Finding 2023-005 – Internal Controls over Federal Awards (Material Weakness and Noncompliance) Information on the Federal Program: U.S. Department of Justice, Assistance Listing No.16.575 Victims of Crime Act (VOCA) Criteria: 2 CFR 200.303 requires non-federal entities to establish and maintain effective internal control over the Federal awards that provides reasonable assurance that the non-federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with 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). Condition/Context: We selected 50 disbursements for testing. Of those 50, 25 were for payroll and 25 were non-payroll disbursements. Of the 25 payroll, 2 employees did not have an approved pay rate. Of the 25 non-payroll, 9 of the expenses were allocated to the VOCA grant through a process in the accounting system. 7 out of the 9 allocations were not properly documented as reviewed and approved by management. Of the remaining 14 non-payroll disbursements, 4 lacked documentation of approval for payment. Cause: The Organization did not properly document controls established to review and approve expenses charged to the grant. Effect: The Organization did not comply with internal control compliance standards. Questioned costs: None Recommendation: We recommend the Organization strengthen its policies and procedures surrounding disbursement and allocation processes to document the review and approval process to meet the control standards. Views of Responsible Officials: See Management’s View and Corrective Action Plan included at the end of the report.
Department of Treasury Federal Financial Assistance Listing 21.033, Award 22ERP060843 Community Development Financial Institutions Equitable Recovery Program (CDFI ERP) Suspension & Debarment Significant Deficiency in Internal Control over Compliance Criteria: CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: In our testing of procurement, suspension, and debarment, it was identified that there was no observable documentation to directly indicate that a search for suspension and debarment was performed on vendors prior to entering into contracts. Cause: Meda has designed internal controls over these areas; however, the controls were not performed timely. Effect: Failure to document the search for suspension and debarment before entering the contact could result in possibly noncompliance. Questioned Costs: None reported. Context: Two vendors, accounting for $149,320 of expenses were selected for testing out of a total of two vendors. Repeat Finding from Prior Years: No Recommendation: We recommend that management maintain adequate supporting documentation and records to document history and methods of the procedures performed to ensure vendors are not suspended or debarred. Views of Responsible Officials: Management agrees with the finding.
Department of Health and Human Services Federal Financial Assistance Listing 93.958, All Awards Block Grants for Community Mental Health Services Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, and Period of Performance Significant Deficiency in Internal Control over Compliance Criteria: CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: There was no formal documentation of review and approval of wage rates prior to submission of the reimbursement request to SAMHSA for all employees selected for testing. There was no formal documented review for the calculation of indirect costs prior to the submission of the reimbursement request to SAMHSA for three months selected for testing. There was no formal documented review of reimbursement requests prior to submission to SAMHSA for three months selected for testing. Cause: Washburn Center has designed internal controls over these areas; however, the controls were not formally documented. Effect: Failure to perform an independent review of expenses and draws submitted could result in a reasonable possibility that Washburn Center would not detect errors in the normal course of performing duties and correct them in a timely manner. Questioned Costs: None reported. Context: Nine employees out of 26 total were selected for testing for the program which made up $143,251 in payroll costs out of $471,807 total payroll costs. Four calculations of indirect costs out of 12 monthly calculations were selected for testing for the program which made up $16,154 indirect costs out of $47,329 total indirect costs. Four requests for reimbursement submissions out of 12 total submissions were selected for testing for the program. Repeat Finding from Prior Years: Yes, Finding 2022-04 Recommendation: We recommend the procedures related to activities allowed or unallowed, allowable costs/cost principles, cash management, and period of performance be reviewed with applicable program employees to ensure the control process is properly followed and documentation is retained to support compliance with program requirements. Views of Responsible Officials: Management agrees with the finding.
Lack of Review Category of Finding – Eligibility Condition – During 2022, Accord did not have controls in place to ensure that eligibility criteria calculations were being reviewed and/or approved by someone other than the individual making the initial determination or annual recertification. Criteria – The HOME Investment Partnership Program has income targeting requirements. Only low-income or very low-income persons as defined in 24 CFR section 92.2, can receive housing assistance. Therefore, the participating jurisdiction must determine if each family is income eligible by calculating the family's annual income, including all persons in the household. 2 CFR section 200.303 requires that organizations who receive federal awards establish and maintain effective internal controls over the federal award that provides reasonable assurance that the organization is managing the federal award in compliance with the federal statues, regulations, and terms and conditions of the award. It also states that controls should be in compliance with guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United State (the Green Book) or the Internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Illustrative specific design and implementation of control activities over eligibility include the following (excerpt from the Green Book): • Proper design of control activities to ensure program compliance should include a process for management to identify and put into effect actions need to carry out specific responses to risks identified in the risk assessment process such as providing benefits to ineligible individuals, calculating amounts to be received for or on behalf of individuals incorrectly, unauthorized changes to system configurations, fraud, unauthorized payments, etc. • Segregations of duties should exist between those determining a participant's eligibility and those reviewing/approving eligibility. Where segregation of duties is not practical, management should select and develop alternative control activities. • Management should establish responsibility and accountability for control activities with management (or other designated personnel) of the unit or function in which the relevant risks reside. Responsible personnel should perform control activities in a timely manner as defined by policies and procedures. Cause – Due to the limited number of staff employed by the Organization in the Housing department there is a lack of adequate segregation of duties in regard to review of eligibility calculations. Effect – By not having proper implementation of controls to ensure that certification/recertifications are reviewed and/or approved, there is a risk that individuals are allowed to either enter in the program when they are not eligible, or continue in the program after becoming ineligible. Questioned Costs – None. Recommendation – We recommend controls be put in place to ensure the eligibility determinations and rent calculations (initial or recertifications) be reviewed and/or approved by someone other than the individual making the determination. Management’s Response and Corrective Action – Management agrees with this finding. As of December 31, 2023, the Organization has sold all properties financed by HOME funds. Responsible party for corrective action: Robert Pickering, Chief Financial Officer Repeat Finding: This is a repeat finding. The finding was reported as 2022-001 in 2022.
Department of Transportation Federal Financial Assistance Listing 20.106; Awards AIP3‐46‐0050‐54, AIP3‐46‐0050‐59, AIP3‐46‐0050‐60, and AIP3‐46‐0050‐62. COVID‐19 Airport Improvement Program Reporting Significant Deficiency in Internal Control over Compliance Criteria ‐ 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal controls over the federal awards that provide assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the conditions of the federal award. 2 CFR 200.327 and 2 CFR 200.328 require the auditee to collect financial information and monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved and report these items in accordance with the program requirements. Condition ‐ The SF‐425 annual report dated September 30, 2023, for award AIP3‐46‐0050‐54 underreported the federal share of expenditures by $80,133, while the FAA Form 5100‐127 annual report dated December 31, 2022, for all awards underreported the externally restricted assets by $397,646. Cause ‐ The Authority does not have an internal control structure designed to ensure amounts reported on SF‐425 and FAA Form 5100‐127 reports are adequately reviewed and agree to underlying accounting records. Effect ‐ Lack of compliance with designed internal controls over reporting could result in the Authority reporting incorrect or incomplete information. Questioned Costs ‐ None reported. Context/Sampling ‐ A nonstatistical sample of 10 reports out of 31 reports. Repeat Finding from Prior Year – Yes, prior year finding 2022‐002 Recommendation ‐ Management should determine and formalize reporting responsibilities between the Airport and the State and establish review processes to ensure that amounts included in SF‐425 and FAA Form 5100‐127 reports agree with the underlying accounting records. Views of Responsible Officials ‐ Management agrees with the finding.
Department of Transportation Federal Financial Assistance Listing 20.106; Awards AIP3‐46‐0050‐54, AIP3‐46‐0050‐59, AIP3‐46‐0050‐60, and AIP3‐46‐0050‐62. COVID‐19 Airport Improvement Program Reporting Significant Deficiency in Internal Control over Compliance Criteria ‐ 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal controls over the federal awards that provide assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the conditions of the federal award. 2 CFR 200.327 and 2 CFR 200.328 require the auditee to collect financial information and monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved and report these items in accordance with the program requirements. Condition ‐ The SF‐425 annual report dated September 30, 2023, for award AIP3‐46‐0050‐54 underreported the federal share of expenditures by $80,133, while the FAA Form 5100‐127 annual report dated December 31, 2022, for all awards underreported the externally restricted assets by $397,646. Cause ‐ The Authority does not have an internal control structure designed to ensure amounts reported on SF‐425 and FAA Form 5100‐127 reports are adequately reviewed and agree to underlying accounting records. Effect ‐ Lack of compliance with designed internal controls over reporting could result in the Authority reporting incorrect or incomplete information. Questioned Costs ‐ None reported. Context/Sampling ‐ A nonstatistical sample of 10 reports out of 31 reports. Repeat Finding from Prior Year – Yes, prior year finding 2022‐002 Recommendation ‐ Management should determine and formalize reporting responsibilities between the Airport and the State and establish review processes to ensure that amounts included in SF‐425 and FAA Form 5100‐127 reports agree with the underlying accounting records. Views of Responsible Officials ‐ Management agrees with the finding.
Department of Transportation Federal Financial Assistance Listing 20.106; Awards AIP3‐46‐0050‐54, AIP3‐46‐0050‐59, AIP3‐46‐0050‐60, and AIP3‐46‐0050‐62. COVID‐19 Airport Improvement Program Reporting Significant Deficiency in Internal Control over Compliance Criteria ‐ 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal controls over the federal awards that provide assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the conditions of the federal award. 2 CFR 200.327 and 2 CFR 200.328 require the auditee to collect financial information and monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved and report these items in accordance with the program requirements. Condition ‐ The SF‐425 annual report dated September 30, 2023, for award AIP3‐46‐0050‐54 underreported the federal share of expenditures by $80,133, while the FAA Form 5100‐127 annual report dated December 31, 2022, for all awards underreported the externally restricted assets by $397,646. Cause ‐ The Authority does not have an internal control structure designed to ensure amounts reported on SF‐425 and FAA Form 5100‐127 reports are adequately reviewed and agree to underlying accounting records. Effect ‐ Lack of compliance with designed internal controls over reporting could result in the Authority reporting incorrect or incomplete information. Questioned Costs ‐ None reported. Context/Sampling ‐ A nonstatistical sample of 10 reports out of 31 reports. Repeat Finding from Prior Year – Yes, prior year finding 2022‐002 Recommendation ‐ Management should determine and formalize reporting responsibilities between the Airport and the State and establish review processes to ensure that amounts included in SF‐425 and FAA Form 5100‐127 reports agree with the underlying accounting records. Views of Responsible Officials ‐ Management agrees with the finding.
Department of Transportation Federal Financial Assistance Listing 20.106; Awards AIP3‐46‐0050‐54, AIP3‐46‐0050‐59, AIP3‐46‐0050‐60, and AIP3‐46‐0050‐62. COVID‐19 Airport Improvement Program Reporting Significant Deficiency in Internal Control over Compliance Criteria ‐ 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal controls over the federal awards that provide assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the conditions of the federal award. 2 CFR 200.327 and 2 CFR 200.328 require the auditee to collect financial information and monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved and report these items in accordance with the program requirements. Condition ‐ The SF‐425 annual report dated September 30, 2023, for award AIP3‐46‐0050‐54 underreported the federal share of expenditures by $80,133, while the FAA Form 5100‐127 annual report dated December 31, 2022, for all awards underreported the externally restricted assets by $397,646. Cause ‐ The Authority does not have an internal control structure designed to ensure amounts reported on SF‐425 and FAA Form 5100‐127 reports are adequately reviewed and agree to underlying accounting records. Effect ‐ Lack of compliance with designed internal controls over reporting could result in the Authority reporting incorrect or incomplete information. Questioned Costs ‐ None reported. Context/Sampling ‐ A nonstatistical sample of 10 reports out of 31 reports. Repeat Finding from Prior Year – Yes, prior year finding 2022‐002 Recommendation ‐ Management should determine and formalize reporting responsibilities between the Airport and the State and establish review processes to ensure that amounts included in SF‐425 and FAA Form 5100‐127 reports agree with the underlying accounting records. Views of Responsible Officials ‐ Management agrees with the finding.
(E) Significant Deficiency in Internal Control Over Compliance of Federal. Awards (F) Instance of noncompliance of Federal Awards Federal Agency: US Department of Health and Human Services Program Name: Health Centers Cluster Compliance Requirement: Procurement and Suspension and Debarment Questioned Costs: None Assistance Listing Number: 93.224, 93.527 Statement of Condition MVCHS did not follow federal procurement and suspension and debarment regulation nor its federal procurement policy. During our test work, it was noted that 4 out of 4 tests of internal control over compliance, MVCHS did not screen vendors for compliance with suspension and debarment requirements. Criteria MVCHS is required to verify that entities it plans to do business with are not excluded or disqualified under the non-procurement common rule, or otherwise declared ineligible under statutory or regulatory authority. According to §75.303 Internal controls of 45 CFR Part 75, the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to §75.327 general procurement standards of 45 CFR Part 75, the nonfederal entity must maintain records sufficient to detail the history of procurement. These records will include but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. According to §200.303 Internal controls of 2 CFR Part 200, the nonfederal entity MVCHS must establish and maintain effective internal control over the Federal award that provides reasonable assurance MVCHS is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with 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). According to §180.300 of Subpart C–Responsibilities of Participants Regarding Transactions Doing Business With Other Persons of 2 CFR Part 180, when you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. This can been done by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. Cause Internal controls over compliance do not appear to have been adequately implemented due to lack of training, oversight, or resources. Effect The Institute may have entered into contracts with ineligible contractors and exposed itself to potential liability and loss of federal funds. Recommendation We recommend that the organization: View of Responsible Officials MVCHS acknowledges the need to implement procedures to verify the suspension and debarment status of contractors prior to using federal funds. The Finance Department will develop a process to check for suspension and debarment prior to issuing a purchase order. This process will be completed by May 6, 2024. Carla Melendez, Chief Financial Officer will be responsible for developing and implementing this process. • follow its policies and procedures to verify the suspension and debarment status of contractors before awarding contracts using federal funds. • include the required suspension and debarment clause in its contracts with contractors using federal funds.
(E) Significant Deficiency in Internal Control Over Compliance of Federal. Awards (F) Instance of noncompliance of Federal Awards Federal Agency: US Department of Health and Human Services Program Name: Health Centers Cluster Compliance Requirement: Procurement and Suspension and Debarment Questioned Costs: None Assistance Listing Number: 93.224, 93.527 Statement of Condition MVCHS did not follow federal procurement and suspension and debarment regulation nor its federal procurement policy. During our test work, it was noted that 4 out of 4 tests of internal control over compliance, MVCHS did not screen vendors for compliance with suspension and debarment requirements. Criteria MVCHS is required to verify that entities it plans to do business with are not excluded or disqualified under the non-procurement common rule, or otherwise declared ineligible under statutory or regulatory authority. According to §75.303 Internal controls of 45 CFR Part 75, the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to §75.327 general procurement standards of 45 CFR Part 75, the nonfederal entity must maintain records sufficient to detail the history of procurement. These records will include but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. According to §200.303 Internal controls of 2 CFR Part 200, the nonfederal entity MVCHS must establish and maintain effective internal control over the Federal award that provides reasonable assurance MVCHS is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with 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). According to §180.300 of Subpart C–Responsibilities of Participants Regarding Transactions Doing Business With Other Persons of 2 CFR Part 180, when you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. This can been done by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. Cause Internal controls over compliance do not appear to have been adequately implemented due to lack of training, oversight, or resources. Effect The Institute may have entered into contracts with ineligible contractors and exposed itself to potential liability and loss of federal funds. Recommendation We recommend that the organization: View of Responsible Officials MVCHS acknowledges the need to implement procedures to verify the suspension and debarment status of contractors prior to using federal funds. The Finance Department will develop a process to check for suspension and debarment prior to issuing a purchase order. This process will be completed by May 6, 2024. Carla Melendez, Chief Financial Officer will be responsible for developing and implementing this process. • follow its policies and procedures to verify the suspension and debarment status of contractors before awarding contracts using federal funds. • include the required suspension and debarment clause in its contracts with contractors using federal funds.
Assistance Listing, Federal Agency, and Program Name - ALN 47.074, National Science Foundation, Biological Sciences - BII: New Roots for Restoration; ALN 15.662, U.S. Department of the Interior, Great Lakes Restoration - Sturgeon Bay Ship Canal Nature Preserve Pitcher's Dune Thistle Habitat Restoration and Neighborhood Outreach Project Federal Award Identification Number and Year - 24409-C; F20AC00354 Pass through Entity - Donald Danforth Plant Science Center; Door County Land Trust, Inc., respectively Finding Type - Significant deficiency Repeat Finding - No Criteria - 2 CFR 200.303(a) - The non federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition - Two reimbursement requests submitted during 2023 did not have documentation available to indicate that the reimbursement request was reviewed by a supervisor for accuracy before submission. Identification of How Questioned Costs Were Computed N/A Context - A total of seven grant reimbursement requests submitted to granting agencies during 2023 were reviewed for evidence of supervisory review. Two of these reimbursement requests were missing documentation to support that supervisory review was performed. Cause and Effect - The Society experienced significant personnel turnover during the year within its accounting and grants departments, which resulted in issues with documentation retention and records retrieval. The lack of review evidence did not result in identified noncompliance with the grant terms. Recommendation - The Society should implement an internal review process of its record retention to ensure that evidence of internal review and approval documentation is appropriately retained in accordance with its formal policies. The Society should also consider alternative methods to document reviewer procedures in order to prevent future issues with record retention. Views of Responsible Officials and Corrective Action Plan - Staff turnover in early 2023 resulted in a temporary lapse of documentation proving that the internal control process was followed. The Society follows its internal review process and is maintaining documentation that appropriate approvals are in place.
Assistance Listing, Federal Agency, and Program Name - ALN 47.074, National Science Foundation, Biological Sciences - BII: New Roots for Restoration; ALN 15.662, U.S. Department of the Interior, Great Lakes Restoration - Sturgeon Bay Ship Canal Nature Preserve Pitcher's Dune Thistle Habitat Restoration and Neighborhood Outreach Project Federal Award Identification Number and Year - 24409-C; F20AC00354 Pass through Entity - Donald Danforth Plant Science Center; Door County Land Trust, Inc., respectively Finding Type - Significant deficiency Repeat Finding - No Criteria - 2 CFR 200.303(a) - The non federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition - Two reimbursement requests submitted during 2023 did not have documentation available to indicate that the reimbursement request was reviewed by a supervisor for accuracy before submission. Identification of How Questioned Costs Were Computed N/A Context - A total of seven grant reimbursement requests submitted to granting agencies during 2023 were reviewed for evidence of supervisory review. Two of these reimbursement requests were missing documentation to support that supervisory review was performed. Cause and Effect - The Society experienced significant personnel turnover during the year within its accounting and grants departments, which resulted in issues with documentation retention and records retrieval. The lack of review evidence did not result in identified noncompliance with the grant terms. Recommendation - The Society should implement an internal review process of its record retention to ensure that evidence of internal review and approval documentation is appropriately retained in accordance with its formal policies. The Society should also consider alternative methods to document reviewer procedures in order to prevent future issues with record retention. Views of Responsible Officials and Corrective Action Plan - Staff turnover in early 2023 resulted in a temporary lapse of documentation proving that the internal control process was followed. The Society follows its internal review process and is maintaining documentation that appropriate approvals are in place.
Federal Agency: U.S. Department of Agriculture Federal Program Name: State Administrative Matching Grants for the Supplemental Nutrition Assistance Program Assistance Listing Number: 10.561 Federal Award Identification Number and Year: 232MN101S2514, 232MN127Q7503, 232MN101S2520 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 232MN101S2514, 232MN127Q7503, 232MN101S2520 Award Period: January 1, 2023 through December 31, 2023 Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Medical Assistance Program Assistance Listing Number: 93.778 Federal Award Identification Number and Year: 2305MN5ADM, 2305MN5MAP, NH23IP922628 Pass-Through Agency: Minnesota Department of Health, Minnesota Department of Human Services Pass-Through Numbers: 2305MN5ADM, 2305MN5MAP, NH23IP922628 Award Period: January 1, 2023 through December 31, 2023 Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Temporary Assistance for Needy Families Program Assistance Listing Number: 93.558 Federal Award Identification Number and Year: 2301MNTANF, 2501MNTANF Pass-Through Agency: Minnesota Department of Health, Minnesota Department of Human Services Pass-Through Numbers: 2301MNTANF, 2501MNTANF Award Period: January 1, 2023 through December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition/Context: During our testing, it was noted that the County does not have a process in place to review eligibility determinations. Case file workers perform the determination without a documented review or approval process. Questioned costs: Not applicable. The County administers the program but benefits to participants in this program are paid by the State of Minnesota. Cause: The County was relying on covid waivers that minimized the county’s involvement in eligibility determinations. Effect: The auditor noted no instances of noncompliance with the provisions of eligibility however, the lack of internal controls over these compliance requirements provides an opportunity for noncompliance.
Federal Agency: U.S. Department of Agriculture Federal Program Name: State Administrative Matching Grants for the Supplemental Nutrition Assistance Program Assistance Listing Number: 10.561 Federal Award Identification Number and Year: 232MN101S2514, 232MN127Q7503, 232MN101S2520 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 232MN101S2514, 232MN127Q7503, 232MN101S2520 Award Period: January 1, 2023 through December 31, 2023 Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Medical Assistance Program Assistance Listing Number: 93.778 Federal Award Identification Number and Year: 2305MN5ADM, 2305MN5MAP, NH23IP922628 Pass-Through Agency: Minnesota Department of Health, Minnesota Department of Human Services Pass-Through Numbers: 2305MN5ADM, 2305MN5MAP, NH23IP922628 Award Period: January 1, 2023 through December 31, 2023 Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Temporary Assistance for Needy Families Program Assistance Listing Number: 93.558 Federal Award Identification Number and Year: 2301MNTANF, 2501MNTANF Pass-Through Agency: Minnesota Department of Health, Minnesota Department of Human Services Pass-Through Numbers: 2301MNTANF, 2501MNTANF Award Period: January 1, 2023 through December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition/Context: During our testing, it was noted that the County does not have a process in place to review eligibility determinations. Case file workers perform the determination without a documented review or approval process. Questioned costs: Not applicable. The County administers the program but benefits to participants in this program are paid by the State of Minnesota. Cause: The County was relying on covid waivers that minimized the county’s involvement in eligibility determinations. Effect: The auditor noted no instances of noncompliance with the provisions of eligibility however, the lack of internal controls over these compliance requirements provides an opportunity for noncompliance.
Federal Agency: U.S. Department of Agriculture Federal Program Name: State Administrative Matching Grants for the Supplemental Nutrition Assistance Program Assistance Listing Number: 10.561 Federal Award Identification Number and Year: 232MN101S2514, 232MN127Q7503, 232MN101S2520 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 232MN101S2514, 232MN127Q7503, 232MN101S2520 Award Period: January 1, 2023 through December 31, 2023 Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Medical Assistance Program Assistance Listing Number: 93.778 Federal Award Identification Number and Year: 2305MN5ADM, 2305MN5MAP, NH23IP922628 Pass-Through Agency: Minnesota Department of Health, Minnesota Department of Human Services Pass-Through Numbers: 2305MN5ADM, 2305MN5MAP, NH23IP922628 Award Period: January 1, 2023 through December 31, 2023 Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Temporary Assistance for Needy Families Program Assistance Listing Number: 93.558 Federal Award Identification Number and Year: 2301MNTANF, 2501MNTANF Pass-Through Agency: Minnesota Department of Health, Minnesota Department of Human Services Pass-Through Numbers: 2301MNTANF, 2501MNTANF Award Period: January 1, 2023 through December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition/Context: During our testing, it was noted that the County does not have a process in place to review eligibility determinations. Case file workers perform the determination without a documented review or approval process. Questioned costs: Not applicable. The County administers the program but benefits to participants in this program are paid by the State of Minnesota. Cause: The County was relying on covid waivers that minimized the county’s involvement in eligibility determinations. Effect: The auditor noted no instances of noncompliance with the provisions of eligibility however, the lack of internal controls over these compliance requirements provides an opportunity for noncompliance.
Federal Agency: U.S. Department of Agriculture Federal Program Name: State Administrative Matching Grants for the Supplemental Nutrition Assistance Program Assistance Listing Number: 10.561 Federal Award Identification Number and Year: 232MN101S2514, 232MN127Q7503, 232MN101S2520 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 232MN101S2514, 232MN127Q7503, 232MN101S2520 Award Period: January 1, 2023 through December 31, 2023 Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Medical Assistance Program Assistance Listing Number: 93.778 Federal Award Identification Number and Year: 2305MN5ADM, 2305MN5MAP, NH23IP922628 Pass-Through Agency: Minnesota Department of Health, Minnesota Department of Human Services Pass-Through Numbers: 2305MN5ADM, 2305MN5MAP, NH23IP922628 Award Period: January 1, 2023 through December 31, 2023 Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Temporary Assistance for Needy Families Program Assistance Listing Number: 93.558 Federal Award Identification Number and Year: 2301MNTANF, 2501MNTANF Pass-Through Agency: Minnesota Department of Health, Minnesota Department of Human Services Pass-Through Numbers: 2301MNTANF, 2501MNTANF Award Period: January 1, 2023 through December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition/Context: During our testing, it was noted that the County does not have a process in place to review eligibility determinations. Case file workers perform the determination without a documented review or approval process. Questioned costs: Not applicable. The County administers the program but benefits to participants in this program are paid by the State of Minnesota. Cause: The County was relying on covid waivers that minimized the county’s involvement in eligibility determinations. Effect: The auditor noted no instances of noncompliance with the provisions of eligibility however, the lack of internal controls over these compliance requirements provides an opportunity for noncompliance.
Federal Agency: U.S. Department of Agriculture Federal Program Name: State Administrative Matching Grants for the Supplemental Nutrition Assistance Program Assistance Listing Number: 10.561 Federal Award Identification Number and Year: 232MN101S2514, 232MN127Q7503, 232MN101S2520 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 232MN101S2514, 232MN127Q7503, 232MN101S2520 Award Period: January 1, 2023 through December 31, 2023 Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Medical Assistance Program Assistance Listing Number: 93.778 Federal Award Identification Number and Year: 2305MN5ADM, 2305MN5MAP, NH23IP922628 Pass-Through Agency: Minnesota Department of Health, Minnesota Department of Human Services Pass-Through Numbers: 2305MN5ADM, 2305MN5MAP, NH23IP922628 Award Period: January 1, 2023 through December 31, 2023 Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Temporary Assistance for Needy Families Program Assistance Listing Number: 93.558 Federal Award Identification Number and Year: 2301MNTANF, 2501MNTANF Pass-Through Agency: Minnesota Department of Health, Minnesota Department of Human Services Pass-Through Numbers: 2301MNTANF, 2501MNTANF Award Period: January 1, 2023 through December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition/Context: During our testing, it was noted that the County does not have a process in place to review eligibility determinations. Case file workers perform the determination without a documented review or approval process. Questioned costs: Not applicable. The County administers the program but benefits to participants in this program are paid by the State of Minnesota. Cause: The County was relying on covid waivers that minimized the county’s involvement in eligibility determinations. Effect: The auditor noted no instances of noncompliance with the provisions of eligibility however, the lack of internal controls over these compliance requirements provides an opportunity for noncompliance.
Federal Agency: U.S. Department of Agriculture Federal Program Name: State Administrative Matching Grants for the Supplemental Nutrition Assistance Program Assistance Listing Number: 10.561 Federal Award Identification Number and Year: 232MN101S2514, 232MN127Q7503, 232MN101S2520 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 232MN101S2514, 232MN127Q7503, 232MN101S2520 Award Period: January 1, 2023 through December 31, 2023 Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Medical Assistance Program Assistance Listing Number: 93.778 Federal Award Identification Number and Year: 2305MN5ADM, 2305MN5MAP, NH23IP922628 Pass-Through Agency: Minnesota Department of Health, Minnesota Department of Human Services Pass-Through Numbers: 2305MN5ADM, 2305MN5MAP, NH23IP922628 Award Period: January 1, 2023 through December 31, 2023 Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Temporary Assistance for Needy Families Program Assistance Listing Number: 93.558 Federal Award Identification Number and Year: 2301MNTANF, 2501MNTANF Pass-Through Agency: Minnesota Department of Health, Minnesota Department of Human Services Pass-Through Numbers: 2301MNTANF, 2501MNTANF Award Period: January 1, 2023 through December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition/Context: During our testing, it was noted that the County does not have a process in place to review eligibility determinations. Case file workers perform the determination without a documented review or approval process. Questioned costs: Not applicable. The County administers the program but benefits to participants in this program are paid by the State of Minnesota. Cause: The County was relying on covid waivers that minimized the county’s involvement in eligibility determinations. Effect: The auditor noted no instances of noncompliance with the provisions of eligibility however, the lack of internal controls over these compliance requirements provides an opportunity for noncompliance.
Federal Agency: U.S. Department of Agriculture Federal Program Name: State Administrative Matching Grants for the Supplemental Nutrition Assistance Program Assistance Listing Number: 10.561 Federal Award Identification Number and Year: 232MN101S2514, 232MN127Q7503, 232MN101S2520 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 232MN101S2514, 232MN127Q7503, 232MN101S2520 Award Period: January 1, 2023 through December 31, 2023 Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Medical Assistance Program Assistance Listing Number: 93.778 Federal Award Identification Number and Year: 2305MN5ADM, 2305MN5MAP, NH23IP922628 Pass-Through Agency: Minnesota Department of Health, Minnesota Department of Human Services Pass-Through Numbers: 2305MN5ADM, 2305MN5MAP, NH23IP922628 Award Period: January 1, 2023 through December 31, 2023 Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Temporary Assistance for Needy Families Program Assistance Listing Number: 93.558 Federal Award Identification Number and Year: 2301MNTANF, 2501MNTANF Pass-Through Agency: Minnesota Department of Health, Minnesota Department of Human Services Pass-Through Numbers: 2301MNTANF, 2501MNTANF Award Period: January 1, 2023 through December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition/Context: During our testing, it was noted that the County does not have a process in place to review eligibility determinations. Case file workers perform the determination without a documented review or approval process. Questioned costs: Not applicable. The County administers the program but benefits to participants in this program are paid by the State of Minnesota. Cause: The County was relying on covid waivers that minimized the county’s involvement in eligibility determinations. Effect: The auditor noted no instances of noncompliance with the provisions of eligibility however, the lack of internal controls over these compliance requirements provides an opportunity for noncompliance.
Federal Agency: U.S. Department of Agriculture Federal Program Name: State Administrative Matching Grants for the Supplemental Nutrition Assistance Program Assistance Listing Number: 10.561 Federal Award Identification Number and Year: 232MN101S2514, 232MN127Q7503, 232MN101S2520 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 232MN101S2514, 232MN127Q7503, 232MN101S2520 Award Period: January 1, 2023 through December 31, 2023 Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Medical Assistance Program Assistance Listing Number: 93.778 Federal Award Identification Number and Year: 2305MN5ADM, 2305MN5MAP, NH23IP922628 Pass-Through Agency: Minnesota Department of Health, Minnesota Department of Human Services Pass-Through Numbers: 2305MN5ADM, 2305MN5MAP, NH23IP922628 Award Period: January 1, 2023 through December 31, 2023 Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Temporary Assistance for Needy Families Program Assistance Listing Number: 93.558 Federal Award Identification Number and Year: 2301MNTANF, 2501MNTANF Pass-Through Agency: Minnesota Department of Health, Minnesota Department of Human Services Pass-Through Numbers: 2301MNTANF, 2501MNTANF Award Period: January 1, 2023 through December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition/Context: During our testing, it was noted that the County does not have a process in place to review eligibility determinations. Case file workers perform the determination without a documented review or approval process. Questioned costs: Not applicable. The County administers the program but benefits to participants in this program are paid by the State of Minnesota. Cause: The County was relying on covid waivers that minimized the county’s involvement in eligibility determinations. Effect: The auditor noted no instances of noncompliance with the provisions of eligibility however, the lack of internal controls over these compliance requirements provides an opportunity for noncompliance.
Finding 2023-001: Procurement Policy Information on the Federal Program: All Criteria: According to 2 CFR §200.303, the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with 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). Additionally, according to 2 CFR §200.318 Procurement standards, the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Title 2, Subtitle A Chapter II Part 200 Subpart D 200.319 Procurement Standards. All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and §200.320. The non-Federal entity must have written procedures for procurement transactions." Additionally, according to 2 CFR §200.318 Procurement standards, the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Title 2, Subtitle A Chapter II Part 200 Subpart D 200.319 Procurement Standards. All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and §200.320. The non-Federal entity must have written procedures for procurement transactions. Condition: During our testing performed over procurement and through inquiries with management, we noted the Organization does not have a formally documented procurement policy in place that is consistent with 2 CFR §200.318(a). Cause: Management has not formalized and implemented an official organizational procurement policy. Effect or Potential Effect: An official procurement policy will outline specified thresholds for which procurement is required, required documentation needed for each threshold, and individuals responsible for ensuring procurement is performed in all required circumstances. When no policy is in place, there is a risk that procurement would not be performed, or adequate documentation would not be obtained, when required. Questioned Costs: None noted. Context: We noted that the Organization does not have a documented procurement policy in effect.Identification as a Repeat Finding, if Applicable: Not a repeat finding. Recommendation: We recommend that management formalize and implement an official procurement policy. This policy should include thresholds for which various levels of procurement are required. The policy should also include what documentation is required for each level of procurement. Additionally, the policy should specify individuals responsible for conducting procurement, and approving the final selection.
Department of Health and Human Services Passed Through Ramsey County Minnesota Family Investment Program Adult Services (MFIP), Federal Financial Assistance Listing 93.558, Award #2301MNTANF, 2023 Temporary Assistance for Needy Families Activities Allowed or Unallowed, Allowable Costs/Cost Principles Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition: For one employee tested, documentation was not maintained to support all hours charged to the TANF program. Cause: The Association has designed internal controls over this area; however, the controls were not properly documented. Effect: The condition may affect the Association’s ability to support compliance with allowable activities and costs requirements. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 4 employees out of 15 were selected for testing, which accounted for $147,203 of $617,470 of federal program expenditures. Repeat Finding from Prior Year(s): No. Recommendation: We recommend the procedures related to payroll allocations be reviewed with applicable program employees to ensure proper documentation and review is properly supported and the documentation is retained. Views of Responsible Officials: Management agrees with the finding.
2023‐003 Department of Agriculture Federal Financial Assistance Listing #10.766 Community Facilities Loans and Grants Cluster Special Tests and Provisions Material Weakness in Internal Control Over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over federal award that provides assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and conditions of the federal awards. Condition: During our testing, there was no formal review separate from the preparer over the reserve fund reconciliation for the federal program. Cause: The Health Center did not have an adequate internal control policy in place to ensure review and approval over the reserve fund. Effect: The lack of adequate policies governing review increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs: None reported. Context/Sampling: Sampling was not used. The Health Center has two required reserve accounts that were tested. Repeat Finding from Prior Years: Yes, prior year finding 2022‐004 Recommendation: We recommend that the Health Center enhance internal control policies to ensure that formal documentation of reviews is present. Views of Responsible Officials: Management agrees with the finding.
2023-001 Activities Allowed or Unallowed, Allowable Costs/ Cost Principles – Indirect Costs Cluster: Research and Development Cluster Grantor: National Science Foundation Award Name: Various Award Year: Various Award Numbers: Various CFDA Numbers: Various Criteria or specific requirement: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States. Condition: BRIT applies its predetermined approved facilities and administrative rate when charging indirect costs to federal awards rather than the 10% de minimis indirect cost rate as allowed under Uniform Guidance. During our testing of 55 indirect costs, 2 transactions did not calculate the correct indirect cost. Questioned costs: None Context: See Condition. Cause: The exception was caused by management human error in typing in the indirect percentage or formula. Effect: Incorrect allocation caused two transactions to which the incorrect rate was applied caused to over claim $645 of indirect cost. Recommendation: We recommend that the money is repaid or credited back to NSF: 1. Provide documentation supporting that it has repaid or otherwise credited the $645 of overcharged indirect costs for which it has agreed to reimburse NSF. 2. We recommend BRIT strengthen its existing internal controls over the review of grant expense to ensure indirect cost rates change and to take appropriate steps to avoid claiming unallowable indirect costs on NSF awards. Once NSF determines that the recommendations have been adequately addressed and the $645 costs have been resolved, this finding should be closed. Views of responsible officials: Management agrees with the finding. Corrective action plan: Management will strengthen existing internal control over the review of monthly accounting worksheet to ensure the formulas and percentage for indirect cost are accurate before invoicing federal entity. Implementation date: March 31, 2024. Responsible Person(s): Keri Barfield, CFO.
2023-001 Activities Allowed or Unallowed, Allowable Costs/ Cost Principles – Indirect Costs Cluster: Research and Development Cluster Grantor: National Science Foundation Award Name: Various Award Year: Various Award Numbers: Various CFDA Numbers: Various Criteria or specific requirement: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States. Condition: BRIT applies its predetermined approved facilities and administrative rate when charging indirect costs to federal awards rather than the 10% de minimis indirect cost rate as allowed under Uniform Guidance. During our testing of 55 indirect costs, 2 transactions did not calculate the correct indirect cost. Questioned costs: None Context: See Condition. Cause: The exception was caused by management human error in typing in the indirect percentage or formula. Effect: Incorrect allocation caused two transactions to which the incorrect rate was applied caused to over claim $645 of indirect cost. Recommendation: We recommend that the money is repaid or credited back to NSF: 1. Provide documentation supporting that it has repaid or otherwise credited the $645 of overcharged indirect costs for which it has agreed to reimburse NSF. 2. We recommend BRIT strengthen its existing internal controls over the review of grant expense to ensure indirect cost rates change and to take appropriate steps to avoid claiming unallowable indirect costs on NSF awards. Once NSF determines that the recommendations have been adequately addressed and the $645 costs have been resolved, this finding should be closed. Views of responsible officials: Management agrees with the finding. Corrective action plan: Management will strengthen existing internal control over the review of monthly accounting worksheet to ensure the formulas and percentage for indirect cost are accurate before invoicing federal entity. Implementation date: March 31, 2024. Responsible Person(s): Keri Barfield, CFO.
2023-001 Activities Allowed or Unallowed, Allowable Costs/ Cost Principles – Indirect Costs Cluster: Research and Development Cluster Grantor: National Science Foundation Award Name: Various Award Year: Various Award Numbers: Various CFDA Numbers: Various Criteria or specific requirement: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States. Condition: BRIT applies its predetermined approved facilities and administrative rate when charging indirect costs to federal awards rather than the 10% de minimis indirect cost rate as allowed under Uniform Guidance. During our testing of 55 indirect costs, 2 transactions did not calculate the correct indirect cost. Questioned costs: None Context: See Condition. Cause: The exception was caused by management human error in typing in the indirect percentage or formula. Effect: Incorrect allocation caused two transactions to which the incorrect rate was applied caused to over claim $645 of indirect cost. Recommendation: We recommend that the money is repaid or credited back to NSF: 1. Provide documentation supporting that it has repaid or otherwise credited the $645 of overcharged indirect costs for which it has agreed to reimburse NSF. 2. We recommend BRIT strengthen its existing internal controls over the review of grant expense to ensure indirect cost rates change and to take appropriate steps to avoid claiming unallowable indirect costs on NSF awards. Once NSF determines that the recommendations have been adequately addressed and the $645 costs have been resolved, this finding should be closed. Views of responsible officials: Management agrees with the finding. Corrective action plan: Management will strengthen existing internal control over the review of monthly accounting worksheet to ensure the formulas and percentage for indirect cost are accurate before invoicing federal entity. Implementation date: March 31, 2024. Responsible Person(s): Keri Barfield, CFO.
2023-001 Activities Allowed or Unallowed, Allowable Costs/ Cost Principles – Indirect Costs Cluster: Research and Development Cluster Grantor: National Science Foundation Award Name: Various Award Year: Various Award Numbers: Various CFDA Numbers: Various Criteria or specific requirement: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States. Condition: BRIT applies its predetermined approved facilities and administrative rate when charging indirect costs to federal awards rather than the 10% de minimis indirect cost rate as allowed under Uniform Guidance. During our testing of 55 indirect costs, 2 transactions did not calculate the correct indirect cost. Questioned costs: None Context: See Condition. Cause: The exception was caused by management human error in typing in the indirect percentage or formula. Effect: Incorrect allocation caused two transactions to which the incorrect rate was applied caused to over claim $645 of indirect cost. Recommendation: We recommend that the money is repaid or credited back to NSF: 1. Provide documentation supporting that it has repaid or otherwise credited the $645 of overcharged indirect costs for which it has agreed to reimburse NSF. 2. We recommend BRIT strengthen its existing internal controls over the review of grant expense to ensure indirect cost rates change and to take appropriate steps to avoid claiming unallowable indirect costs on NSF awards. Once NSF determines that the recommendations have been adequately addressed and the $645 costs have been resolved, this finding should be closed. Views of responsible officials: Management agrees with the finding. Corrective action plan: Management will strengthen existing internal control over the review of monthly accounting worksheet to ensure the formulas and percentage for indirect cost are accurate before invoicing federal entity. Implementation date: March 31, 2024. Responsible Person(s): Keri Barfield, CFO.
2023-001 Activities Allowed or Unallowed, Allowable Costs/ Cost Principles – Indirect Costs Cluster: Research and Development Cluster Grantor: National Science Foundation Award Name: Various Award Year: Various Award Numbers: Various CFDA Numbers: Various Criteria or specific requirement: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States. Condition: BRIT applies its predetermined approved facilities and administrative rate when charging indirect costs to federal awards rather than the 10% de minimis indirect cost rate as allowed under Uniform Guidance. During our testing of 55 indirect costs, 2 transactions did not calculate the correct indirect cost. Questioned costs: None Context: See Condition. Cause: The exception was caused by management human error in typing in the indirect percentage or formula. Effect: Incorrect allocation caused two transactions to which the incorrect rate was applied caused to over claim $645 of indirect cost. Recommendation: We recommend that the money is repaid or credited back to NSF: 1. Provide documentation supporting that it has repaid or otherwise credited the $645 of overcharged indirect costs for which it has agreed to reimburse NSF. 2. We recommend BRIT strengthen its existing internal controls over the review of grant expense to ensure indirect cost rates change and to take appropriate steps to avoid claiming unallowable indirect costs on NSF awards. Once NSF determines that the recommendations have been adequately addressed and the $645 costs have been resolved, this finding should be closed. Views of responsible officials: Management agrees with the finding. Corrective action plan: Management will strengthen existing internal control over the review of monthly accounting worksheet to ensure the formulas and percentage for indirect cost are accurate before invoicing federal entity. Implementation date: March 31, 2024. Responsible Person(s): Keri Barfield, CFO.
2023-001 Activities Allowed or Unallowed, Allowable Costs/ Cost Principles – Indirect Costs Cluster: Research and Development Cluster Grantor: National Science Foundation Award Name: Various Award Year: Various Award Numbers: Various CFDA Numbers: Various Criteria or specific requirement: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States. Condition: BRIT applies its predetermined approved facilities and administrative rate when charging indirect costs to federal awards rather than the 10% de minimis indirect cost rate as allowed under Uniform Guidance. During our testing of 55 indirect costs, 2 transactions did not calculate the correct indirect cost. Questioned costs: None Context: See Condition. Cause: The exception was caused by management human error in typing in the indirect percentage or formula. Effect: Incorrect allocation caused two transactions to which the incorrect rate was applied caused to over claim $645 of indirect cost. Recommendation: We recommend that the money is repaid or credited back to NSF: 1. Provide documentation supporting that it has repaid or otherwise credited the $645 of overcharged indirect costs for which it has agreed to reimburse NSF. 2. We recommend BRIT strengthen its existing internal controls over the review of grant expense to ensure indirect cost rates change and to take appropriate steps to avoid claiming unallowable indirect costs on NSF awards. Once NSF determines that the recommendations have been adequately addressed and the $645 costs have been resolved, this finding should be closed. Views of responsible officials: Management agrees with the finding. Corrective action plan: Management will strengthen existing internal control over the review of monthly accounting worksheet to ensure the formulas and percentage for indirect cost are accurate before invoicing federal entity. Implementation date: March 31, 2024. Responsible Person(s): Keri Barfield, CFO.
2023-001 Activities Allowed or Unallowed, Allowable Costs/ Cost Principles – Indirect Costs Cluster: Research and Development Cluster Grantor: National Science Foundation Award Name: Various Award Year: Various Award Numbers: Various CFDA Numbers: Various Criteria or specific requirement: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States. Condition: BRIT applies its predetermined approved facilities and administrative rate when charging indirect costs to federal awards rather than the 10% de minimis indirect cost rate as allowed under Uniform Guidance. During our testing of 55 indirect costs, 2 transactions did not calculate the correct indirect cost. Questioned costs: None Context: See Condition. Cause: The exception was caused by management human error in typing in the indirect percentage or formula. Effect: Incorrect allocation caused two transactions to which the incorrect rate was applied caused to over claim $645 of indirect cost. Recommendation: We recommend that the money is repaid or credited back to NSF: 1. Provide documentation supporting that it has repaid or otherwise credited the $645 of overcharged indirect costs for which it has agreed to reimburse NSF. 2. We recommend BRIT strengthen its existing internal controls over the review of grant expense to ensure indirect cost rates change and to take appropriate steps to avoid claiming unallowable indirect costs on NSF awards. Once NSF determines that the recommendations have been adequately addressed and the $645 costs have been resolved, this finding should be closed. Views of responsible officials: Management agrees with the finding. Corrective action plan: Management will strengthen existing internal control over the review of monthly accounting worksheet to ensure the formulas and percentage for indirect cost are accurate before invoicing federal entity. Implementation date: March 31, 2024. Responsible Person(s): Keri Barfield, CFO.
2023-001 Activities Allowed or Unallowed, Allowable Costs/ Cost Principles – Indirect Costs Cluster: Research and Development Cluster Grantor: National Science Foundation Award Name: Various Award Year: Various Award Numbers: Various CFDA Numbers: Various Criteria or specific requirement: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States. Condition: BRIT applies its predetermined approved facilities and administrative rate when charging indirect costs to federal awards rather than the 10% de minimis indirect cost rate as allowed under Uniform Guidance. During our testing of 55 indirect costs, 2 transactions did not calculate the correct indirect cost. Questioned costs: None Context: See Condition. Cause: The exception was caused by management human error in typing in the indirect percentage or formula. Effect: Incorrect allocation caused two transactions to which the incorrect rate was applied caused to over claim $645 of indirect cost. Recommendation: We recommend that the money is repaid or credited back to NSF: 1. Provide documentation supporting that it has repaid or otherwise credited the $645 of overcharged indirect costs for which it has agreed to reimburse NSF. 2. We recommend BRIT strengthen its existing internal controls over the review of grant expense to ensure indirect cost rates change and to take appropriate steps to avoid claiming unallowable indirect costs on NSF awards. Once NSF determines that the recommendations have been adequately addressed and the $645 costs have been resolved, this finding should be closed. Views of responsible officials: Management agrees with the finding. Corrective action plan: Management will strengthen existing internal control over the review of monthly accounting worksheet to ensure the formulas and percentage for indirect cost are accurate before invoicing federal entity. Implementation date: March 31, 2024. Responsible Person(s): Keri Barfield, CFO.
2023-001 Activities Allowed or Unallowed, Allowable Costs/ Cost Principles – Indirect Costs Cluster: Research and Development Cluster Grantor: National Science Foundation Award Name: Various Award Year: Various Award Numbers: Various CFDA Numbers: Various Criteria or specific requirement: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States. Condition: BRIT applies its predetermined approved facilities and administrative rate when charging indirect costs to federal awards rather than the 10% de minimis indirect cost rate as allowed under Uniform Guidance. During our testing of 55 indirect costs, 2 transactions did not calculate the correct indirect cost. Questioned costs: None Context: See Condition. Cause: The exception was caused by management human error in typing in the indirect percentage or formula. Effect: Incorrect allocation caused two transactions to which the incorrect rate was applied caused to over claim $645 of indirect cost. Recommendation: We recommend that the money is repaid or credited back to NSF: 1. Provide documentation supporting that it has repaid or otherwise credited the $645 of overcharged indirect costs for which it has agreed to reimburse NSF. 2. We recommend BRIT strengthen its existing internal controls over the review of grant expense to ensure indirect cost rates change and to take appropriate steps to avoid claiming unallowable indirect costs on NSF awards. Once NSF determines that the recommendations have been adequately addressed and the $645 costs have been resolved, this finding should be closed. Views of responsible officials: Management agrees with the finding. Corrective action plan: Management will strengthen existing internal control over the review of monthly accounting worksheet to ensure the formulas and percentage for indirect cost are accurate before invoicing federal entity. Implementation date: March 31, 2024. Responsible Person(s): Keri Barfield, CFO.
2023-001 Activities Allowed or Unallowed, Allowable Costs/ Cost Principles – Indirect Costs Cluster: Research and Development Cluster Grantor: National Science Foundation Award Name: Various Award Year: Various Award Numbers: Various CFDA Numbers: Various Criteria or specific requirement: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States. Condition: BRIT applies its predetermined approved facilities and administrative rate when charging indirect costs to federal awards rather than the 10% de minimis indirect cost rate as allowed under Uniform Guidance. During our testing of 55 indirect costs, 2 transactions did not calculate the correct indirect cost. Questioned costs: None Context: See Condition. Cause: The exception was caused by management human error in typing in the indirect percentage or formula. Effect: Incorrect allocation caused two transactions to which the incorrect rate was applied caused to over claim $645 of indirect cost. Recommendation: We recommend that the money is repaid or credited back to NSF: 1. Provide documentation supporting that it has repaid or otherwise credited the $645 of overcharged indirect costs for which it has agreed to reimburse NSF. 2. We recommend BRIT strengthen its existing internal controls over the review of grant expense to ensure indirect cost rates change and to take appropriate steps to avoid claiming unallowable indirect costs on NSF awards. Once NSF determines that the recommendations have been adequately addressed and the $645 costs have been resolved, this finding should be closed. Views of responsible officials: Management agrees with the finding. Corrective action plan: Management will strengthen existing internal control over the review of monthly accounting worksheet to ensure the formulas and percentage for indirect cost are accurate before invoicing federal entity. Implementation date: March 31, 2024. Responsible Person(s): Keri Barfield, CFO.
Finding 2023-001 – Reporting Federal Programs AL No. 93.914 – HIV Emergency Relief Project Grants and AL No. 93.498 Prover Relief Fund and American Rescue Plan (ARP) Rural Distribution. Pass-through Entities Hillsborough County for AL No. 93.914 and n/a for AL No. 93.498 Federal Agency U.S. Department of Health and Human Services Federal Award Number and Award Year RW1-17, award year 3/1/2022 – 2/29/2024 for AL No. 93.914 None, award year 1/1/2022 – 12/31/2022 for AL No. 93.498 Criteria The 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. BAYCARE HEALTH SYSTEM, INC. AND AFFILIATES Schedule of Findings and Questioned Costs Year ended December 31, 2023 77 Condition and Context For AL No. 93.914, BayCare included expenditures related to February 2024 dates of service on the Schedule of Expenditures of Federal Awards (SEFA). An adjustment to the final SEFA of $152,329 was required. For AL No. 93.498, BayCare initially excluded Period 5 Provider Relief Funds on the SEFA. An adjustment to the final SEFA of $9,234,533 was required. Possible Cause and Effect For AL No. 93.914, in preparing the SEFA, BayCare exported the year to date patient data which included all patients served under this program. Certain manipulation of the data is needed to include only those dates of service in 2023. In doing so, the client included dates of service in February 2024 which overstated the SEFA expenditures. For AL No. 93.498, per the compliance supplement, Period 5 and 6 payments received during 2022 were to be included on the 2023 SEFA. Due to an internal miscommunication within the BayCare team, these funds were initially excluded and thus required an adjustment to the SEFA. Questioned Costs None Statistically Valid Sample Not applicable Repeat of Prior Finding No Recommendations Management should enhance its process to include a supervisory review of the SEFA, ensuring its completeness and accuracy. View of Responsible Official Management agrees with the noted finding.
Finding 2023-001 – Reporting Federal Programs AL No. 93.914 – HIV Emergency Relief Project Grants and AL No. 93.498 Prover Relief Fund and American Rescue Plan (ARP) Rural Distribution. Pass-through Entities Hillsborough County for AL No. 93.914 and n/a for AL No. 93.498 Federal Agency U.S. Department of Health and Human Services Federal Award Number and Award Year RW1-17, award year 3/1/2022 – 2/29/2024 for AL No. 93.914 None, award year 1/1/2022 – 12/31/2022 for AL No. 93.498 Criteria The 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. BAYCARE HEALTH SYSTEM, INC. AND AFFILIATES Schedule of Findings and Questioned Costs Year ended December 31, 2023 77 Condition and Context For AL No. 93.914, BayCare included expenditures related to February 2024 dates of service on the Schedule of Expenditures of Federal Awards (SEFA). An adjustment to the final SEFA of $152,329 was required. For AL No. 93.498, BayCare initially excluded Period 5 Provider Relief Funds on the SEFA. An adjustment to the final SEFA of $9,234,533 was required. Possible Cause and Effect For AL No. 93.914, in preparing the SEFA, BayCare exported the year to date patient data which included all patients served under this program. Certain manipulation of the data is needed to include only those dates of service in 2023. In doing so, the client included dates of service in February 2024 which overstated the SEFA expenditures. For AL No. 93.498, per the compliance supplement, Period 5 and 6 payments received during 2022 were to be included on the 2023 SEFA. Due to an internal miscommunication within the BayCare team, these funds were initially excluded and thus required an adjustment to the SEFA. Questioned Costs None Statistically Valid Sample Not applicable Repeat of Prior Finding No Recommendations Management should enhance its process to include a supervisory review of the SEFA, ensuring its completeness and accuracy. View of Responsible Official Management agrees with the noted finding.
Finding 2023-001 – Reporting Federal Programs AL No. 93.914 – HIV Emergency Relief Project Grants and AL No. 93.498 Prover Relief Fund and American Rescue Plan (ARP) Rural Distribution. Pass-through Entities Hillsborough County for AL No. 93.914 and n/a for AL No. 93.498 Federal Agency U.S. Department of Health and Human Services Federal Award Number and Award Year RW1-17, award year 3/1/2022 – 2/29/2024 for AL No. 93.914 None, award year 1/1/2022 – 12/31/2022 for AL No. 93.498 Criteria The 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. BAYCARE HEALTH SYSTEM, INC. AND AFFILIATES Schedule of Findings and Questioned Costs Year ended December 31, 2023 77 Condition and Context For AL No. 93.914, BayCare included expenditures related to February 2024 dates of service on the Schedule of Expenditures of Federal Awards (SEFA). An adjustment to the final SEFA of $152,329 was required. For AL No. 93.498, BayCare initially excluded Period 5 Provider Relief Funds on the SEFA. An adjustment to the final SEFA of $9,234,533 was required. Possible Cause and Effect For AL No. 93.914, in preparing the SEFA, BayCare exported the year to date patient data which included all patients served under this program. Certain manipulation of the data is needed to include only those dates of service in 2023. In doing so, the client included dates of service in February 2024 which overstated the SEFA expenditures. For AL No. 93.498, per the compliance supplement, Period 5 and 6 payments received during 2022 were to be included on the 2023 SEFA. Due to an internal miscommunication within the BayCare team, these funds were initially excluded and thus required an adjustment to the SEFA. Questioned Costs None Statistically Valid Sample Not applicable Repeat of Prior Finding No Recommendations Management should enhance its process to include a supervisory review of the SEFA, ensuring its completeness and accuracy. View of Responsible Official Management agrees with the noted finding.
Finding 2023-001 – Reporting Federal Programs AL No. 93.914 – HIV Emergency Relief Project Grants and AL No. 93.498 Prover Relief Fund and American Rescue Plan (ARP) Rural Distribution. Pass-through Entities Hillsborough County for AL No. 93.914 and n/a for AL No. 93.498 Federal Agency U.S. Department of Health and Human Services Federal Award Number and Award Year RW1-17, award year 3/1/2022 – 2/29/2024 for AL No. 93.914 None, award year 1/1/2022 – 12/31/2022 for AL No. 93.498 Criteria The 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. BAYCARE HEALTH SYSTEM, INC. AND AFFILIATES Schedule of Findings and Questioned Costs Year ended December 31, 2023 77 Condition and Context For AL No. 93.914, BayCare included expenditures related to February 2024 dates of service on the Schedule of Expenditures of Federal Awards (SEFA). An adjustment to the final SEFA of $152,329 was required. For AL No. 93.498, BayCare initially excluded Period 5 Provider Relief Funds on the SEFA. An adjustment to the final SEFA of $9,234,533 was required. Possible Cause and Effect For AL No. 93.914, in preparing the SEFA, BayCare exported the year to date patient data which included all patients served under this program. Certain manipulation of the data is needed to include only those dates of service in 2023. In doing so, the client included dates of service in February 2024 which overstated the SEFA expenditures. For AL No. 93.498, per the compliance supplement, Period 5 and 6 payments received during 2022 were to be included on the 2023 SEFA. Due to an internal miscommunication within the BayCare team, these funds were initially excluded and thus required an adjustment to the SEFA. Questioned Costs None Statistically Valid Sample Not applicable Repeat of Prior Finding No Recommendations Management should enhance its process to include a supervisory review of the SEFA, ensuring its completeness and accuracy. View of Responsible Official Management agrees with the noted finding.
Finding 2023-001 – Reporting Federal Programs AL No. 93.914 – HIV Emergency Relief Project Grants and AL No. 93.498 Prover Relief Fund and American Rescue Plan (ARP) Rural Distribution. Pass-through Entities Hillsborough County for AL No. 93.914 and n/a for AL No. 93.498 Federal Agency U.S. Department of Health and Human Services Federal Award Number and Award Year RW1-17, award year 3/1/2022 – 2/29/2024 for AL No. 93.914 None, award year 1/1/2022 – 12/31/2022 for AL No. 93.498 Criteria The 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. BAYCARE HEALTH SYSTEM, INC. AND AFFILIATES Schedule of Findings and Questioned Costs Year ended December 31, 2023 77 Condition and Context For AL No. 93.914, BayCare included expenditures related to February 2024 dates of service on the Schedule of Expenditures of Federal Awards (SEFA). An adjustment to the final SEFA of $152,329 was required. For AL No. 93.498, BayCare initially excluded Period 5 Provider Relief Funds on the SEFA. An adjustment to the final SEFA of $9,234,533 was required. Possible Cause and Effect For AL No. 93.914, in preparing the SEFA, BayCare exported the year to date patient data which included all patients served under this program. Certain manipulation of the data is needed to include only those dates of service in 2023. In doing so, the client included dates of service in February 2024 which overstated the SEFA expenditures. For AL No. 93.498, per the compliance supplement, Period 5 and 6 payments received during 2022 were to be included on the 2023 SEFA. Due to an internal miscommunication within the BayCare team, these funds were initially excluded and thus required an adjustment to the SEFA. Questioned Costs None Statistically Valid Sample Not applicable Repeat of Prior Finding No Recommendations Management should enhance its process to include a supervisory review of the SEFA, ensuring its completeness and accuracy. View of Responsible Official Management agrees with the noted finding.
Finding 2023-001 – Reporting Federal Programs AL No. 93.914 – HIV Emergency Relief Project Grants and AL No. 93.498 Prover Relief Fund and American Rescue Plan (ARP) Rural Distribution. Pass-through Entities Hillsborough County for AL No. 93.914 and n/a for AL No. 93.498 Federal Agency U.S. Department of Health and Human Services Federal Award Number and Award Year RW1-17, award year 3/1/2022 – 2/29/2024 for AL No. 93.914 None, award year 1/1/2022 – 12/31/2022 for AL No. 93.498 Criteria The 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. BAYCARE HEALTH SYSTEM, INC. AND AFFILIATES Schedule of Findings and Questioned Costs Year ended December 31, 2023 77 Condition and Context For AL No. 93.914, BayCare included expenditures related to February 2024 dates of service on the Schedule of Expenditures of Federal Awards (SEFA). An adjustment to the final SEFA of $152,329 was required. For AL No. 93.498, BayCare initially excluded Period 5 Provider Relief Funds on the SEFA. An adjustment to the final SEFA of $9,234,533 was required. Possible Cause and Effect For AL No. 93.914, in preparing the SEFA, BayCare exported the year to date patient data which included all patients served under this program. Certain manipulation of the data is needed to include only those dates of service in 2023. In doing so, the client included dates of service in February 2024 which overstated the SEFA expenditures. For AL No. 93.498, per the compliance supplement, Period 5 and 6 payments received during 2022 were to be included on the 2023 SEFA. Due to an internal miscommunication within the BayCare team, these funds were initially excluded and thus required an adjustment to the SEFA. Questioned Costs None Statistically Valid Sample Not applicable Repeat of Prior Finding No Recommendations Management should enhance its process to include a supervisory review of the SEFA, ensuring its completeness and accuracy. View of Responsible Official Management agrees with the noted finding.
Finding 2023-001 – Reporting Federal Programs AL No. 93.914 – HIV Emergency Relief Project Grants and AL No. 93.498 Prover Relief Fund and American Rescue Plan (ARP) Rural Distribution. Pass-through Entities Hillsborough County for AL No. 93.914 and n/a for AL No. 93.498 Federal Agency U.S. Department of Health and Human Services Federal Award Number and Award Year RW1-17, award year 3/1/2022 – 2/29/2024 for AL No. 93.914 None, award year 1/1/2022 – 12/31/2022 for AL No. 93.498 Criteria The 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. BAYCARE HEALTH SYSTEM, INC. AND AFFILIATES Schedule of Findings and Questioned Costs Year ended December 31, 2023 77 Condition and Context For AL No. 93.914, BayCare included expenditures related to February 2024 dates of service on the Schedule of Expenditures of Federal Awards (SEFA). An adjustment to the final SEFA of $152,329 was required. For AL No. 93.498, BayCare initially excluded Period 5 Provider Relief Funds on the SEFA. An adjustment to the final SEFA of $9,234,533 was required. Possible Cause and Effect For AL No. 93.914, in preparing the SEFA, BayCare exported the year to date patient data which included all patients served under this program. Certain manipulation of the data is needed to include only those dates of service in 2023. In doing so, the client included dates of service in February 2024 which overstated the SEFA expenditures. For AL No. 93.498, per the compliance supplement, Period 5 and 6 payments received during 2022 were to be included on the 2023 SEFA. Due to an internal miscommunication within the BayCare team, these funds were initially excluded and thus required an adjustment to the SEFA. Questioned Costs None Statistically Valid Sample Not applicable Repeat of Prior Finding No Recommendations Management should enhance its process to include a supervisory review of the SEFA, ensuring its completeness and accuracy. View of Responsible Official Management agrees with the noted finding.
Finding 2023-001 – Reporting Federal Programs AL No. 93.914 – HIV Emergency Relief Project Grants and AL No. 93.498 Prover Relief Fund and American Rescue Plan (ARP) Rural Distribution. Pass-through Entities Hillsborough County for AL No. 93.914 and n/a for AL No. 93.498 Federal Agency U.S. Department of Health and Human Services Federal Award Number and Award Year RW1-17, award year 3/1/2022 – 2/29/2024 for AL No. 93.914 None, award year 1/1/2022 – 12/31/2022 for AL No. 93.498 Criteria The 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. BAYCARE HEALTH SYSTEM, INC. AND AFFILIATES Schedule of Findings and Questioned Costs Year ended December 31, 2023 77 Condition and Context For AL No. 93.914, BayCare included expenditures related to February 2024 dates of service on the Schedule of Expenditures of Federal Awards (SEFA). An adjustment to the final SEFA of $152,329 was required. For AL No. 93.498, BayCare initially excluded Period 5 Provider Relief Funds on the SEFA. An adjustment to the final SEFA of $9,234,533 was required. Possible Cause and Effect For AL No. 93.914, in preparing the SEFA, BayCare exported the year to date patient data which included all patients served under this program. Certain manipulation of the data is needed to include only those dates of service in 2023. In doing so, the client included dates of service in February 2024 which overstated the SEFA expenditures. For AL No. 93.498, per the compliance supplement, Period 5 and 6 payments received during 2022 were to be included on the 2023 SEFA. Due to an internal miscommunication within the BayCare team, these funds were initially excluded and thus required an adjustment to the SEFA. Questioned Costs None Statistically Valid Sample Not applicable Repeat of Prior Finding No Recommendations Management should enhance its process to include a supervisory review of the SEFA, ensuring its completeness and accuracy. View of Responsible Official Management agrees with the noted finding.
Finding 2023-001: Allowable Costs/Cost Principles, Reporting, and Special Tests and Provisions U.S. Department of Commerce Economic Development Cluster Economic Adjustment Assistance ALN 11.307 Condition: There were not adequate internal controls in place to ensure that the loan monitoring procedures of the submitted ‘Revolving Loan Fund Plan’ (RLF Plan) were being complied with including obtaining financial statements and federal income tax returns, insurance renewals, and performing site visits. We also noted that there were not adequate internal controls to identify and correct material misstatements in key line items in the Form ED-209, Revolving Loan Fund Financial Report (report) for the Legacy or Cares Revolving Loan Funds or submit the reports timely. The key line items contain critical information and should reconcile to the Authority's financial documents and account balances. Additionally, one revolving phase loan disbursement was selected to review the standard loan documents and it was noted that the required application was not available for review. Criteria: Pursuant to 2 CFR section 200.303(a), the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Revolving Loan Fund (RLF) recipients must administer RLFs in accordance with an RLF Plan approved by EDA. Pursuant to 13 CFR 307.14 (a) All RLF Recipients, including those receiving Recapitalization Grants for existing RLFs, must complete and submit an RLF report, using Form ED-209, in a format and at a frequency as required by EDA. Pursuant to 13 CFR 307.14 (b) All RLF Recipients must certify as part of the RLF report to EDA that the RLF is operating in accordance with the applicable RLF Plan and that the information provided is complete and accurate. Pursuant to 13 CFR 307.11 (a) (1) (ii) the standard loan documents must include the loan application. Cause: The current internal control system in place was not adequate to ensure: loan monitoring procedures were followed in accordance with the RLF Plan approved by the EDA, reports were completed accurately and timely and the required loan application was maintained. Effect: The loan monitoring procedures were not followed and therefore required information was not obtained, the reports were not filed timely and do not contain accurate information and the loan application was not maintained. Question Costs: None Identification as a Repeat Finding: This is a repeat finding of 2022-002. Recommendation: We have the following recommendations: 1) the Authority should implement procedures to ensure that the RLF program is administered in accordance with the plan approved by the EDA, 2) the Authority should implement procedures to ensure that required reports are reviewed for accuracy prior to being submitted by the due date, and 3) the Authority should have internal controls in place to review the standard loan documentation to ensure all documentation is completed, submitted, and retained. View of Responsible Official: Management agrees with the finding. See separate corrective action plan.
Finding 2023-001: Allowable Costs/Cost Principles, Reporting, and Special Tests and Provisions U.S. Department of Commerce Economic Development Cluster Economic Adjustment Assistance ALN 11.307 Condition: There were not adequate internal controls in place to ensure that the loan monitoring procedures of the submitted ‘Revolving Loan Fund Plan’ (RLF Plan) were being complied with including obtaining financial statements and federal income tax returns, insurance renewals, and performing site visits. We also noted that there were not adequate internal controls to identify and correct material misstatements in key line items in the Form ED-209, Revolving Loan Fund Financial Report (report) for the Legacy or Cares Revolving Loan Funds or submit the reports timely. The key line items contain critical information and should reconcile to the Authority's financial documents and account balances. Additionally, one revolving phase loan disbursement was selected to review the standard loan documents and it was noted that the required application was not available for review. Criteria: Pursuant to 2 CFR section 200.303(a), the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Revolving Loan Fund (RLF) recipients must administer RLFs in accordance with an RLF Plan approved by EDA. Pursuant to 13 CFR 307.14 (a) All RLF Recipients, including those receiving Recapitalization Grants for existing RLFs, must complete and submit an RLF report, using Form ED-209, in a format and at a frequency as required by EDA. Pursuant to 13 CFR 307.14 (b) All RLF Recipients must certify as part of the RLF report to EDA that the RLF is operating in accordance with the applicable RLF Plan and that the information provided is complete and accurate. Pursuant to 13 CFR 307.11 (a) (1) (ii) the standard loan documents must include the loan application. Cause: The current internal control system in place was not adequate to ensure: loan monitoring procedures were followed in accordance with the RLF Plan approved by the EDA, reports were completed accurately and timely and the required loan application was maintained. Effect: The loan monitoring procedures were not followed and therefore required information was not obtained, the reports were not filed timely and do not contain accurate information and the loan application was not maintained. Question Costs: None Identification as a Repeat Finding: This is a repeat finding of 2022-002. Recommendation: We have the following recommendations: 1) the Authority should implement procedures to ensure that the RLF program is administered in accordance with the plan approved by the EDA, 2) the Authority should implement procedures to ensure that required reports are reviewed for accuracy prior to being submitted by the due date, and 3) the Authority should have internal controls in place to review the standard loan documentation to ensure all documentation is completed, submitted, and retained. View of Responsible Official: Management agrees with the finding. See separate corrective action plan.
Identification of the federal program: Federal Agency: United States Department of Health and Human Services, Health Resources and Services Administration (HRSA) Pass-Through Entities: North Dakota Department of Health, South Dakota Department of Health and Minnesota Department of Health Assistance Listing: 93.155; COVID-19 Rural Health Research Centers Award Numbers: Various Award Year: FY 2021 – 2023 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with 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 Uniform Guidance 2 CFR Section 200.213 states, “Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR Part 180. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended or otherwise excluded from or ineligible for participation in Federal assistance programs or activities”. In addition, Uniform Guidance 2 CFR Section 200.320 (c) states: “There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Further, Uniform Guidance 2 CFR Section 200.320(a)(2) states: Small purchases – “The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity.” Condition: We noted the following matters during our testing of Procurement and Suspension and Debarment compliance requirements: • A third-party vendor performed the suspension and debarment validation process for Sanford. The third-party vendor does not have a SOC 1 (System and Organization Controls) Report. For a portion of the year, Sanford relied on the suspension and debarment checks performed by the third-party vendor for results concluding no match without completing a validation control to ensure the results provided by the third-party vendor were accurate. • We noted instances where the vendor screening for suspension and debarment was not performed prior to setting up the vendor in the System and procuring the goods/services. Section III—Federal Award Findings and Questioned Costs (continued) • For certain procurement transactions tested, we noted Sanford did not adhere to the compliance requirements and did not follow its procurement policy by maintaining documentation related to cost/price analysis or sole-source procurement and completing the sole-source justification forms timely. Cause: Sanford utilizes a third-party vendor to perform suspension and debarment checks on its vendors, both during the vendor setup process as well as ongoing monitoring of active vendors. Sanford did not add an additional validation control until August 2023 to ensure that the suspension and debarment checks performed by the third-party vendor aligned with the governmental suspension and debarment database when the search resulted in no match. In addition, Sanford did not follow its procurement policy and perform the vendor screening for suspension and debarment prior to setting up the vendor in the system and transacting with the vendors. Furthermore, Sanford, prior to entering into the procurement transaction, did not complete the sole-source justification forms, or maintain documentation to support the sole-sourced procurements for those procurement transactions that exceeded the small purchase threshold. Effect or potential effect: Sanford’s screening for suspension and debarment through the third-party vendor results may not be accurate for the period January 1, 2023 through July 31, 2023. Further, by not performing the vendor screening for suspension and debarment prior to transacting with the vendor, Sanford could have potentially entered into a business transaction with suspended or debarred parties. Sanford did not comply with the federal procurement requirements and its procurement policy by not maintaining adequate documentation to support the cost/price analysis or sole sourced vendor selections in addition to not timely completing the sole source justification forms. Section III—Federal Award Findings and Questioned Costs (continued) Questioned costs: $307,249 determined as the amount of the procurement expenditures included in the Schedule of Expenditures of Federal Awards for two procurement transactions that had inadequate documentation to justify sole source selection. Context: To ensure compliance with 2 CFR Section 200.213, Sanford conducts both preventive and detective controls in its vendor setup and monitoring process to ensure new vendors and active vendors are not suspended or debarred. A consistent vendor setup process is followed for each new vendor that Sanford transacts with, regardless of whether the vendor transactions are funded through federal grant funding or through other sources. To prevent a suspended or debarred vendor from being added as a new vendor, the vendor is checked against the suspension and debarment database electronically before completion of the vendor setup. Subsequent to vendor setup, Sanford also monitors the status of its vendors to ensure the vendor’s status has not changed. We selected 25 new vendors to verify that the suspension and debarment screening was performed and performed timely. We noted for 3 of the 25 vendors, the suspension and debarment screening was not performed prior to setting up the vendor in the system and for 1 of these vendors, Sanford had entered into a transaction prior to performing the suspension and debarment screening. We selected 8 procurement transactions that exceeded the small purchase threshold. Of the 8 transactions, 4 transactions did not follow the federal procurement standards and Sanford’s procurement policy which requires sole source documentation be completed prior to procuring the items. Additionally, for 2 of these 4 transactions, Sanford did not have sufficient documentation maintained to support the cost/price analysis performed or justification to support the sole source selection of the vendors. Total federal expenditures subject to suspension and debarment is $2,870,421, and federal expenditures exceeding the micro purchase threshold is $2,298,733. Total federal expenditures under the program, as reported on the SEFA, is $2,870,421. Identification as a repeat finding, if applicable: This finding is a repeat of Finding 2022-001 in the prior year. Recommendation: Management should ensure that the suspension and debarment screening is performed prior to entering into the transaction with the vendor and also ensure that it follows the procurement policy to verify suspension and debarment of the vendor prior to setting up the vendor in the system. In addition, Management should ensure that any sole sourced purchases or when quotes are obtained, that those be documented prior to entering into the procurement transaction. Views of responsible officials: Sanford continues to document periodic validation of the suspension and debarment search results performed by the third-party vendor for vendor searches that yield no suspension and debarment match. Additionally, as part of the periodic validation, Sanford will include a validation to ensure a suspension and debarment search is completed prior to setting the vendor up in the system. Sanford will re-educate appropriate staff regarding the process to verify a suspension and debarment search is completed prior to setting up the vendor in the system. Sanford’s preventative and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being paid to vendors that are suspended or debarred. Sanford’s preventive and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being utilized for items that do not adhere to the procurement standards. Sanford will re-educate applicable parties and enhance its procedural documentation regarding procurement. Sanford will implement a monthly review process of federal funds utilized for procurement.
Identification of the federal program: Federal Agency: United States Department of Health and Human Services, Health Resources and Services Administration (HRSA) Pass-Through Entities: North Dakota Department of Health, South Dakota Department of Health and Minnesota Department of Health Assistance Listing: 93.155; COVID-19 Rural Health Research Centers Award Numbers: Various Award Year: FY 2021 – 2023 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with 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 Uniform Guidance 2 CFR Section 200.213 states, “Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR Part 180. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended or otherwise excluded from or ineligible for participation in Federal assistance programs or activities”. In addition, Uniform Guidance 2 CFR Section 200.320 (c) states: “There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Further, Uniform Guidance 2 CFR Section 200.320(a)(2) states: Small purchases – “The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity.” Condition: We noted the following matters during our testing of Procurement and Suspension and Debarment compliance requirements: • A third-party vendor performed the suspension and debarment validation process for Sanford. The third-party vendor does not have a SOC 1 (System and Organization Controls) Report. For a portion of the year, Sanford relied on the suspension and debarment checks performed by the third-party vendor for results concluding no match without completing a validation control to ensure the results provided by the third-party vendor were accurate. • We noted instances where the vendor screening for suspension and debarment was not performed prior to setting up the vendor in the System and procuring the goods/services. Section III—Federal Award Findings and Questioned Costs (continued) • For certain procurement transactions tested, we noted Sanford did not adhere to the compliance requirements and did not follow its procurement policy by maintaining documentation related to cost/price analysis or sole-source procurement and completing the sole-source justification forms timely. Cause: Sanford utilizes a third-party vendor to perform suspension and debarment checks on its vendors, both during the vendor setup process as well as ongoing monitoring of active vendors. Sanford did not add an additional validation control until August 2023 to ensure that the suspension and debarment checks performed by the third-party vendor aligned with the governmental suspension and debarment database when the search resulted in no match. In addition, Sanford did not follow its procurement policy and perform the vendor screening for suspension and debarment prior to setting up the vendor in the system and transacting with the vendors. Furthermore, Sanford, prior to entering into the procurement transaction, did not complete the sole-source justification forms, or maintain documentation to support the sole-sourced procurements for those procurement transactions that exceeded the small purchase threshold. Effect or potential effect: Sanford’s screening for suspension and debarment through the third-party vendor results may not be accurate for the period January 1, 2023 through July 31, 2023. Further, by not performing the vendor screening for suspension and debarment prior to transacting with the vendor, Sanford could have potentially entered into a business transaction with suspended or debarred parties. Sanford did not comply with the federal procurement requirements and its procurement policy by not maintaining adequate documentation to support the cost/price analysis or sole sourced vendor selections in addition to not timely completing the sole source justification forms. Section III—Federal Award Findings and Questioned Costs (continued) Questioned costs: $307,249 determined as the amount of the procurement expenditures included in the Schedule of Expenditures of Federal Awards for two procurement transactions that had inadequate documentation to justify sole source selection. Context: To ensure compliance with 2 CFR Section 200.213, Sanford conducts both preventive and detective controls in its vendor setup and monitoring process to ensure new vendors and active vendors are not suspended or debarred. A consistent vendor setup process is followed for each new vendor that Sanford transacts with, regardless of whether the vendor transactions are funded through federal grant funding or through other sources. To prevent a suspended or debarred vendor from being added as a new vendor, the vendor is checked against the suspension and debarment database electronically before completion of the vendor setup. Subsequent to vendor setup, Sanford also monitors the status of its vendors to ensure the vendor’s status has not changed. We selected 25 new vendors to verify that the suspension and debarment screening was performed and performed timely. We noted for 3 of the 25 vendors, the suspension and debarment screening was not performed prior to setting up the vendor in the system and for 1 of these vendors, Sanford had entered into a transaction prior to performing the suspension and debarment screening. We selected 8 procurement transactions that exceeded the small purchase threshold. Of the 8 transactions, 4 transactions did not follow the federal procurement standards and Sanford’s procurement policy which requires sole source documentation be completed prior to procuring the items. Additionally, for 2 of these 4 transactions, Sanford did not have sufficient documentation maintained to support the cost/price analysis performed or justification to support the sole source selection of the vendors. Total federal expenditures subject to suspension and debarment is $2,870,421, and federal expenditures exceeding the micro purchase threshold is $2,298,733. Total federal expenditures under the program, as reported on the SEFA, is $2,870,421. Identification as a repeat finding, if applicable: This finding is a repeat of Finding 2022-001 in the prior year. Recommendation: Management should ensure that the suspension and debarment screening is performed prior to entering into the transaction with the vendor and also ensure that it follows the procurement policy to verify suspension and debarment of the vendor prior to setting up the vendor in the system. In addition, Management should ensure that any sole sourced purchases or when quotes are obtained, that those be documented prior to entering into the procurement transaction. Views of responsible officials: Sanford continues to document periodic validation of the suspension and debarment search results performed by the third-party vendor for vendor searches that yield no suspension and debarment match. Additionally, as part of the periodic validation, Sanford will include a validation to ensure a suspension and debarment search is completed prior to setting the vendor up in the system. Sanford will re-educate appropriate staff regarding the process to verify a suspension and debarment search is completed prior to setting up the vendor in the system. Sanford’s preventative and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being paid to vendors that are suspended or debarred. Sanford’s preventive and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being utilized for items that do not adhere to the procurement standards. Sanford will re-educate applicable parties and enhance its procedural documentation regarding procurement. Sanford will implement a monthly review process of federal funds utilized for procurement.
Identification of the federal program: Federal Agency: United States Department of Health and Human Services, Health Resources and Services Administration (HRSA) Pass-Through Entities: North Dakota Department of Health, South Dakota Department of Health and Minnesota Department of Health Assistance Listing: 93.155; COVID-19 Rural Health Research Centers Award Numbers: Various Award Year: FY 2021 – 2023 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with 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 Uniform Guidance 2 CFR Section 200.213 states, “Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR Part 180. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended or otherwise excluded from or ineligible for participation in Federal assistance programs or activities”. In addition, Uniform Guidance 2 CFR Section 200.320 (c) states: “There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Further, Uniform Guidance 2 CFR Section 200.320(a)(2) states: Small purchases – “The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity.” Condition: We noted the following matters during our testing of Procurement and Suspension and Debarment compliance requirements: • A third-party vendor performed the suspension and debarment validation process for Sanford. The third-party vendor does not have a SOC 1 (System and Organization Controls) Report. For a portion of the year, Sanford relied on the suspension and debarment checks performed by the third-party vendor for results concluding no match without completing a validation control to ensure the results provided by the third-party vendor were accurate. • We noted instances where the vendor screening for suspension and debarment was not performed prior to setting up the vendor in the System and procuring the goods/services. Section III—Federal Award Findings and Questioned Costs (continued) • For certain procurement transactions tested, we noted Sanford did not adhere to the compliance requirements and did not follow its procurement policy by maintaining documentation related to cost/price analysis or sole-source procurement and completing the sole-source justification forms timely. Cause: Sanford utilizes a third-party vendor to perform suspension and debarment checks on its vendors, both during the vendor setup process as well as ongoing monitoring of active vendors. Sanford did not add an additional validation control until August 2023 to ensure that the suspension and debarment checks performed by the third-party vendor aligned with the governmental suspension and debarment database when the search resulted in no match. In addition, Sanford did not follow its procurement policy and perform the vendor screening for suspension and debarment prior to setting up the vendor in the system and transacting with the vendors. Furthermore, Sanford, prior to entering into the procurement transaction, did not complete the sole-source justification forms, or maintain documentation to support the sole-sourced procurements for those procurement transactions that exceeded the small purchase threshold. Effect or potential effect: Sanford’s screening for suspension and debarment through the third-party vendor results may not be accurate for the period January 1, 2023 through July 31, 2023. Further, by not performing the vendor screening for suspension and debarment prior to transacting with the vendor, Sanford could have potentially entered into a business transaction with suspended or debarred parties. Sanford did not comply with the federal procurement requirements and its procurement policy by not maintaining adequate documentation to support the cost/price analysis or sole sourced vendor selections in addition to not timely completing the sole source justification forms. Section III—Federal Award Findings and Questioned Costs (continued) Questioned costs: $307,249 determined as the amount of the procurement expenditures included in the Schedule of Expenditures of Federal Awards for two procurement transactions that had inadequate documentation to justify sole source selection. Context: To ensure compliance with 2 CFR Section 200.213, Sanford conducts both preventive and detective controls in its vendor setup and monitoring process to ensure new vendors and active vendors are not suspended or debarred. A consistent vendor setup process is followed for each new vendor that Sanford transacts with, regardless of whether the vendor transactions are funded through federal grant funding or through other sources. To prevent a suspended or debarred vendor from being added as a new vendor, the vendor is checked against the suspension and debarment database electronically before completion of the vendor setup. Subsequent to vendor setup, Sanford also monitors the status of its vendors to ensure the vendor’s status has not changed. We selected 25 new vendors to verify that the suspension and debarment screening was performed and performed timely. We noted for 3 of the 25 vendors, the suspension and debarment screening was not performed prior to setting up the vendor in the system and for 1 of these vendors, Sanford had entered into a transaction prior to performing the suspension and debarment screening. We selected 8 procurement transactions that exceeded the small purchase threshold. Of the 8 transactions, 4 transactions did not follow the federal procurement standards and Sanford’s procurement policy which requires sole source documentation be completed prior to procuring the items. Additionally, for 2 of these 4 transactions, Sanford did not have sufficient documentation maintained to support the cost/price analysis performed or justification to support the sole source selection of the vendors. Total federal expenditures subject to suspension and debarment is $2,870,421, and federal expenditures exceeding the micro purchase threshold is $2,298,733. Total federal expenditures under the program, as reported on the SEFA, is $2,870,421. Identification as a repeat finding, if applicable: This finding is a repeat of Finding 2022-001 in the prior year. Recommendation: Management should ensure that the suspension and debarment screening is performed prior to entering into the transaction with the vendor and also ensure that it follows the procurement policy to verify suspension and debarment of the vendor prior to setting up the vendor in the system. In addition, Management should ensure that any sole sourced purchases or when quotes are obtained, that those be documented prior to entering into the procurement transaction. Views of responsible officials: Sanford continues to document periodic validation of the suspension and debarment search results performed by the third-party vendor for vendor searches that yield no suspension and debarment match. Additionally, as part of the periodic validation, Sanford will include a validation to ensure a suspension and debarment search is completed prior to setting the vendor up in the system. Sanford will re-educate appropriate staff regarding the process to verify a suspension and debarment search is completed prior to setting up the vendor in the system. Sanford’s preventative and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being paid to vendors that are suspended or debarred. Sanford’s preventive and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being utilized for items that do not adhere to the procurement standards. Sanford will re-educate applicable parties and enhance its procedural documentation regarding procurement. Sanford will implement a monthly review process of federal funds utilized for procurement.
Identification of the federal program: Federal Agency: United States Department of Health and Human Services, Health Resources and Services Administration (HRSA) Pass-Through Entities: North Dakota Department of Health, South Dakota Department of Health and Minnesota Department of Health Assistance Listing: 93.155; COVID-19 Rural Health Research Centers Award Numbers: Various Award Year: FY 2021 – 2023 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with 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 Uniform Guidance 2 CFR Section 200.213 states, “Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR Part 180. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended or otherwise excluded from or ineligible for participation in Federal assistance programs or activities”. In addition, Uniform Guidance 2 CFR Section 200.320 (c) states: “There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Further, Uniform Guidance 2 CFR Section 200.320(a)(2) states: Small purchases – “The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity.” Condition: We noted the following matters during our testing of Procurement and Suspension and Debarment compliance requirements: • A third-party vendor performed the suspension and debarment validation process for Sanford. The third-party vendor does not have a SOC 1 (System and Organization Controls) Report. For a portion of the year, Sanford relied on the suspension and debarment checks performed by the third-party vendor for results concluding no match without completing a validation control to ensure the results provided by the third-party vendor were accurate. • We noted instances where the vendor screening for suspension and debarment was not performed prior to setting up the vendor in the System and procuring the goods/services. Section III—Federal Award Findings and Questioned Costs (continued) • For certain procurement transactions tested, we noted Sanford did not adhere to the compliance requirements and did not follow its procurement policy by maintaining documentation related to cost/price analysis or sole-source procurement and completing the sole-source justification forms timely. Cause: Sanford utilizes a third-party vendor to perform suspension and debarment checks on its vendors, both during the vendor setup process as well as ongoing monitoring of active vendors. Sanford did not add an additional validation control until August 2023 to ensure that the suspension and debarment checks performed by the third-party vendor aligned with the governmental suspension and debarment database when the search resulted in no match. In addition, Sanford did not follow its procurement policy and perform the vendor screening for suspension and debarment prior to setting up the vendor in the system and transacting with the vendors. Furthermore, Sanford, prior to entering into the procurement transaction, did not complete the sole-source justification forms, or maintain documentation to support the sole-sourced procurements for those procurement transactions that exceeded the small purchase threshold. Effect or potential effect: Sanford’s screening for suspension and debarment through the third-party vendor results may not be accurate for the period January 1, 2023 through July 31, 2023. Further, by not performing the vendor screening for suspension and debarment prior to transacting with the vendor, Sanford could have potentially entered into a business transaction with suspended or debarred parties. Sanford did not comply with the federal procurement requirements and its procurement policy by not maintaining adequate documentation to support the cost/price analysis or sole sourced vendor selections in addition to not timely completing the sole source justification forms. Section III—Federal Award Findings and Questioned Costs (continued) Questioned costs: $307,249 determined as the amount of the procurement expenditures included in the Schedule of Expenditures of Federal Awards for two procurement transactions that had inadequate documentation to justify sole source selection. Context: To ensure compliance with 2 CFR Section 200.213, Sanford conducts both preventive and detective controls in its vendor setup and monitoring process to ensure new vendors and active vendors are not suspended or debarred. A consistent vendor setup process is followed for each new vendor that Sanford transacts with, regardless of whether the vendor transactions are funded through federal grant funding or through other sources. To prevent a suspended or debarred vendor from being added as a new vendor, the vendor is checked against the suspension and debarment database electronically before completion of the vendor setup. Subsequent to vendor setup, Sanford also monitors the status of its vendors to ensure the vendor’s status has not changed. We selected 25 new vendors to verify that the suspension and debarment screening was performed and performed timely. We noted for 3 of the 25 vendors, the suspension and debarment screening was not performed prior to setting up the vendor in the system and for 1 of these vendors, Sanford had entered into a transaction prior to performing the suspension and debarment screening. We selected 8 procurement transactions that exceeded the small purchase threshold. Of the 8 transactions, 4 transactions did not follow the federal procurement standards and Sanford’s procurement policy which requires sole source documentation be completed prior to procuring the items. Additionally, for 2 of these 4 transactions, Sanford did not have sufficient documentation maintained to support the cost/price analysis performed or justification to support the sole source selection of the vendors. Total federal expenditures subject to suspension and debarment is $2,870,421, and federal expenditures exceeding the micro purchase threshold is $2,298,733. Total federal expenditures under the program, as reported on the SEFA, is $2,870,421. Identification as a repeat finding, if applicable: This finding is a repeat of Finding 2022-001 in the prior year. Recommendation: Management should ensure that the suspension and debarment screening is performed prior to entering into the transaction with the vendor and also ensure that it follows the procurement policy to verify suspension and debarment of the vendor prior to setting up the vendor in the system. In addition, Management should ensure that any sole sourced purchases or when quotes are obtained, that those be documented prior to entering into the procurement transaction. Views of responsible officials: Sanford continues to document periodic validation of the suspension and debarment search results performed by the third-party vendor for vendor searches that yield no suspension and debarment match. Additionally, as part of the periodic validation, Sanford will include a validation to ensure a suspension and debarment search is completed prior to setting the vendor up in the system. Sanford will re-educate appropriate staff regarding the process to verify a suspension and debarment search is completed prior to setting up the vendor in the system. Sanford’s preventative and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being paid to vendors that are suspended or debarred. Sanford’s preventive and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being utilized for items that do not adhere to the procurement standards. Sanford will re-educate applicable parties and enhance its procedural documentation regarding procurement. Sanford will implement a monthly review process of federal funds utilized for procurement.
Identification of the federal program: Federal Agency: United States Department of Health and Human Services, Health Resources and Services Administration (HRSA) Pass-Through Entities: North Dakota Department of Health, South Dakota Department of Health and Minnesota Department of Health Assistance Listing: 93.155; COVID-19 Rural Health Research Centers Award Numbers: Various Award Year: FY 2021 – 2023 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with 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 Uniform Guidance 2 CFR Section 200.213 states, “Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR Part 180. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended or otherwise excluded from or ineligible for participation in Federal assistance programs or activities”. In addition, Uniform Guidance 2 CFR Section 200.320 (c) states: “There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Further, Uniform Guidance 2 CFR Section 200.320(a)(2) states: Small purchases – “The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity.” Condition: We noted the following matters during our testing of Procurement and Suspension and Debarment compliance requirements: • A third-party vendor performed the suspension and debarment validation process for Sanford. The third-party vendor does not have a SOC 1 (System and Organization Controls) Report. For a portion of the year, Sanford relied on the suspension and debarment checks performed by the third-party vendor for results concluding no match without completing a validation control to ensure the results provided by the third-party vendor were accurate. • We noted instances where the vendor screening for suspension and debarment was not performed prior to setting up the vendor in the System and procuring the goods/services. Section III—Federal Award Findings and Questioned Costs (continued) • For certain procurement transactions tested, we noted Sanford did not adhere to the compliance requirements and did not follow its procurement policy by maintaining documentation related to cost/price analysis or sole-source procurement and completing the sole-source justification forms timely. Cause: Sanford utilizes a third-party vendor to perform suspension and debarment checks on its vendors, both during the vendor setup process as well as ongoing monitoring of active vendors. Sanford did not add an additional validation control until August 2023 to ensure that the suspension and debarment checks performed by the third-party vendor aligned with the governmental suspension and debarment database when the search resulted in no match. In addition, Sanford did not follow its procurement policy and perform the vendor screening for suspension and debarment prior to setting up the vendor in the system and transacting with the vendors. Furthermore, Sanford, prior to entering into the procurement transaction, did not complete the sole-source justification forms, or maintain documentation to support the sole-sourced procurements for those procurement transactions that exceeded the small purchase threshold. Effect or potential effect: Sanford’s screening for suspension and debarment through the third-party vendor results may not be accurate for the period January 1, 2023 through July 31, 2023. Further, by not performing the vendor screening for suspension and debarment prior to transacting with the vendor, Sanford could have potentially entered into a business transaction with suspended or debarred parties. Sanford did not comply with the federal procurement requirements and its procurement policy by not maintaining adequate documentation to support the cost/price analysis or sole sourced vendor selections in addition to not timely completing the sole source justification forms. Section III—Federal Award Findings and Questioned Costs (continued) Questioned costs: $307,249 determined as the amount of the procurement expenditures included in the Schedule of Expenditures of Federal Awards for two procurement transactions that had inadequate documentation to justify sole source selection. Context: To ensure compliance with 2 CFR Section 200.213, Sanford conducts both preventive and detective controls in its vendor setup and monitoring process to ensure new vendors and active vendors are not suspended or debarred. A consistent vendor setup process is followed for each new vendor that Sanford transacts with, regardless of whether the vendor transactions are funded through federal grant funding or through other sources. To prevent a suspended or debarred vendor from being added as a new vendor, the vendor is checked against the suspension and debarment database electronically before completion of the vendor setup. Subsequent to vendor setup, Sanford also monitors the status of its vendors to ensure the vendor’s status has not changed. We selected 25 new vendors to verify that the suspension and debarment screening was performed and performed timely. We noted for 3 of the 25 vendors, the suspension and debarment screening was not performed prior to setting up the vendor in the system and for 1 of these vendors, Sanford had entered into a transaction prior to performing the suspension and debarment screening. We selected 8 procurement transactions that exceeded the small purchase threshold. Of the 8 transactions, 4 transactions did not follow the federal procurement standards and Sanford’s procurement policy which requires sole source documentation be completed prior to procuring the items. Additionally, for 2 of these 4 transactions, Sanford did not have sufficient documentation maintained to support the cost/price analysis performed or justification to support the sole source selection of the vendors. Total federal expenditures subject to suspension and debarment is $2,870,421, and federal expenditures exceeding the micro purchase threshold is $2,298,733. Total federal expenditures under the program, as reported on the SEFA, is $2,870,421. Identification as a repeat finding, if applicable: This finding is a repeat of Finding 2022-001 in the prior year. Recommendation: Management should ensure that the suspension and debarment screening is performed prior to entering into the transaction with the vendor and also ensure that it follows the procurement policy to verify suspension and debarment of the vendor prior to setting up the vendor in the system. In addition, Management should ensure that any sole sourced purchases or when quotes are obtained, that those be documented prior to entering into the procurement transaction. Views of responsible officials: Sanford continues to document periodic validation of the suspension and debarment search results performed by the third-party vendor for vendor searches that yield no suspension and debarment match. Additionally, as part of the periodic validation, Sanford will include a validation to ensure a suspension and debarment search is completed prior to setting the vendor up in the system. Sanford will re-educate appropriate staff regarding the process to verify a suspension and debarment search is completed prior to setting up the vendor in the system. Sanford’s preventative and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being paid to vendors that are suspended or debarred. Sanford’s preventive and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being utilized for items that do not adhere to the procurement standards. Sanford will re-educate applicable parties and enhance its procedural documentation regarding procurement. Sanford will implement a monthly review process of federal funds utilized for procurement.
Identification of the federal program: Federal Agency: United States Department of Health and Human Services, Health Resources and Services Administration (HRSA) Pass-Through Entities: North Dakota Department of Health, South Dakota Department of Health and Minnesota Department of Health Assistance Listing: 93.155; COVID-19 Rural Health Research Centers Award Numbers: Various Award Year: FY 2021 – 2023 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with 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 Uniform Guidance 2 CFR Section 200.213 states, “Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR Part 180. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended or otherwise excluded from or ineligible for participation in Federal assistance programs or activities”. In addition, Uniform Guidance 2 CFR Section 200.320 (c) states: “There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Further, Uniform Guidance 2 CFR Section 200.320(a)(2) states: Small purchases – “The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity.” Condition: We noted the following matters during our testing of Procurement and Suspension and Debarment compliance requirements: • A third-party vendor performed the suspension and debarment validation process for Sanford. The third-party vendor does not have a SOC 1 (System and Organization Controls) Report. For a portion of the year, Sanford relied on the suspension and debarment checks performed by the third-party vendor for results concluding no match without completing a validation control to ensure the results provided by the third-party vendor were accurate. • We noted instances where the vendor screening for suspension and debarment was not performed prior to setting up the vendor in the System and procuring the goods/services. Section III—Federal Award Findings and Questioned Costs (continued) • For certain procurement transactions tested, we noted Sanford did not adhere to the compliance requirements and did not follow its procurement policy by maintaining documentation related to cost/price analysis or sole-source procurement and completing the sole-source justification forms timely. Cause: Sanford utilizes a third-party vendor to perform suspension and debarment checks on its vendors, both during the vendor setup process as well as ongoing monitoring of active vendors. Sanford did not add an additional validation control until August 2023 to ensure that the suspension and debarment checks performed by the third-party vendor aligned with the governmental suspension and debarment database when the search resulted in no match. In addition, Sanford did not follow its procurement policy and perform the vendor screening for suspension and debarment prior to setting up the vendor in the system and transacting with the vendors. Furthermore, Sanford, prior to entering into the procurement transaction, did not complete the sole-source justification forms, or maintain documentation to support the sole-sourced procurements for those procurement transactions that exceeded the small purchase threshold. Effect or potential effect: Sanford’s screening for suspension and debarment through the third-party vendor results may not be accurate for the period January 1, 2023 through July 31, 2023. Further, by not performing the vendor screening for suspension and debarment prior to transacting with the vendor, Sanford could have potentially entered into a business transaction with suspended or debarred parties. Sanford did not comply with the federal procurement requirements and its procurement policy by not maintaining adequate documentation to support the cost/price analysis or sole sourced vendor selections in addition to not timely completing the sole source justification forms. Section III—Federal Award Findings and Questioned Costs (continued) Questioned costs: $307,249 determined as the amount of the procurement expenditures included in the Schedule of Expenditures of Federal Awards for two procurement transactions that had inadequate documentation to justify sole source selection. Context: To ensure compliance with 2 CFR Section 200.213, Sanford conducts both preventive and detective controls in its vendor setup and monitoring process to ensure new vendors and active vendors are not suspended or debarred. A consistent vendor setup process is followed for each new vendor that Sanford transacts with, regardless of whether the vendor transactions are funded through federal grant funding or through other sources. To prevent a suspended or debarred vendor from being added as a new vendor, the vendor is checked against the suspension and debarment database electronically before completion of the vendor setup. Subsequent to vendor setup, Sanford also monitors the status of its vendors to ensure the vendor’s status has not changed. We selected 25 new vendors to verify that the suspension and debarment screening was performed and performed timely. We noted for 3 of the 25 vendors, the suspension and debarment screening was not performed prior to setting up the vendor in the system and for 1 of these vendors, Sanford had entered into a transaction prior to performing the suspension and debarment screening. We selected 8 procurement transactions that exceeded the small purchase threshold. Of the 8 transactions, 4 transactions did not follow the federal procurement standards and Sanford’s procurement policy which requires sole source documentation be completed prior to procuring the items. Additionally, for 2 of these 4 transactions, Sanford did not have sufficient documentation maintained to support the cost/price analysis performed or justification to support the sole source selection of the vendors. Total federal expenditures subject to suspension and debarment is $2,870,421, and federal expenditures exceeding the micro purchase threshold is $2,298,733. Total federal expenditures under the program, as reported on the SEFA, is $2,870,421. Identification as a repeat finding, if applicable: This finding is a repeat of Finding 2022-001 in the prior year. Recommendation: Management should ensure that the suspension and debarment screening is performed prior to entering into the transaction with the vendor and also ensure that it follows the procurement policy to verify suspension and debarment of the vendor prior to setting up the vendor in the system. In addition, Management should ensure that any sole sourced purchases or when quotes are obtained, that those be documented prior to entering into the procurement transaction. Views of responsible officials: Sanford continues to document periodic validation of the suspension and debarment search results performed by the third-party vendor for vendor searches that yield no suspension and debarment match. Additionally, as part of the periodic validation, Sanford will include a validation to ensure a suspension and debarment search is completed prior to setting the vendor up in the system. Sanford will re-educate appropriate staff regarding the process to verify a suspension and debarment search is completed prior to setting up the vendor in the system. Sanford’s preventative and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being paid to vendors that are suspended or debarred. Sanford’s preventive and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being utilized for items that do not adhere to the procurement standards. Sanford will re-educate applicable parties and enhance its procedural documentation regarding procurement. Sanford will implement a monthly review process of federal funds utilized for procurement.
Identification of the federal program: Federal Agency: United States Department of Health and Human Services, Health Resources and Services Administration (HRSA) Pass-Through Entities: North Dakota Department of Health, South Dakota Department of Health and Minnesota Department of Health Assistance Listing: 93.155; COVID-19 Rural Health Research Centers Award Numbers: Various Award Year: FY 2021 – 2023 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with 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 Uniform Guidance 2 CFR Section 200.213 states, “Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR Part 180. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended or otherwise excluded from or ineligible for participation in Federal assistance programs or activities”. In addition, Uniform Guidance 2 CFR Section 200.320 (c) states: “There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate.” Further, Uniform Guidance 2 CFR Section 200.320(a)(2) states: Small purchases – “The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity.” Condition: We noted the following matters during our testing of Procurement and Suspension and Debarment compliance requirements: • A third-party vendor performed the suspension and debarment validation process for Sanford. The third-party vendor does not have a SOC 1 (System and Organization Controls) Report. For a portion of the year, Sanford relied on the suspension and debarment checks performed by the third-party vendor for results concluding no match without completing a validation control to ensure the results provided by the third-party vendor were accurate. • We noted instances where the vendor screening for suspension and debarment was not performed prior to setting up the vendor in the System and procuring the goods/services. Section III—Federal Award Findings and Questioned Costs (continued) • For certain procurement transactions tested, we noted Sanford did not adhere to the compliance requirements and did not follow its procurement policy by maintaining documentation related to cost/price analysis or sole-source procurement and completing the sole-source justification forms timely. Cause: Sanford utilizes a third-party vendor to perform suspension and debarment checks on its vendors, both during the vendor setup process as well as ongoing monitoring of active vendors. Sanford did not add an additional validation control until August 2023 to ensure that the suspension and debarment checks performed by the third-party vendor aligned with the governmental suspension and debarment database when the search resulted in no match. In addition, Sanford did not follow its procurement policy and perform the vendor screening for suspension and debarment prior to setting up the vendor in the system and transacting with the vendors. Furthermore, Sanford, prior to entering into the procurement transaction, did not complete the sole-source justification forms, or maintain documentation to support the sole-sourced procurements for those procurement transactions that exceeded the small purchase threshold. Effect or potential effect: Sanford’s screening for suspension and debarment through the third-party vendor results may not be accurate for the period January 1, 2023 through July 31, 2023. Further, by not performing the vendor screening for suspension and debarment prior to transacting with the vendor, Sanford could have potentially entered into a business transaction with suspended or debarred parties. Sanford did not comply with the federal procurement requirements and its procurement policy by not maintaining adequate documentation to support the cost/price analysis or sole sourced vendor selections in addition to not timely completing the sole source justification forms. Section III—Federal Award Findings and Questioned Costs (continued) Questioned costs: $307,249 determined as the amount of the procurement expenditures included in the Schedule of Expenditures of Federal Awards for two procurement transactions that had inadequate documentation to justify sole source selection. Context: To ensure compliance with 2 CFR Section 200.213, Sanford conducts both preventive and detective controls in its vendor setup and monitoring process to ensure new vendors and active vendors are not suspended or debarred. A consistent vendor setup process is followed for each new vendor that Sanford transacts with, regardless of whether the vendor transactions are funded through federal grant funding or through other sources. To prevent a suspended or debarred vendor from being added as a new vendor, the vendor is checked against the suspension and debarment database electronically before completion of the vendor setup. Subsequent to vendor setup, Sanford also monitors the status of its vendors to ensure the vendor’s status has not changed. We selected 25 new vendors to verify that the suspension and debarment screening was performed and performed timely. We noted for 3 of the 25 vendors, the suspension and debarment screening was not performed prior to setting up the vendor in the system and for 1 of these vendors, Sanford had entered into a transaction prior to performing the suspension and debarment screening. We selected 8 procurement transactions that exceeded the small purchase threshold. Of the 8 transactions, 4 transactions did not follow the federal procurement standards and Sanford’s procurement policy which requires sole source documentation be completed prior to procuring the items. Additionally, for 2 of these 4 transactions, Sanford did not have sufficient documentation maintained to support the cost/price analysis performed or justification to support the sole source selection of the vendors. Total federal expenditures subject to suspension and debarment is $2,870,421, and federal expenditures exceeding the micro purchase threshold is $2,298,733. Total federal expenditures under the program, as reported on the SEFA, is $2,870,421. Identification as a repeat finding, if applicable: This finding is a repeat of Finding 2022-001 in the prior year. Recommendation: Management should ensure that the suspension and debarment screening is performed prior to entering into the transaction with the vendor and also ensure that it follows the procurement policy to verify suspension and debarment of the vendor prior to setting up the vendor in the system. In addition, Management should ensure that any sole sourced purchases or when quotes are obtained, that those be documented prior to entering into the procurement transaction. Views of responsible officials: Sanford continues to document periodic validation of the suspension and debarment search results performed by the third-party vendor for vendor searches that yield no suspension and debarment match. Additionally, as part of the periodic validation, Sanford will include a validation to ensure a suspension and debarment search is completed prior to setting the vendor up in the system. Sanford will re-educate appropriate staff regarding the process to verify a suspension and debarment search is completed prior to setting up the vendor in the system. Sanford’s preventative and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being paid to vendors that are suspended or debarred. Sanford’s preventive and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being utilized for items that do not adhere to the procurement standards. Sanford will re-educate applicable parties and enhance its procedural documentation regarding procurement. Sanford will implement a monthly review process of federal funds utilized for procurement.