Audit 399042

Schedule of Expenditures of Federal Awards (“SEFA”) Criteria: Internal controls should be designed to capture the Town’s federal expenditures in order to ensure that an accurate Schedule of Expenditures of Federal Awards (“SEFA”) can be prepared. Condition: Uniform Guidance section 200.510 requires the auditee to prepare a SEFA. A complete and accurate SEFA was not provided to us. Cause: The records were not maintained in a manner which allowed the SEFA to be prepared in an efficient manner to ensure accuracy and completeness. Questioned Costs: None. Effect: The SEFA is used by the auditor to determine which federal programs are to be audited as major programs and to accurately report expenditures to the federal government and granting agencies. Major programs may not be properly identified in accordance with the Uniform Guidance. Recommendation: Additional resources should be employed to ensure timely and accurate completion of the SEFA, and all information should be included on the SEFA by employees familiar with the grant awards. The general ledger should be categorized by federal programs/program year in order to capture the correct expenditures by programs. A review should be performed by someone other than the preparer for accuracy and completeness. Identification of a repeat finding: This is a repeat finding from the previous year identified as 2024-005. View of Responsible Official: Management concurs with the finding.

Enhancement of Policies and Procedures for Federal Awards Criteria: The Uniform Guidance administrative requirements and cost principles apply to federal funding awards on or after December 26, 2014. 2 CFR 200, Subpart D – Post Federal Award Requirements and Subpart E – Cost Principles of the Uniform Guidance require specific written policies and internal controls relative to federal awards. Written policies should be in place to establish operational parameters to ensure compliance with regulations. Condition: The written policies and procedures of the Town do not directly address all the requirements under the Uniform Guidance for federal programs as it relates to procurement, suspension and debarment. Cause: The Town has not taken appropriate steps to formalize policies and procedures relating to the requirements established under Uniform Guidance for compliance with and procurement, suspension and debarment. Questioned Costs: None. Effect: The Town is susceptible to a higher risk of non-compliance with federal awarding requirements as they relate to procurement, suspension and debarment. Recommendation: The Town must establish written policies and procedures to ensure compliance with Uniform Guidance relating to procurement and suspension and debarment. Identification of a repeat finding: This is a repeat finding from the previous year identified as 2024-006. View of Responsible Official: Management concurs with the finding.

Coronavirus State and Local Fiscal Recovery Funds Criteria: Under 2 CFR 200.214, recipients and subrecipients are subject to procurement suspension and debarment requirements, which prohibit entering into covered transactions with parties that are suspended, debarred, or otherwise excluded from participation in federal programs. These requirements apply to contracts and subawards funded with federal financial assistance. In addition, 200.318–200.327 requires non federal entities to follow procurement standards applicable to federal awards, which include maintaining adequate oversight and compliance with applicable federal requirements, including suspension and debarment provisions. Condition: During our review of procurement transactions charged to federal awards, we noted that the Town did not document verification that vendors used for information technology and phone system upgrades and for the purchase of tasers and body worn cameras were not suspended or debarred at the time the contracts or purchase orders were executed. Specifically, the Town did not perform or retain evidence of a search of the System for Award Management (SAM.gov) or obtain vendor certifications demonstrating compliance with federal suspension and debarment requirements for these procurements. we did not identify any vendors that were suspended or debarred at the time of procurement. We did not identify any vendors that were suspended or debarred at the time of procurement. Universe/ Population: Four contracts totaling $7,347,577 were subjected to compliance testing. For two of the four contracts totaling $90,955, the Town did not perform or retain evidence of a search SAM.gov or obtain vendor certifications demonstrating compliance with federal suspension and debarment requirements. Cause: The Town did not have written procurement procedures or internal controls that required suspension and debarment verification to be performed and documented prior to awarding contracts or issuing purchase orders funded with federal awards. As a result, procurement staff relied on informal practices that did not include consistent SAM.gov verification. Questioned Costs: No questioned costs were identified. Effect: Without performing and documenting suspension and debarment checks, the Entity increases the risk of awarding contracts to vendors that are ineligible to participate in federally funded transactions. This noncompliance exposes the Town to potential cost disallowance, increased federal oversight, and audit findings related to procurement and internal controls. Further, questioned costs could arise if future review determines that payments were made to ineligible vendors. Recommendation: We recommend that the Town: 1. Update its written procurement policies and procedures to require verification of vendor eligibility through SAM.gov prior to awarding any contract or issuing any purchase order funded with federal awards. 2. Require procurement staff to retain documentation of the suspension and debarment verification (e.g., dated SAM.gov search results or vendor certifications). 3. Provide training to relevant personnel on federal procurement requirements, including suspension and debarment compliance under 2 CFR Part 200. 4. Require that all contracts pertaining to federally funded transactions include language that addresses termination for cause as well as other requirements stipulated in 2 CFR Part 200. View of Responsible Official: Management concurs with the finding.

Coronavirus State and Local Fiscal Recovery Funds Criteria: Under 2 CFR 200.320(a), recipients and subrecipients may use informal procurement methods for small purchases when the value of the procurement does not exceed the Simplified Acquisition Threshold. However, small purchase procedures require the solicitation of price or rate quotations from an adequate number of qualified sources and documentation supporting the procurement decision. In addition, 2 CFR 200.318(a) requires recipients and subrecipients to maintain and use documented procurement procedures that conform to federal procurement standards and applicable state and local laws and regulations. Condition: During our review of procurement transactions charged to federal awards, we noted that the Town did not follow required small purchase (informal procurement) procedures for certain purchases. Specifically, for selected procurement transactions with values above the micro purchase threshold but below the Simplified Acquisition Threshold, the Town did not solicit price or rate quotations from an adequate number of qualified sources and did not retain documentation to support price reasonableness, as required by federal procurement standards. Universe/Population: Four contracts totaling $7,347,577 were subjected to compliance testing. For two of the four contracts totaling $90,955 that were below the Simplified Acquisition threshold were subjected to compliance testing. The Town did not solicit price or rate quotations from an adequate number of qualified sources for one contract and did not retain documentation to support price reasonableness, as required by federal procurement standards, for the other contract. Cause: The Entity did not have written procurement procedures or internal controls as required by 2 CFR 200.318(a). As a result, inconsistent application of small purchase requirements, including the failure to obtain and document required price or rate quotations and support for price reasonableness, occurred. Questioned Costs: No questioned costs were identified. Effect: Failure to follow small purchase procedures increases the risk that procurements are not conducted in a manner that ensures full and open competition and cost reasonableness. This noncompliance exposes the Town to potential questioned costs, cost disallowance, and increased federal or pass through oversight. Recommendation:. We recommend that the Town: 1. Update its written procurement policies and procedures to clearly define small purchase requirements, including quotation thresholds and documentation standards. 2. Require procurement staff to solicit and retain documentation of price or rate quotations from an adequate number of qualified sources for all small purchases. 3. Provide training to relevant personnel on federal procurement requirements under 2 CFR Part 200, including informal procurement methods. 4. Implement supervisory review of procurement files to ensure compliance prior to payment. View of Responsible Official: Management concurs with the finding.