2024-004 Improve Internal Controls Over Procurement Federal Agency: Department of the Treasury Award Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Year: 2024 Compliance Requirement: Procurement Type of Finding Compliance Internal Control over Compliance – Significant Deficiency Criteria: Per 2 CFR 200.318–200.327, non-federal entities must use their own documented procurement procedures which reflect applicable state, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards set forth in the Uniform Guidance. For purchases exceeding the micro-purchase threshold, procurement must include documented procedures, full and open competition (unless an exemption applies), and executed contracts. All contracts must be fully executed and amendments provided for any changes to terms or scope. Additionally, any exemption from competitive bidding must be documented, and only applies to the period and scope approved. Suspension and debarment checks must also be performed and documented for covered transactions with vendors. Condition: During our testing of one procurement transaction under the SLFRF program, the Town received an exemption from bidding requirements typically required under Massachusetts’ state law. The exemption was due to an initial emergency procurement; however, expenditures continued to be incurred after the initial emergency ended and the associated contract’s substantial completion date. The Town did not provide contract amendments to extend the contract, nor did it perform additional procurement procedures for expenditures that occurred after the emergency period ended and outside the scope of the exemption. In addition, the contract with the vendor was not countersigned by the Town and therefore a fully executed contract did not exist. Further, suspension and debarment checks for vendors were not retained as required. Cause: The Town did not ensure contracts were fully executed prior to commencement of work, did not maintain documentation or perform procurement for additional expenditures incurred after the completion date of the original contract and outside the scope of the emergency exemption, and did not maintain documentation of required suspension and debarment checks. Effect: Failure to obtain a fully executed contract, perform and document suspension and debarment checks, and appropriately document or procure additional services beyond the contract term increases the risk of noncompliance with federal procurement requirements and may expose the Town to possible unallowable costs, conflicts of interest, or ineligible vendor participation. Recommendation: The Town should implement policies and procedures to ensure all contracts are fully executed prior to work commencement, and any extensions or additional services beyond the original contract are properly documented via contract amendments or appropriate procurement methods in accordance with Uniform Guidance. The Town should also ensure continued monitoring and documentation of procurement exemptions and maintain documentation of all suspension and debarment checks for vendors paid with federal funds. Views of Responsible Official: Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.
2024-005 Improve Internal Controls Over Reporting Federal Agency: Department of the Treasury Award Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Year: 2024 Compliance Requirement: Reporting Type of Finding Compliance Internal Control over Compliance – Significant Deficiency Criteria: Under the requirements of the American Rescue Plan Act (ARPA) State and Local Fiscal Recovery Funds program, the Town must submit quarterly performance and evaluation reports reflecting accurate and complete financial information, including current period and cumulative expenditures, in accordance with program requirements and the Uniform Guidance. Reported expenditures should correspond to actual amounts expended in the entity’s general ledger for the reporting period. Condition: During testing of two quarterly performance and evaluation (P&E) reports, filed during fiscal year 2024, variances were identified in both current period and cumulative expenditures as compared to the general ledger detail. These variances were primarily due to timing differences. Specifically, the Town reported revenue replacement funds as current period expenditures upon appropriation and approval from the Town meeting in the P&E report, even though the corresponding actual expenditures in the general ledger occurred in a subsequent period. Cause: The Town did not have sufficient controls in place to ensure that expenditures reported on the P&E reports were aligned with the actual amounts expended and recorded in the general ledger for the reporting period. Effect: Reporting expenditures in the P&E report before they are actually incurred and recorded in the general ledger can result in inaccurate financial reporting to the federal awarding agency, reducing the reliability and transparency of the Town’s compliance reporting. Recommendation: The Town should develop and implement procedures to ensure that expenditures reported on quarterly performance and evaluation reports are based on actual amounts expended and recorded in the general ledger during the reporting period, rather than amounts approved or planned for future expenditure. Views of Responsible Official: Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.
2024-003 Document Policies and Procedures Over Federal Awards Cluster/Program: All federal programs Type of Finding Compliance – Other Matters Internal Control over Compliance – Significant Deficiency Condition: The Town has not formalized written policies and procedures related to federal awards required under the Uniform Guidance. Criteria: OMB’s Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (UG) requirements stipulate that federal award recipients must document their policies and procedures over certain aspects of financial and program management. Specifically, written policies are required for the following: • Cash management • Determination of allowable costs • Employee travel • Procurement • Conflicts of interest • Subrecipient monitoring and management Cause: The Town has not developed written formal documentation of internal controls to encompass all required areas per the Uniform Guidance. Effect: The Town is not in compliance with the requirements of the Uniform Guidance as it relates to the requirement to have documented policies and procedures pertaining to the management of federal awards. No questioned costs are reported as this requirement is procedural in nature. Recommendation: Written policies and procedures should be implemented in accordance with the Uniform Guidance. Views of Responsible Official: Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.