Audit 401907

Finding #2024-001 – Procurement and Suspension and Debarment Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds (ALN 21.027) Passed Through Payments from the State of New Hampshire Department of Environmental Services Criteria: In accordance with 2 CFR § 200.318, 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 identified in 2 CFR § 200.318 through 200.327. Condition: During our testing of procurement transactions, we noted that the District does not have a formal, written procurement policy that incorporates the requirements of the Uniform Guidance. As a result of the District not having a formally documented procurement policy meeting the requirements of the Uniform Guidance, the District failed to verify whether parties it was entering into covered transactions with were suspended or debarred. Cause: The District’s management failed to develop and adopt a formal written procurement policy that aligns with federal regulations. There was a lack of oversight and necessary training regarding the specific administrative requirements of the Uniform Guidance for federally funded programs. Effect: The absence of a compliant procurement policy and related internal control increases the risk that federal funds could be misappropriated or paid to excluded parties. The deficiency results in non-compliance with federal statutes and may lead to questioned costs by the awarding agency. Questioned Costs: Known questioned costs of $962,807 based on all transactions tested and likely questioned costs of $135,384. Context: Of the District’s charges to the major program during the fiscal year, a sample of 6 transactions totaling $962,807 were tested out of a total population of 22 and total expenditures of $1,098,191. Repeat Finding: No Recommendation: We recommend that District management immediately draft and adopt a comprehensive written procurement policy that adheres to 2 CFR §§ 200.318 through 200.327. This policy should specifically include: • Procedures for verifying and documenting the suspension and debarment status of vendors. • Defined thresholds for micro-purchases, small purchases, and sealed bids • Requirements for conducting and documenting cost or price analyses for all procurements exceeding the Simplified Acquisition Threshold. Views of Responsible Officials: District agrees with the finding and will take the necessary steps to draft and adopt a comprehensive procurement policy which meets the requirements of the Uniform Guidance.