosed the following instances of noncompliance: The procurement method used was not in accordance with Uniform Guidance requirements, as the contract amount exceeded the simplified acquisition threshold and a sealed bid or other allowable competitive procurement method was not obtained. The executed contract did not include all required contract provisions as prescribed byAppendix II to 2 CFR Part 200. Cause: The Hospital did not have adequately designed and implemented controls to ensure compliance with Uniform Guidance procurement requirements. Specifically, management had not established or implemented written procurement policies and procedures to guide procurement activities and to ensure contracts are reviewed for compliance with required federal provisions. Effect: As a result of the deficiencies noted above, the Hospital did not comply with Uniform Guidance procurement requirements. The absence of compliant procurement policies and procedures increases the risk of noncompliance with federal requirements and may result in the use of inappropriate procurement methods or omission of required contractual protections in federally funded contracts. Questioned Costs: Total questioned costs related to Federal Assistance Listing #10.855 amounted to $575,507, which is a known error based on the Hospital’s only procurement transaction during the audit period. Context/Sampling: The procurement policy was reviewed and one contract was tested out of a population of one total contract executed during the audit period. Repeated Finding from Prior Year(s): No. Recommendation: We recommend the Hospital develop and implement a wri􀆩en procurement policy that complies with Uniform Guidance and 2 CFR §§ 200.318 through 200.326. In addi􀆟on, we recommend the Hospital establish procedures to ensure: Appropriate procurement methods are used based on applicable dollar thresholds; and All contracts funded by federal awards are reviewed to ensure inclusion of the required contract provisions outlined in Appendix II to 2 CFR Part 200. Views of Responsible Officials: Management is aware of the deficiency of internal control over the procurement, suspension and debarment direct and material requirement and subsequent to fiscal year end has implemented a formal procurement policy.