Audit 414932

2024-003 – Procurement and Suspension and Debarment Finding Type: Material Noncompliance; Material Weakness in Internal Control over Compliance Program: Rural Health Outreach and Rural Network Development Program (AL# 93.912); U.S. Department of Health and Human Services; Direct award; all grant numbers. Criteria: Non-federal entities 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: The Organization's procurement policies were not complete and the Organization did not follow the federal procurement standards which provides specific guidance including process and documentation requirements necessary to be in compliance as required by the 2 CFR sections 200.318 through 200.326. Cause: The Organization’s procurement policies do not include the federal procurement requirements noted at 2 CFR section 200.318 through 200.326. Additionally, the Organization did not maintain the required procurement documentation, provide for full and open competition, or provide support for limitation of such competition. Effect: Future procurement arrangements may not meet the federal guidelines necessary for projects funded by federal sources. The Organization may have to pay back funds received for a project where federal funds were used for the procurement of products or services, but the required federal process was not met. Questioned Costs: $98,500. Recommendation: The Organization should update their procurement policy to include all requirements as noted in 2 CFR sections 200.318-200.326 and ensure that all future agreements follow the required processes. View of Responsible Officials: Management agrees with the finding. On June 2, 2025, the Board approved revised Policy F2.01 v.01, Procurement for Products or Services. Effective September 1, 2026, management adopted Procedure SOP F2.01 v.01, Procurement Under Federal Awards, which supplements Policy F2.01 and incorporates the procurement standards at 2 CFR 200.317 through 200.327 and the suspension and debarment requirements at 2 CFR Part 180. See the Corrective Action Plan. Repeat Finding - 2023-001

2024-004 – Cash Management Finding Type: Material Noncompliance; Material Weakness in Internal Control over Compliance Program: Rural Health Outreach and Rural Network Development Program (AL# 93.912); U.S. Department of Health and Human Services; Direct award; all grant numbers. Criteria: Management is responsible for establishing and maintaining effective internal control over the advance payment requests related to federal awards. This includes review and approval for the advance draw from an individual other than the one requesting the draw, as well as support demonstrating that existing grant funds received were expended prior to additional funds being requested. Condition: The Organization was unable to provide documentation to support the advanced draw calculation estimate or its approval by someone other than the individual who requested the draw for eleven of the sixteen selections tested. The Organization was unable to support that existing grant funds were fully expended prior to submitting additional advance draw requests for eleven of the sixteen selections tested. Cause: The Organization does not have a consistent process in place to estimate the amount of advance draws for a 30-day period of needed funding, nor do they have a consistent process in place for the documentation of the review/approval of the advance draw by someone other than the individual who requests the funds. Effect: The Organization could advance draw an amount greater than their need for a 30-day period, or staff could request funds without the proper approval. Questioned Costs: $225,000. Recommendation: The Organization should develop a clearly documented process and method to determine the amount of advance draw not to exceed a 30-day need. This process should include appropriate review, approval and documentation of the advance draw prior to requesting the funds. View of Responsible Officials: Management agrees with the finding. Effective September 1, 2026, management adopted Cash Drawdown Policy which requires a documented calculation of each advance draw not to exceed 30-day cash needs, accounts for federal cash on hand, and requires approval by an individual other than the requester before the draw is submitted. The questioned costs have been resolved. See the Corrective Action Plan. Repeat Finding - 2023-003