Audit 414990

Criteria or specific requirement: Federal regulations (2 CFR 180.300) require that grantees have controls in place to verify that vendors are not suspended or debarred prior to entering into contracts for goods and services exceeding $25,000. Condition: For four of the four contracts tested, there was no evidence of verification from sam.gov having been obtained to verify vendors were not suspended or debarred prior to conducting business. There was also no evidence in the Organization’s contract with the vendor that the appropriate language had been included. Context: Of the ten vendors that had expenditures greater than $25,000, we selected four vendors for procurement testing. Effect: The Organization could be transacting with parties that are suspended or debarred and may be subject to questioned costs or other sanctions from funding agencies. However, during the course of the audit, we verified these vendors were not previously suspended or debarred. Cause: There were ineffective controls in place during the period, along with lack of management oversight. Repeat finding: Yes, this is a repeat finding of 2024-001 from the prior year’s audit. The prior corrective action plan was not fully implemented. As the prior year audit was completed subsequent to June 30, 2025 the Organization did not have time to implement the corrective action plan. Recommendation: We recommend that the Organization establish and implement controls to verify, prior to entering into covered transactions, that prospective vendors are not suspended, debarred, or otherwise excluded from participation in Federal awards. The Organization should establish a consistent verification method, such as checking SAM.gov Exclusions, obtain a certification from the vendor or include an appropriate clause or condition in the transaction, and retain evidence that the verification was performed. Views of responsible officials: Management agrees with the auditor recommendation.

Criteria or specific requirement: Federal regulations require that for acquisitions exceeding the simplified acquisition threshold, the nonfederal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR 200.320(b)(1); the competitive proposals method under the conditions specified in 2 CFR 200.320(b)(2); or the noncompetitive proposals method (i.e., solicit a proposal from only one source), but only when one or more of five circumstances are met in accordance with 2 CFR 200.320(c). Condition: For one of the four contracts tested, the Organization followed its internal policy allowing for preferred vendor selection, which states frequently used vendors can be vetted in advance of use and can eliminate the need for bids; however, the contract exceeds the simplified acquisition threshold and must follow formal procurement methods. Formal procurement methods are competitive and require public notice. The Organization did not meet the criteria in 2 CFR 200.320(c) for noncompetitive procurement. Context: Of the ten vendors that had expenditures greater than $25,000, we selected four vendors for procurement testing. One of the four vendors had a contract that exceeded the simplified acquisition threshold. The total value of the contract award is $663,190 over three years and the questioned costs during the year ended June 30, 2025 totaled $221,063. Effect: The Organization awarded a contract to a vendor that exceeded the simplified acquisition threshold. This project did not follow the required formal procurement process. Cause: There were ineffective controls in place during the period, along with lack of management oversight. Repeat finding: Yes, this is a repeat finding of 2024-002 from the prior year’s audit. The prior corrective action plan was not fully implemented. As the prior year audit was completed subsequent to June 30, 2025 the Organization did not have time to implement the corrective action. Recommendation: The Organization should ensure that all contracts exceeding the simplified acquisition threshold follow procurement methods outlined in 2 CFR 200.320. Additionally, the Organization should implement controls to verify and maintain documentation of contract approvals to ensure compliance with federal regulations under 2 CFR 200.320. Views of responsible officials: Management agrees with the auditor recommendation