Audit 411832

Finding 2025-001 – COVID 19 – Coronavirus State and Local Fiscal Recovery Fund - AL No. 21.027 U.S. Department of Treasury Norfolk County Noncompliance and Material Weakness Related to Internal Control over Compliance of the Major Program Criteria: Non‐federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. Condition: During our testing as it related to compliance with procurement we noted that an expense for engineering services for the Well #10 Permitting Project services charged to the major program would have required a formal bidding process as the project exceeded the simplified acquisition threshold of $250,000. Context: The Town had a ARPA project 1123 for well#10 permitting project that they relied on a request for qualifications from 2011 for engineering services related to Town wide drinking water. The Well#10 project was submitted on 12/20/22 for approval by Norfolk County. It is the auditor’s professional judgment that separate procurement procedures should have been performed as the RFQ was approximately 11 years old and this was a new project. Although services are exempt under State procurement requirement, Federal Procurement rules would have required procurement procedures. Under Federal Procurement requirements expenses of $250,000 or more require a formal bid process. As the project costs and estimates at the time of the project exceeded $250,000, the Town should have performed formal bid procedures for this service. Questioned Costs: Based on vendor expenses charged to the grant in FY 2025 the total questioned costs were $54,060.65. Cause: The noncompliance occurred because the organization mistakenly relied on Massachusetts Chapter 30B exemptions, which govern state and local procurements, and did not recognize the need to comply with the more stringent federal procurement requirements for federal fund usage. Staff members were not sufficiently aware of the specific requirements under 2 CFR Part 200 and the precedence of federal procurement regulations over state law in this context. Effect or Potential Effect: There is a risk that the amounts charged to the federal awards major program may not be in accordance with procurement, suspension, and debarment principles. Identification as a Repeat Finding: 2024-002 Recommendation: Going forward, the Town of Bellingham should consider a separate bidding process for expenses related to federal grant awards. Management Response: We acknowledge the audit finding regarding our reliance on Massachusetts Chapter 30B exemptions for procurement involving federal funds. We understand that federal procurement regulations under 2 CFR Part 200 take precedence over state law and that we failed fully to comply with federal requirements for competitive bidding, sole-source justification, and documentation. We are committed to addressing this issue by reviewing our procurement policies to clearly differentiate between state and federal requirements, ensuring that federal standards govern all procurement involving federal funds. We will provide additional training to staff, implement stronger documentation procedures, and review past procurement to ensure full compliance moving forward.

Finding 2025-002 – COVID 19 – Coronavirus State and Local Fiscal Recovery Fund - AL No. 21.027 U.S. Department of Treasury Norfolk County Other Matters Related to Internal Control over Compliance of the Major Program Condition: Upon review of the Town of Bellingham’s report filed with Norfolk County it was noted that one of the reports submitted to Norfolk County did not agree with the Town’s accounting ledgers. Criteria: The Town was required to submit quarterly performance reports to Norfolk County that are in agreement with the Town’s accounting ledgers. Context: The quarterly report submitted to Norfolk County for the time period of October 1, 2024 through December 31, 2024 did not agree to the Town’s accounting ledgers as they included returned funds to Norfolk County that were included in the project expense for the period being reported in error. Effect: The Town of Bellingham was not in compliance with the Norfolk County reporting requirements. Questioned Costs: N/A- No questioned costs as it relates to reporting errors. Cause: The funds returned to Norfolk County were returned using an expense account, not a revenue account. This is why the returned funds were included in the expenditure report, sent to Norfolk County. Identification as a Repeat Finding: N/A – This is not a repeat finding. Recommendation: The Town of Bellingham should ensure that the reports submitted to Norfolk County are in agreement with the Town’s accounting ledgers. Management Response: Going forward, returning unexpended funds will not be treated as an expenditure.