Audit 402510

Criteria: Entities may follow informal procurement methods for small purchases less than $15,000 (or $50,000 if self-certified as the micro-purchase threshold). Otherwise, entities must follow formal procurement methods except under very specific circumstances in which the recipient may use a noncompetitive procurement method (2 CFR 200.320). Formal procurement methods are competitive and require public notice. These methods may include sealed bids or proposals. Condition: Management did not document formal procurement methods used for expenditures over $15,000. Cause: Management has previously worked with several universities and research institutions and established a working relationship with them in years not subject federal audit requirements. Management believes these institutions to be fair and reasonable in cost. Effect: Contracts engaged by management did not promote fair competition and may have resulted in excessive costs. Questioned Costs: Federal award purchases beyond the micro-purchase threshold totaled $261,772. Recommendation: We recommend that management follow and document formal procurement methods for all federal award purchases over $15,000, which may include self-certifying a micro-purchase threshold up to $50,000.

Criteria: If an entity receives awards under only one program (excluding research and development (R&D)), and the program’s laws, regulations, or grant agreements do not require a financial statement audit, the entity has the alternative of having an audit made of the one program in accordance with that program’s audit requirements (e.g., a program-specific audit) instead of a Single Audit (2 CFR 200.501(c)). For R&D, a program–specific audit may be elected if all awards expended were received from the same federal agency, or the same federal agency and the same pass-through agency, and such entity(ies) approves in advance a program specific audit (2 CFR 200.501(d)). Condition: Management engaged its auditors to perform a program specific audit while receiving R&D awards from multiple federal agencies and in advance of obtaining approval from the awarding agencies. Cause: Management has difficulty receiving responses from the grant managers of their federal awards and as such, was unable to obtain approval to perform a program-specific audit as of the completion of the audit. Effect: The program-specific audit may be rejected by the federal grant authorities. Recommendation: We recommend that management engage its auditors to perform a full single audit prior to the filing deadline.