Audit 79547

2022-001 Utilization of a Cost Plus a Percentage of Cost Contract Type: Significant deficiency in internal control over compliance and an instance of noncompliance with respect to procurement requirements. Federal program: AL# 21.027, Coronavirus State and Local Fiscal Recovery Funds. Criteria: The Organization is obligated to comply with the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards at 2 C.F.R. Part 200, of which paragraph 200.324(d) states that the cost plus a percentage of cost and percentage of construction cost methods of contracting must not be used. Questioned costs: $41,208; calculated as vendor's profit based on 4.75% of the actual construction cost of $867,532 per vendor invoices. Total cost reimbursement form the contract was $882,713 after retention credit of $26,028. Condition: The Organization entered into a cost plus a percentage of cost contract with a vendor for the renovation of its Redmond location and was unaware that such a contract provision was not allowed. Effect: The Organization was out of compliance with 2 C.F.R. ? 200.324(d). Cause: The construction contract was executed before the federal grant was awarded. The construction contract was signed on May 21, 2021 and was initially projected to be funded by non-federal grants and contributions. Deschutes County grant agreement came at a later date on December 27, 2021, and awarded the Organization a reimbursement of their remodeling expenditures up to $900,000. The Organization did not have sufficient internal controls in place to identify the noncompliance when the federal grant was awarded, as management was unaware of the procurement prohibition on cost plus a percentage of cost contracting method. Prevalence: This is an internal control design deficiency and an instance of immaterial noncompliance resulting in questioned costs of $41,208. Repeat finding: No. Auditor?s recommendation: Work closely with the Organization?s assigned Deschutes County project officer to communicate and establish a corrective action plan to address the noncompliance. The Organization?s response: Management agrees with the auditor's recommendation. The Organization will work closely with the Deschutes County project officer to address and demonstrate compliance for the condition listed above. The Organization has developed a Corrective Action Plan which outlines the necessary steps the Organization will follow to bring the Organization into compliance with the condition. Management has reviewed this finding in detail with the Finance & Audit Committee, and subsequently presented this to the Board of Directors who voted to approve the Audit and associated response and Corrective Action Plan.

2022-001 Utilization of a Cost Plus a Percentage of Cost Contract Type: Significant deficiency in internal control over compliance and an instance of noncompliance with respect to procurement requirements. Federal program: AL# 21.027, Coronavirus State and Local Fiscal Recovery Funds. Criteria: The Organization is obligated to comply with the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards at 2 C.F.R. Part 200, of which paragraph 200.324(d) states that the cost plus a percentage of cost and percentage of construction cost methods of contracting must not be used. Questioned costs: $41,208; calculated as vendor's profit based on 4.75% of the actual construction cost of $867,532 per vendor invoices. Total cost reimbursement form the contract was $882,713 after retention credit of $26,028. Condition: The Organization entered into a cost plus a percentage of cost contract with a vendor for the renovation of its Redmond location and was unaware that such a contract provision was not allowed. Effect: The Organization was out of compliance with 2 C.F.R. ? 200.324(d). Cause: The construction contract was executed before the federal grant was awarded. The construction contract was signed on May 21, 2021 and was initially projected to be funded by non-federal grants and contributions. Deschutes County grant agreement came at a later date on December 27, 2021, and awarded the Organization a reimbursement of their remodeling expenditures up to $900,000. The Organization did not have sufficient internal controls in place to identify the noncompliance when the federal grant was awarded, as management was unaware of the procurement prohibition on cost plus a percentage of cost contracting method. Prevalence: This is an internal control design deficiency and an instance of immaterial noncompliance resulting in questioned costs of $41,208. Repeat finding: No. Auditor?s recommendation: Work closely with the Organization?s assigned Deschutes County project officer to communicate and establish a corrective action plan to address the noncompliance. The Organization?s response: Management agrees with the auditor's recommendation. The Organization will work closely with the Deschutes County project officer to address and demonstrate compliance for the condition listed above. The Organization has developed a Corrective Action Plan which outlines the necessary steps the Organization will follow to bring the Organization into compliance with the condition. Management has reviewed this finding in detail with the Finance & Audit Committee, and subsequently presented this to the Board of Directors who voted to approve the Audit and associated response and Corrective Action Plan.