Audit 411504

Finding 2025-001 – Inadequate Documentation Supporting Compliance with Federal Procurement Requirements Federal Agency: U.S. Department of Treasury passed through Kansas Department of Commerce Federal Program: COVID-19, Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal award identification number and year: SLFRP0140 - 2025 Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria: Pursuant to 2 CFR §§ 200.214, 200.319, and 200.327, non-Federal entities are required to verify that covered parties are not suspended or debarred from participation in Federal programs, conduct procurements in a manner providing full and open competition, and include applicable Federal award provisions in contracts funded by Federal awards. Condition: During testing of procurement contracts, we noted the following exceptions: • Certain contracts did not contain the applicable Federal contract provisions required by Appendix II to 2 CFR Part 200. Management indicated that the omission of the required provisions was identified through monitoring performed by the grant administrator acting on behalf of the pass-through entity and efforts were subsequently initiated to amend the affected contracts. • One contract below the questioned cost threshold lacked documentation demonstrating the procurement was conducted in a manner providing full and open competition. • One contract lacked documentation supporting the required price/cost analysis. • One contract lacked documentation evidencing performance of suspension and debarment verification procedures. Consequently, the Organization lacks controls to demonstrate compliance with certain Federal procurement requirements. Context: The exceptions identified above affected six contracts, representing approximately 17% of the procurement expenditures tested within the Procurement, Suspension, and Debarment compliance requirement. Based on audit procedures performed, the related expenditures were determined to be allowable costs, supported by appropriate documentation, and incurred in furtherance of the grant's objectives. Cause: The Organization did not maintain effective controls to demonstrate compliance with Federal procurement requirements. Effect: The Organization could not demonstrate compliance with certain Federal procurement requirements related to contract provisions, competition, and suspension and debarment. Questioned costs: None noted. Recommendation: We recommend the Organization implement procedures to ensure Federal procurement requirements, including contract provisions, competition requirements, and suspension and debarment verification, are performed, documented, and retained for all covered procurements. Views of responsible officials: Management agrees with the finding. See corrective action plan.