Noncompliance with Procurement Requirements and Material Weakness in Internal Control over Procurement and Suspension and Debarment Assistance Listing Number: 14.251 Name of Federal Program or Cluster: Economic Development Initiative, Community Project Funding, and Miscellaneous Grants Name of Federal Agency: Department of Housing and Urban Development Name of Pass-Through Entities: N/A Procurement and Suspension and Debarment 2 CFR§200.318(i) requires the recipient or subrecipient must maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price. 2 CFR§200.303 requires the Organization to establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). WRTP entered into a contract with a vendor greater than the simplified acquisition threshold to perform services under the federal award. WRTP was unable to provide records sufficient to detail the history of the procurement transaction. WRTP had turnover during the year with the positions that assisted with the procurement transactions. WRTP was unable to locate the records requested with their departures. Failure to keep adequate procurement records limits the ability to determine that procurement complied with applicable Uniform Guidance procurement standards or whether the procurement provided the required degree of competition. We recommend that WRTP implement procedures to ensure that adequate documentation is maintained for all procurements subject to the Uniform Guidance. Procurement files should document the procurement method used, vendors solicited, bids or quotations received, the basis for vendor selection or rejection, and the basis for determining contract price is reasonable. No Management concurs with the finding and recognizes the importance of maintaining consistent documentation supporting compliance with federal procurement, suspension, and debarment requirements. While WRTP|BIG STEP has procedures in place intended to ensure that it is in compliance with procurement requirements for federally funded activities, management acknowledges that documentation supporting those procedures was not maintained in a manner sufficient to satisfy audit requirements. During 2026, Management will establish standardized compliance checklists and procedures to ensure procurement requirements are being met. The planned hiring of a Finance Director will further strengthen oversight and accountability related to federal grant compliance and documentation requirements. The Finance Director will be responsible for overseeing grant financial management, federal and state grant compliance, implementation of internal controls, maintenance of supporting grant documentation, development and monitoring of compliance procedures, audit coordination, and ongoing verification that required documentation is maintained in accordance with federal regulations and Uniform Guidance requirements. Management believes these enhancements will strengthen internal controls over federal grant compliance and ensure adequate support is maintained for future audits.
Noncompliance with Approved Federal Award Budgets and Material Weakness in Internal Control Over Compliance Assistance Listing Number: 14.251 Name of Federal Program or Cluster: Economic Development Initiative, Community Project Funding, and Miscellaneous Grants Name of Federal Agency: Department of Housing and Urban Development (HUD) Name of Pass-Through Entities: N/A Assistance Listing Number: 47.084 Name of Federal Program or Cluster: Technology, Innovation, and Partnerships Name of Federal Agency: National Science Foundation Name of Pass-Through Entities: Current Innovation Activities Allowed or Unallowed 2 CFR§200.308 revision of budget and program plans: The Code of Federal Regulations (CFR) Section 200.308(b) Deviations from Approved Budget requires the recipient or subrecipient must report deviations from the approved budget, project or program scope, or objectives(s) in accordance with §200.329. The recipient or subrecipient must request prior approvals from the Federal agency or pass-through entity for budget and program plan revisions in accordance with this section. 2 CFR§200.308(f)(9) transferring funds between construction and non-construction work under a Federal award is a revision requiring prior approval. Article 3C of the HUD Grant Agreement states all changes to the Grantee’s Project of Approved budget must be made in accordance with 2 CFR 200.308 and this grant agreement. To request HUD’s approval for a change in the project or approved budget, the grantee must submit a formal letter to the Director of HUD’s Office of Economic Development – Congressional Grants Division. The letter must be submitted by email to the assigned grant officer and must provide justification for the change. Section G.1 of the Current Innovation Grant Agreement requires prior approvals for (d) to change or temporarily replace key project staff (e) any rebudgeting in excess of 15% or $100,000, whichever is greater, by programmatic core functions, and (f) to add a line item to the budget. 2 CFR§200.303 requires the Organization to establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The HUD approved line-item budget included: $140,000 Equipment: training equipment for training bays includes a virtual welder, a virtual CDL training system, and several VR training apparatuses. WRTP did not use the HUD Federal grant funds to purchase the VR training system and instead the VR training system was purchased using other grant funding. The total $1,500,000 HUD award was spent and WRTP deviated from the budget without meeting the requirements noted in the criteria section of the finding resulting in a $140,000 questioned cost. The HUD grant agreement explicitly incorporated the requirements in the Criteria section into the grant award. The Current Innovation approved budget included personnel salaries and wages for the President & CEO, Chief Operating Officer, the Program Coordinator, and Outreach Coordinator. On the December 2025 invoice sent to Current Innovation for cost reimbursement, WRTP included the salaries and wages for a total of 11 positions and some of these positions were not included in the approved budget. WRTP was working with Current Innovation to modify the budget to include additional positions but the budget modification was not approved at the time these costs were billed resulting in a $18,992 questioned cost. Management did not monitor to ensure that the requirements listed in the Uniform Guidance as well as the approved award budgets were being followed. WRTP may have expended grant funds on activities or cost categories inconsistent with the approved award budget and contract terms. We recommend that WRTP management monitor their compliance with the approved budget. If changes to the approved budget are necessary we recommend that WRTP follows the Uniform Guidance and grant agreement requirements.No Management concurs with the finding and acknowledges the importance of maintaining complete documentation supporting approved grant budgets and budget modifications associated with federally funded programs. Although the Organization monitored expenditures and program performance throughout the grant period, certain documentation supporting budget approvals and modifications was not maintained in a manner sufficient to satisfy audit requirements. During 2026, management will strengthen grant management procedures by implementing centralized grant files containing all award documents, approved budgets, amendments, correspondence, supporting approvals, and related grant documentation. Additional internal review procedures will be established to ensure budget revisions and approvals are properly documented, reviewed, and retained in accordance with grant requirements. The planned hiring of a Finance Director will provide additional oversight of grant budgeting, financial reporting, and compliance monitoring. The Finance Director will be responsible for budget development and monitoring, grant financial management, maintenance of supporting grant documentation, implementation of internal controls, development of financial policies and procedures, audit coordination, and ensuring that grant budgets, amendments, approvals, and related documentation are properly maintained and consistently applied across all funding sources. Management is committed to enhancing grant administration and compliance processes and believes the corrective actions being implemented will mitigate the risk of similar findings in future audits.