Environmental Protection Agency, Passed through North Dakota Department of Environmental Quality Federal Financial Assistance Listing 66.468 Capitalization Grants for Drinking Water Procurement, Suspension, and Debarment Significant Deficiency in Internal Control over Compliance Criteria - Uniform Guidance and 2 CFR sections 200.318 through 200.327 set forth the procurement standards non-federal entities other than states must follow when operating federal programs and the procurement procedures required. Condition - During the course of our engagement, it was identified that the District’s policy on procurement did not satisfy the requirements of 2 CFR sections 200.318 through 200.327 with regards to procurement levels and methods, conflicts of interest, and contract provisions. Cause - Lack of oversight, awareness, or understanding of all of the specific requirements under Uniform Guidance and applicable CFR sections, and controls were not adequately designed to ensure compliance with all of these requirements. Effect – A lack of documented policies increase the overall risk that employees are not aware of the specific requirements with of procurement, suspension, and debarment. Questioned Costs – None reported Context/Sampling – Overall procurement policy Repeat Finding from Prior Year(s) –Yes, prior year finding 2024-005 Recommendation - We recommend that management establish a written policy that addresses all of the procurement requirements for federal programs as identified in 2 CFR sections 200.318 through 200.327 and maintain adequate supporting documentation and records to document history and methods of procurement and the procedures performed to comply with these CFR sections. View of Responsible Officials - There is no disagreement with the audit finding.
Internal Control over Compliance or Compliance Findings Criteria: Uniform Guidance §200.318 (General Procurement Standards) requires recipients and subrecipients to maintain and follow documented procurement procedures for transactions under a Federal award or subaward. These procedures must be consistent with applicable State, local, or tribal laws and regulations, as well as the standards set forth in 2 CFR §§200.317–200.327. Documentation must include, at a minimum, the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for contract pricing. In addition, recipients must ensure vendors are not suspended or debarred from participation in federal programs. Condition: Although the Organization followed procurement requirements in practice, including appropriate procurement methods, documentation of vendor selection, and verification that vendors were not suspended or debarred, it did not have formal, written procurement and suspension/debarment policies in place during the audit period. Cause: The Organization relied on established operating practices and staff knowledge to ensure compliance with federal procurement requirements. As a result, these practices were not formally documented in written policies aligned with 2 CFR Part 200. Effect: While no instances of noncompliance or questioned costs were identified, the absence of formal written policies increases the risk that procurement and suspension/debarment procedures may not be applied consistently in the future or adequately demonstrated during audits or monitoring reviews. Recommendation: We recommend that the Organization formally document its existing procurement and suspension/debarment practices in written policies that comply with 2 CFR Part 200. Views of Responsible Officials: Management agrees with the finding. The Organization notes that all federal procurement and suspension/debarment requirements were followed during the audit period and has formalized these practices in written policies for future federal awards.
Finding Number: 2025-006 Finding Type: Federal award finding Federal Assistance Listing No.: 15.685 Program Name: National Fish Passage Federal Agency: The U.S. Department of Interior Pass-Through Entity: n/a Grant Number: F24AC01768-00 Award Project Period: July 1, 2024 through July 1, 2029 Control Deficiency Type: Significant deficiency Instance of Noncompliance: Yes Compliance Requirement: Procurement, suspension and debarment Repeat Finding: No Criteria: A non-federal organization must follow its own documented procurement procedures, provided they comply with applicable state and local laws and align with the federal standards outlined in 2 CFR 200.318–200.327. Specifically, 2 CFR 200.318(i) requires entities to maintain records sufficient to detail the history of the procurement, including but not limited to the rationale for the procurement method chosen, the basis for selecting or rejecting contractors, and the justification for the contract price. In addition, all procurement transactions must be conducted in a manner providing full and open competition. Furthermore, federal requirements prohibit grant recipients from contracting with, or purchasing from, contractors who are suspended and debarred from doing business with the federal government. Whenever the organization enters into contracts or purchases goods or services with federal funds that it expects to equal or exceed $25,000, it must verify that the contractor or vendor has not been suspended, debarred or otherwise excluded. Finally, the organization must ensure that all federal programs comply with Section 70914 of the Build America, Buy America (BABA) Act for infrastructure projects. Condition: The Council has enacted a written procurement policy, which management believed met all the standards required under 2 CFR 200.318 through 200.327. However, the policy failed to include some of the most stringent requirements included in the Uniform Guidance. The organization did not comply with all the documentation requirements laid out in its procurement policy. In addition, the suspension and debarment verification occurred after the contract was entered into, and there was no documentation maintained to demonstrate the monitoring of contract compliance with BABA. Cause: This was the Council’s first year receiving direct federal funding and its first Single Audit. The organization is very small and has limited prior experience with federal procurement requirements. Effect: The absence of aligned written procurement policies and timely documentation increases the risk of non-compliance with federal procurement standards. While no unallowable costs were identified and the contractor was not suspended or debarred, the issues reflect a control deficiency in procurement documentation, suspension and debarment procedures, and monitoring of federal award requirements. Questioned Costs: None. Audit Recommendation: We recommend the Council: • Update its procurement policy to align with federal procurement methods, thresholds, and requirements. • Develop written procedures for technical evaluations, contractor selection, and documentation of procurement decisions. • Perform suspension and debarment verification prior to contract award. • Establish monitoring procedures for contractor compliance with federal award provisions, including Build America, Buy America Act requirements. Management’s Response: Rogue River Watershed Council will review 2 CFR 200.318 through 200.327 and update our Procurement Policy to meet the necessary standards. We will strengthen our policy by setting out procedures related to, when required: (1) suspension/ debarment verification of contractors (including the timing of such verification) and (2) required agreement language related to grant-required stipulations such as BABA requirements, monitoring, compliance, and documentation.
Procurement Suspension and Debarment (EPA Clean Water State Revolving Fund Assistance Listing 66.458) Condition: The Corporation did not perform verification of vendors against the System for Award Management (SAM.gov) to ensure vendors were not suspended or debarred prior to the award of contracts or payments for services. Criteria: In accordance with 2 CFR 200.214 and 2 CFR 200.318, non-federal entities are prohibited from contracting with or making subawards to parties that are suspended or debarred. Entities are required to verify that vendors are not suspended or debarred, which may be accomplished through review of SAM.gov or by obtaining appropriate certifications from vendors. Effect: The Corporation is at risk of contracting with or making payments to vendors that are suspended or debarred, which could result in noncompliance with federal requirements and potential disallowance of costs. Questioned Costs: None Noted. Recommendation: We recommend that the Corporation implement procedures to verify vendor eligibility prior to awarding contracts or making payments using SAM.gov or by obtaining appropriate certifications from vendors. Documentation of this verification should be retained. Views of Responsible Officials: Management agrees with the finding and will implement procedures to verify vendor eligibility through SAM.gov or equivalent methods for applicable vendors.
2025-004 LACK OF WRITTEN FEDERAL POLICIES AND PROCEDURES REQUIRED BY UNIFORM GUIDANCE Type of Finding: Material noncompliance Federal Program: Coronavirus State and Local Fiscal Recovery Funds (ALN# 21.027) Compliance Requirement: All Criteria - Per 2 CFR §200.303 and related sections (including §§200.305 and 200.318-320), non-federal entities expending federal awards must establish and maintain effective internal controls and must document policies and procedures governing compliance with applicable federal statutes, regulations, and terms of award. Condition - The Village has not developed or implemented the written policies and procedures required under the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Required documentation is absent in areas such as internal controls over compliance, cash management, procurement, and allowable costs. A similar issue was noted and reported last year as 2024-005. Cause - The Village has not formally developed Uniform Guidance-compliant policies due to limited administrative resources and competing operational priorities. Effect - The absence of formal written policies and procedures increases the risk of inconsistent or noncompliant treatment of federal expenditures. Without documented controls and expectations, the Village may fail to detect or prevent noncompliance with federal requirements in key grant administration areas. Questioned Costs - None Recommendation - We recommend that the Village adopt written policies and procedures addressing the specific requirements outlined in the Uniform Guidance. These policies should include, but not be limited to, internal controls over compliance, procurement, cash management, subrecipient monitoring (if applicable), and allowable cost determinations. Management should ensure that these policies are communicated and periodically reviewed. Views of Responsible Officials: Management agrees with the finding and will take appropriate steps to remedy noted finding.
Reference Number: 2024-001 Program Name: 14.267 Continuum of Care Reference Number: 2025-001 Program Name: 14.267 Continuum of Care Description: Procurement Criteria: 2 CFR 180.300 and 2 CFR 200.214 prohibit nonfederal entities from contracting with parties that are suspended or debarred. For covered transactions equal to or exceeding $25,000, the Organization must verify that the vendor is not excluded by checking the System for Award Management (SAM.gov) or through other approved methods. Additionally, HUD procurement requirements under 2 CFR 200.318 require entities to ensure vendor eligibility. When multiple transactions with the same vendor exceed $25,000 in aggregate, the total amount should be considered in determining whether suspension or debarment requirements apply. Condition: The Organization entered into multiple rental agreements with the same rental companies. While each contract was less than $25,000, total payments to the rental companies exceeded $25,000. The Organization did not perform or document a suspension and debarment verification. Questioned Costs: None identified. Cause: The Organization did not follow their procurement policy. The Organization’s procurement policy states that “no contract shall be made to the parties listed on the General Services List of Parties Excluded from Federal Procurement or Non-procurement Programs in accordance with E.O.’s 12549 and 12689”. Effect: The Organization is not in compliance with federal and HUD procurement requirements and may have contracted with a suspended or debarred party. This increases the risk of questioned costs. Identification of a Repeat Finding: This is not repeat finding. Auditors’ Recommendation: We recommend the Organization implement procedures to ensure SAM.gov verification is performed annually on all covered transactions and prior to signing leases with new rental companies. Views of Responsible Officials: See attachment for the Organization’s corrective action plan.
2025-005 — Procurement – Material Weakness in Internal Control Over Compliance and Noncompliance (Repeat of Finding 2024-005, 2023-006 and 2022-004) Federal program information: Funding agencies: U.S. Department of Interior and U.S. Department of Education Titles: Assistance to Tribally Controlled Community Colleges and Higher Education Institutional Aid ALN Number: 15.027 and 84.031 Award years: Various Criteria: According to 2 CFR Section 200.318i, the recipient or subrecipient must maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price. According to 2 CFR Section 0200.319a, all procurement transactions under the federal award must be conducted in a manner that provides full and open competition. Condition: The College did not maintain records sufficient to detail the history of each procurement transaction for the procurement contracts tested. Cause: The College did not have sufficient procedures in place to ensure that procurement records are maintained. Effect: The College is not in compliance with procurement requirements. Questioned Costs: None. Context: Procurement documents were not retained for transactions tested. Recommendation: Formally document and enforce policies and procedures that will promote adequate monitoring of the procurement and bidding process. Ensure that any contract over the College’s threshold ($150,000) follows the sealed bid requirements listed in 2 CFR Section 200.320b1. Management’s Response: The College concurs with the finding. Management will follow procedures as outlined in its policies and procedures to ensure all stages of the process adequately conducted and documented.
Finding Number: 2025-001 Repeat Finding: Yes; 2024-002, 2023-002, 2022-002, 2021-002 Federal Program Name/Assistance Listing Title: Federal Transit Cluster Federal Assistance Listing Number: 20.507, 20.526 Federal Agency: U.S. Department of Transportation Federal Award Number: 5339-R-2024-GCTD-00025 Federal Pass-Through Agency: Texas Department of Transportation State Program Name: Urban State Program State Agency: Texas Department of Transportation Type of Finding: Noncompliance Material to Financial Statements and Federal/State Major Programs, Material Weakness in Internal Control Over Compliance Compliance Requirement: Procurement, Suspension and Debarment Questioned Costs: $368,203 Criteria Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR §§200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR part 200. Condition The District was unable to provide evidence that the federal guidelines were followed for purchases exceeding the small purchases and simplified acquisition threshold. Cause The District’s internal controls over procurement of goods and services were not adequate. Effect The District was not in compliance with Federal regulations and guidelines related to procurement of goods and services. Context During our testing of procurement compliance, we selected all vendors with expenditures exceeding the federal Simplified Acquisition Threshold for the fiscal year. The population consisted of one (1) vendor with total FY 2025 expenditures of $368,203. The District was unable to provide any documentation supporting the procurement method, competitive solicitation, or suspension and debarment verification for this vendor. Because the District could not produce a procurement file or alternative evidence demonstrating compliance with 2 CFR 200.318–200.326, the entire amount paid to this vendor was considered questioned costs. Recommendation The District should maintain documentation of procurement actions in the vendor file including sealed procurements issued and quotes. Review of procurement compliance should occur before the District’s funds are obligated. Views of Responsible Officials The District agrees with the finding and has taken steps to address this issue as detailed in the Corrective Action Plan.
Finding 2025-003: Conflict of Interest Attestations Federal Agency(ies): United States Agency for International Development (USAID) Federal Program(s): Adv HIV & AIDS Epidemic Control (AHEC) Activity Assistance Listing Number(s): N/A – Federal Contract Pass-through Entity (if applicable): N/A Award Identification Number and Year: 72066821C00001 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Under 2 CFR §200.112, non-Federal entities must disclose in writing any potential conflict of interest to the Federal awarding agency or pass-through entity. Additionally, 2 CFR §200.318(c)(1) requires organizations to maintain written standards of conduct governing the performance of employees engaged in the administration of Federal awards. Effective internal controls require employees to periodically acknowledge and attest to compliance with IntraHealth’s conflict of interest policy to ensure transparency, accountability, and compliance with Federal regulations. Condition: During our testing of payroll and employee personnel files at both headquarters and the field office level, we noted instances in which employee-signed conflict of interest attestation forms were not available for our review. For various employees included in our sample, there was no documentation evidencing that the employee had acknowledged or certified compliance with IntraHealth’s conflict of interest policy. Cause: Based on discussions with management, the condition appears to be the result of employees which were terminated prior to the fiscal year 2025 attestation date. However, we were unable to verify that the employees had signed the conflict of interest forms for the immediately preceding period (which their sampled pay periods pertained to). This limitation was due to the inability to access systems which were discontinued, as well as the termination of responsible employees, due to cost reduction measures in response to the stop-work orders issued by the Federal Government. Effect or Potential Effect: Failure to obtain and retain signed conflict of interest attestations increases the risk that potential or actual conflicts may not be identified, disclosed, or appropriately managed. This weakens IntraHealth’s internal control environment and increases the risk of noncompliance with Federal conflict of interest requirements. Without documented attestations, IntraHealth cannot demonstrate that employees involved in the administration of Federal awards are aware of and complying with established standards of conduct. Questioned Costs: N/A, as the condition does not lead to unallowable costs. Context: The exceptions were identified across multiple locations and arose from our testing of internal controls around the payroll cycle. Identification as a Repeat Finding, if Applicable: N/A Recommendation: We recommend that management strengthen controls over its conflict of interest compliance process by implementing procedures to ensure all employees complete and sign conflict of interest attestations upon hire and on a periodic basis thereafter. Management should establish a centralized tracking mechanism and perform periodic monitoring to ensure documentation is complete and retained in personnel files. Strengthening this process will enhance transparency, promote ethical conduct, and provide reasonable assurance of compliance with Federal conflict of interest requirements.
Item: 2025-001 Assistance Listing Number: 93.185 Program: Immunization Research, Demonstration, Public Information and Education Training and Clinical Improvement Projects Federal Agency: U.S. Department of Health and Human Services, Centers for Disease Control and Prevention Pass-Through Agencies: n/a Contract/Pass-Through Grantor Identifying Number: NH23IP922665 Award Year: August 2024 to July 2029 Compliance Requirement: Procurement, Suspension and Debarment Criteria: Per 2 CFR §200.318 - §200.326, non-federal entities must follow procurement procedures that ensure full and open competition and maintain proper documentation of procurement transactions. Additionally, under 2 CFR §200.213, entities must verify that vendors and subrecipients are not suspended or debarred before entering into contracts funded by federal awards. Condition: AIRA did not retain sufficient/updated documentation to support compliance with Uniform Guidance procurement standards. Specifically: • Procurement files lacked evidence of cost/price analysis and vendor selection criteria for purchases exceeding the micro-purchase threshold of $10,000. • The entity did not retain verification records confirming that selected vendors were not suspended or debarred in SAM.gov before contract execution. Questioned Costs: n/a Context: In a population of 35 vendors with purchases in excess of $10,000, we conducted a non-statistical sample of six vendors. In our sample of six vendors, we noted that for two vendors selected and tested, AIRA did not retain sufficient documentation to support compliance with the Uniform Guidance procurement standards. Effect: Failure to maintain proper procurement documentation and verify vendor eligibility increases the risk of noncompliance with federal requirements. This may lead to questioned costs and potential disallowance of federal expenditures. This was deemed to be a significant deficiency in internal control over compliance. Cause: The deficiency appears to result from inadequate internal control over procurement documentation and a lack of formalized procedures ensuring compliance with federal procurement and debarment requirements for a portion of fiscal 2025. In April 2025, AIRA implemented a standardized procurement policy and a formal review process to verify and document vendor eligibility through SAM.gov before awarding any contracts funded with federal funds. As these controls were not in place during the entire fiscal year the finding is repeated. Identification as a Repeat Finding: Repeat finding. See 2024-001 Recommendation: Recommendations from prior year’s finding were implemented effectively beginning in April 2025. No additional action necessary. Views of Responsible Officials: Management of the Organization concurs with the finding. See Corrective Action Plan.
U.S. Department of Treasury, Federal Financial Assistance Listing #21.027, COVID-19 – Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Procurement, Suspension, and Debarment Significant Deficiency in Internal Control over Compliance Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. 2 CFR sections 200.212 and 200.318(h); 2 CFR section 180.300; 48 CFR section 52.2096 outlines the requirements the non-federal entity verify vendors for which it plans to enter into a covered transaction are not debarred, suspended, or otherwise excluded. We noted that while the County does have a purchasing policy, elements as required by Uniform Guidance are absent from the policy. In addition, we noted the County did not retain the supporting documentation indicating they had verified vendors they were entering into covered transactions with were neither suspended nor debarred. The County was made aware that the policy is out of compliance with the Uniform Guidance during the 2024 audit. However, management has not had sufficient time to draft an updated policy in compliance with the Uniform Guidance. While our testing noted no instances of noncompliance, the absence of internal controls over compliance as it relates to having a Uniform Guidance compliant policy, could lead the County to enter into covered transactions that are not compliant with federal regulations. Questioned Costs: None reported Context/Sampling: Sampling was not used to test the policy. Repeat Finding from Prior Year(s): Yes Recommendation: The County should review the applicable provisions of the CFR to ensure their written procurement policy is compliant with Uniform Guidance requirements. Additionally, the County should review their checklist and/or document retention requirements for contracts to be sure it includes the support the County verified the vendor was neither suspended nor debarred. Views of Responsible Officials: Management agrees with the finding.
Federal Agency: Environmental Protection Agency Federal Program Name: Water Pollution Control Assistance Listing Numbers: 66.419 Federal Award Identification Number: 98339418 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 10/1/2023 - 12/30/2025 Compliance Requirement: Procurement Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matter Criteria or specific requirement: Compliance: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR §200.318 through §200.327. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. Small purchase procedures are used for purchases that exceed the micro-purchase amount but do not exceed the simplified acquisition threshold ($250,000). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR §200.320(b)). Control: Per 2 CFR §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 comply with the guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control-Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition/Context: For two of five procurements selected for testing, the Commission was unable to provide documentation (completed requisition form) to demonstrate compliance with their procurement policy. Questioned costs: Undetermined. Cause: Controls were not operating effectively to ensure that the Commission’s procurement policies were followed for procurements entered into where expenses were charged to the federal program. Effect: The Commission was unable to provide documentation to support compliance with Federal requirements. Repeat Finding: No. Recommendation: We recommend that the Commission ensure that it follows its procurement policies for all goods and services charged to the program and that documentation be readily available for audit. Views of responsible officials: To prevent future noncompliance the Commission will 1)clarify vendor coverage on existing agreements, 2) strengthen controls over procurement threshold, 3) monitor cumulative spending by vendor, and 4) reinforce training and communication.
Finding 2025-003: Procurement, Suspension and Debarment Federal Program Name: National Railroad Passenger Corporation Grants Assistance Listing No. 20.315 Federal Award Nos.: 69A36525520030AMTDC 69A36525520040AMTDC 69A36524520000AMTDC 69A36524520010AMTDC FR-AMT-0028-22 FR-AMT-0027-22 Federal Agency: Department of Transportation, Federal Railroad Administration Federal Program Name: Railroad Development Assistance Listing No. 20.314 Federal Award No.: 69A36524400010MEGDC Federal Agency: Department of Transportation, Federal Railroad Administration Federal Program Name: Railroad Rehabilitation and Improvement Financing Program Assistance Listing No. 20.316 Federal Award No.: RRIF_2016_0040 Federal Agency: Department of Transportation, Federal Railroad Administration Federal Program Name: Federal-State Partnership for Intercity Passenger Rail Assistance Listing No. 20.326 Federal Award Nos.: 69A36525421260FSPDC 69A36525521430FSPDC 69A36525421100FSPDC Federal Agency: Department of Transportation, Federal Railroad Administration Criteria 1. The code of federal regulations - 2 CFR 200.318 General procurement standards state that: (h) Responsible contractors. The recipient or subrecipient must award contracts only to responsible contractors that possess the ability to perform successfully under the terms and conditions of a proposed contract. The recipient or subrecipient must consider contractor integrity, public policy compliance, property classification of employees, past performance record, and financial and technical resources when conducting a procurement transaction. (i) Procurement records. The recipient or subrecipient must maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price. 2. Section 10 of the Annual Grant Agreements and Section 500 of the IIJA Supplemental Grant Agreements (Assistance Listing No. 20.315) state: The Recipient will ensure persons or entities that perform any part of the work under this Agreement, including Subrecipients, as defined in 2 C.F.R. § 200.1, or Contractors, as defined in 2 C.F.R. § 200.1, will comply with applicable federal requirements and federal guidance, and the applicable requirements of this Agreement. Recipient agrees that flowing down such requirements does not relieve it of any obligation to comply with the requirements itself. For each of the Recipient’s subawards or contracts to perform all or part of the work under this Agreement: (a) The Recipient must include applicable grant regulations in the subaward or contract and ensure compliance with these provisions, including applicable provisions of 2 C.F.R. § 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, and DOT’s implementing regulations at 2 C.F.R. § 1201. (b) The Recipient must include applicable federal statutory and regulatory requirements in the subaward or contract and ensure compliance with these requirements, including applicable limitations on use of federal funds. 3. Additionally, the code of federal regulations - 2 CFR 200 Appendix II Contract Provisions for Non-Federal Entity Contracts Under Federal Awards states that: In addition to other provisions required by the Federal agency or non-Federal entity, all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. H) Debarment and Suspension – A contract award must not be made to parties listed on the government wide exclusions in the System for Award Management (SAM), in accordance with the OMB guidelines at 2 CFR 180 that implement Executive Orders 12549 and 12689. SAM Exclusions contains the names of parties debarred, suspended, or otherwise excluded by agencies, as well as parties declared ineligible under statutory or regulatory authority other than Executive Order 12549. 4. The code of federal regulations or 2 CFR 200.320 (c) Procurement Methods states that: (c) Noncompetitive procurement. There are specific circumstances in which the recipient or subrecipient may use a noncompetitive procurement method. The noncompetitive procurement method may only be used if one of the following circumstances applies: 2) The procurement transaction can only be fulfilled by a single source; Condition The following exceptions to the criteria were observed during the performance of the audit procedures: 1. Required flow-down provisions were not incorporated into the legal agreements related to both of EY's legal expense selections as part of its testing of the procurement, suspension and debarment compliance requirement. 2. Amtrak failed to comply with the key compliance requirement related to suspension and debarment which includes a review of sam.gov to verify the legal firms were not present in the suspension and debarment list prior to the procurement. 3. Amtrak lacked adequate documentation to support the sole source justification of the legal firm related to one of EY's legal expense selections as part of its testing of the procurement, suspension and debarment compliance requirement. Cause Amtrak’s inappropriate interpretation of the annual and IIJA supplemental grant agreements involved the treatment of the procurement of legal counsel as exempt from the 2 CFR procurement, suspension and debarment process requirements. Effect or Potential Effect Noncompliance with Section 10 of the Annual Grant Agreements, Section 500 of the IIJA Supplemental Grant Agreements, 2 CFR 200.318, 2 CFR 200 Appendix II and 2 CFR 200.320. Additionally, Amtrak is at risk of doing business with contractors that are suspended/debarred. Amtrak is also at risk of facing increased costs and increased reliance due to the lack of competitive procurement. Questioned Costs Total questioned costs of $1.3 million were identified. Of this amount, approximately $3,500 relates to two EY selections identified as part of procurement, suspension, and debarment testing involving two legal firms. The remaining questioned costs represent legal expenses associated with the two legal firms that are also included on the SEFA. Assistance Listing No. 20.315 69A36522503710AMTDC $ 150,928 69A365255200340AMTDC 40,449 69A36525520040AMTDC 9,964 Assistance Listing No. 20.315 Total $ 201,341 Assistance Listing No. 20.314 69A36524400010MEGDC 135,247 Assistance Listing No. 20.316 RRIF_2016_0040 84,659 Assistance Listing No. 20.326 69A36525521430FSPDC $ 461,261 69A36525421100FSPDC 254,394 69A36525421260FSPDC 197,655 Assistance Listing No. 20.326 Total $ 913,310 Total Questioned Costs $ 1,334,557 Context EY randomly selected 40 procurement transactions as part of the testing of the procurement, suspension and debarment compliance requirement. EY identified exceptions related to its two legal expenditure selections as noted in the Condition section above. Identification as a Repeat Finding Not a repeat finding. Recommendation EY recommends that Amtrak include legal expenses within their procurement, suspension and debarment policy as outlined within each of the grant agreements. Views of Responsible Officials Amtrak understands the need to comply with procurement requirements for grants and retain documentation of the compliance. Amtrak will change its approach for allocating grant funding and its review of legal contracts to address the issue identified in this finding.
Assistance Listing, Federal Agency, and Program Name - 93.045/93.053, Department of Health and Human Services, Aging Cluster Federal Award Identification Number and Year - N/A Pass through Entity - Area Aging on Aging 1C Finding Type - Material weakness Repeat Finding - Yes 2024-15 Criteria - Per 2 CFR 200.303, nonfederal entities 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. Per 2 CFR 200.318(b), recipients must maintain oversight to ensure contractors perform in accordance with the terms, conditions, and specifications of their contracts. Per the “Minimum Nutrition Program Standards” issued Commission on Services to the Aging, individuals receiving certain nutrition benefits to undergo a periodic reassessment of eligibility that includes obtaining confirmation of medical necessity for certain benefit levels. Condition - The County engaged a third party contractor to perform certain eligibility reassessments, including obtaining verification of medical necessity, when required. While the County had a process in place to properly identify when reassessment was required and to follow up with the contractor about the status of reassessments, controls did not ensure the third party contractor followed through on reassessments on a timely basis. Questioned Costs - None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - N/A Identification of How Questioned Costs Were Computed - N/A Context - The County is responsible for ensuring participants who receive meals are eligible under the terms of the grant. The County did not have a control over home delivered meal participants that ensured the third party contractor timely reassessed participants every six months. 3 of the 43 samples selected did not have updated assessment forms within six months of receiving meals and 17 of the 43 samples did not have updated assessment forms. Cause and Effect - The County's controls were not adequate to ensure that the third party contractor was reassessing participants every six months. The lack of controls could result in the County providing meals to ineligible participants. Recommendation - We recommend the County update its policy on the reassessment process, including actions to be taken when participants refuse to complete the reassessment or cannot be contacted. This plan should also include a schedule for actions to be taken when participants do not complete reassessment submissions timely. The County should also implement the appropriate controls to monitor the third-party contractor and ensure reassessments are being performed timely. Views of Responsible Officials and Corrective Action Plan - The Department of Senior Services would like to clarify that the third-party contractor is contracted through The Senior Alliance, the Area Agency on Aging for region 1 C and not Wayne County. Wayne County Senior Services will continue to monitor the third-party vendor for timely assessments and reassessments through the existing controls which include: • Providing the third-party contractor monthly lists of clients in need of assessment/reassessment • Generating monthly lists of outstanding reassessments (clients not reassessed from the monthly list) • Reminding clients of the requirement for six-month reassessments • Obtaining updated information (phone numbers, emergency contacts, etc.) twice per year • Providing updated information to third-party contractor • Documentation of communicated information regarding third-party contractor’s performance to The Senior Alliance
#2025-001 Federal Program: Child Nutrition Cluster Assistance Listing Numbers: 10.553, 10.555 Compliance Requirement: I. Procurement and Suspension and Debarment Type of Finding: Significant Deficiency and Compliance Criteria: An independent estimate must be completed for every procurement action equal to or above 250,000, the federal simplified acquisition threshold in effect during fiscal year 2025. This applies even when purchasing through a cooperative or interlocal contract. The independent estimate must be developed and documented before soliciting or receiving quotes from vendors through the purchasing cooperative. The documentation should include the estimated cost, the date it was prepared, who prepared it, and the basis for the estimate (e.g ., historical data, market research). It ensures compliance with federal regulations (2 CFR § 200.318(e) and 2 CFR § 200.323) to confirm that the prices offered by the cooperative are reasonable. Even though purchasing cooperatives perform competitive procurements, the member district is responsible for the independent estimate to ensure the purchasing cooperative's pricing matches the member district's expected market value for the specific purchase. Condition: During our review of procurement transactions, we noted that the District did not prepare or document an independent cost estimate for a vendor whose expenditures exceeded the simplified acquisition threshold. Cause: The District was unaware of the requirement to prepare and document an independent estimate for procurements exceeding the simplified acquisition threshold. Effect: Failure to perform and document the required independent estimates results in noncompliance with federal requirements for procurements exceeding the simplified acquisition threshold. Additionally, without an independent estimate, the District cannot demonstrate that the amount paid was fair and reasonable, increasing the risk of paying more than market value. Questioned Costs: None reported Repeat Finding: No Recommendation: We recommend that management: 1. Update procurement policies and procedures to clearly require an independent estimate for all procurements exceeding the simplified acquisition threshold. 2. Implement internal control checkpoints, such as required approvals or system prompts, to ensure that documentation is completed and retained prior to contract award. 3. Provide training to procurement and program staff on Federal procurement standards and documentation requirements. 4. Conduct periodic reviews of procurement files to ensure ongoing compliance and strengthen internal controls. Views of Responsible Official: Management concurs with the finding. The District acknowledges that an independent estimate was not documented for the procurement transaction identified. Management is committed to strengthening procurement compliance and improving internal controls to prevent recurrence.
Finding 2025-001: Reportable finding considered a significant deficiency - Noncompliance with Internal Procurement Authorization Controls Program name: Child and Adult Care Food Program Assistance Listing: 10.558 Federal awarding agency: U.S. Department of Agriculture (USDA) Pass-through entity: Maryland State Department of Education, District of Columbia Education Office Award identification number: 012-2024/2025-3539-000 Award Years: 2024/2025 Criteria: Under 2 CFR 200.318(a), non-federal entities must establish and maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders. As required under 2 CFR Subpart D (§§200.317–200.327), organizations must follow written procurement procedures that reflect applicable state, local, and tribal laws and regulations, provided that the procurements conform to applicable federal law and the standards in the Uniform Guidance. The Organization’s internal procurement policy includes specific thresholds for contract approvals and designates levels of review and signature authority based on the contract value. Adherence to these internal controls is essential to ensure compliance with federal procurement requirements and appropriate stewardship of federal funds. Condition: During our testing of procurement activity, we noted that procurement contracts were executed (in September/October of 2024) by an individual who did not have the delegated authority to approve or sign the agreement, as required by the Organization’s internal procurement policy. The contracts exceeded the individual’s approval threshold. The policy’s required internal approval levels were not followed prior to execution. Cause: This issue appears to have resulted from a breakdown in adherence to established internal control procedures, possibly due to a lack of training or oversight. The Organization’s procurement policy was in place and compliant with 2 CFR requirements, but it was not enforced in practice. Effect: Noncompliance with internal procurement approval controls increases the risk of unauthorized or inappropriate spending, lack of transparency, and potential ineligibility of costs charged to federal programs. While the transaction itself may ultimately be allowable, failure to follow established approval protocols constitutes a significant deficiency in internal control over compliance. Repeat finding: This is a repeat finding. See 2024-004 in prior year report. Questioned costs: None identified, as the expenditure appeared otherwise allowable. However, the control deficiency presents a risk for future noncompliance. Perspective: We selected two procurement transactions from a population of four procurement transactions from this program. The issue reflects a control failure affecting procurement activity across federally funded programs and may result in future questioned costs if not corrected. Recommendation: We recommend that the Organization follow up with the relevant parties to ensure proper reporting requirements are met on a timely basis. Management’s response and corrective action plan (unaudited): See corrective action plan
Procurement and Suspension and Debarment Federal Agency: U.S. Environmental Protection Agency Federal Program Title: Drinking Water State Revolving Fund (DWSRF) ALN: 66.468 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 2521902915 September 1, 2024 - August 31, 2025 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: "Per 2 CFR §200.303(a), Texas Commission on Environmental Quality (TCEQ) must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that it is managing the Federal award in compliance with federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR §200.318, the recipient or subrecipient must maintain and use documented procedures for procurement transactions under a federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations and the standards identified in §§ 200.317 through 200.327. Per 2 CFR §200.214, recipients and subrecipients are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, as well as 2 CFR part 180. The regulations in 2 CFR part 180 restrict making Federal awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal awards. Condition: Audit procedures included a review of five procurements conducted during the fiscal year to assess whether TCEQ adhered to required procurement procedures and performed vendor eligibility verifications prior to entering into covered transactions. For one procurement, totaling $16,175, the required procurement processes were not followed, and the necessary vendor compliance checks, including verification of suspension and debarment status, were not completed before executing the transaction. Questioned costs: None. Context: See “Condition.” Cause: The procurement was initiated directly by the program area without notifying or coordinating with the Procurement and Contracts Section. Program staff proceeded with the purchase under the assumption that procurement involvement was unnecessary because the selected vendor was the sole provider of the required item. As a result, established procurement procedures and vendor compliance verification processes were not followed. Effect: Failure to follow procurement procedures and complete proper vendor compliance checks prior to entering into a covered transaction may lead to entering contracts with suspended or debarred vendors that could result in noncompliance and questioned costs. Repeat Finding: No Recommendation: TCEQ should provide targeted training to program staff on federal procurement requirements, including the necessity of coordinating all purchases through the P&C Section and completing required vendor compliance checks. Training should emphasize procedures for sole‑source or limited‑source procurements and reinforce staff responsibilities under 2 CFR procurement and internal control standards. Regular refresher sessions and documented guidance will help ensure consistent understanding and adherence to required procurement practices across all program areas. Views of responsible officials: The Financial Administration Division (FAD) will implement the audit’s recommendations. FAD will reinforce the guidance provided through continuous training, documentation, and improved internal controls.
Assistance Listing, Federal Agency, and Program Name - 93.088, U.S. Department of Health and Human Services, Advancing System Improvements for Key Issues in Women's Health 93.323, U.S. Department of Health and Human Services, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) 93.592, U.S. Department of Health and Human Services, Family Violence Prevention and Services/Discretionary and COVID - 19 Family Violence Prevention and Services/Discretionary 93.837, U.S. Department of Health and Human Services, Cardiovascular Disease Research (Research and Development Cluster) Federal Award Identification Number and Year - 93.088 ASTWH220110 (2023 and 2024) 93.323 - 32680012K (2024) 93.592 - 90EV0516 (2021); 90EV0530 (2023); ; 90EV0544 (2024) 93.837 - U01HL146245 (2024) Pass through Entity - 93.088 N/A 93.323 - Illinois Department of Public Health 93.592 - N/A 93.837 - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - Yes 2024-001 Criteria - Per 2 CFR 200.303(a), nonfederal entities must establish and maintain effective internal controls 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. These internal controls should be in compliance with the guidance in Standards for Internal Control in the Federal Government, issued by the Comptroller General of the United States, or the Internal Control Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.318(a), the nonfederal entity must have and use documented procedures, consistent with state, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a federal award or subaward. The nonfederal entity's documented procurement procedures must conform to the procurement standards identified in §§200.317 through 200.327. The LLC has established in its internal procurement policies and procedures that a minimum of 3 quotes must be obtained for purchases made under informal, simplified acquisition procedures. Per 2 CFR 200.318(i), 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. Condition - Controls were not sufficient to ensure that the history of procurement decisions was documented, as required by 2 CFR 200. Additionally, controls were not sufficient to ensure checks for suspension and debarment were documented before entering into covered transactions with third parties. Questioned Costs - unknown If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported We are unable to predictably quantify, had federal procurement standards been followed, which portion of activity presented on the SEFA under these contracts would be in question. Identification of How Questioned Costs Were Computed N/A Context - 93.088 - Management was unable to provide evidence that three out of three contractors tested was checked for suspension and debarment in advance of entering into a covered transaction. 93.323 - Management was unable to provide evidence that three out of three contractors tested was checked for suspension and debarment in advance of entering into a covered transaction. 93.592 - Management was unable to provide evidence that four out of four contractors tested was checked for suspension and debarment in advance of entering into a covered transaction. 93.837 - Of the four contracts tested, management was unable to produce records sufficient to detail the history of procurement for one contract. Additionally, for that same contractor, management was unable to provide evidence that the third party was checked for suspension and debarment in advance of entering into a covered transaction. Because we were able to confirm via a check of the Excluded Parties Listing that the contractors noted above were not suspended or debarred, no questioned costs related to this noncompliance were identified. Cause and Effect - Newly revised procurement policies and procedures implemented during the last month of the fiscal period under audit were not in place during the time of the contract acquisitions noted above, and therefore a lack of internally established procurement documentation practices resulted in material noncompliance with federal procurement standards. Recommendation - We recommend that management continue to follow and formalize its procurement policies and procedures to demonstrate how the LLC will achieve compliance with federal procurement standards identified in §§200.317 through 200.327. Additionally, we recommend management retain documented evidence that its policies and procedures were followed to ensure compliance with federal procurement standards. Views of Responsible Officials and Corrective Action Plan - Management will continue to strengthen internal controls through the revised Procurement Policy, enhanced documentation requirements, and clarified approval procedures. A centralized tracking database has been implemented to document sanctions, suspension, and debarment checks, as well as other required verifications based on the nature of each purchase or service. These procedures are required prior to entering into covered transactions and are monitored through dual staff reviews. Management believes that ongoing monitoring and consistent enforcement of these procedures will ensure compliance and prevent recurrence.
Federal Grantor: Department of Agriculture, Pass-Through: Nebraska Department of Education Program: Child Nutrition Cluster, Special Education Cluster Award No. and Year: 13898414/13897314/47600262900 and 2024, 24-6406-00-19-028-0001/24-6408-00-19-028-0001/24-6411-00-19-028-0001/24-6412-00-19-028-0001/24-6418-132-28-0001P and 2024 Federal Assistance Listing Number: 10.553/10.555/10.559/10.582, 84.027/84.173 Compliance Requirement: Procurement, Suspension, and Debarment Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria: Uniform Guidance and 2 CFR sections 200.318 through 200.326 set forth the procurement standards non-federal entities other than states must follow when operating federal programs and the procurement procedures required. Condition: In our testing of procurement, suspension, and debarment it was identified that the District’s procurement policy does not address the following items: Avoid acquisition of duplicative items (2 CFR 200.318) Disadvantaged Business Enterprise Program (2 CFR 200.321) Domestic preferences (2 CFR 200.322) Recovered materials, if subject to EPA requirements (2 CFR 200.323) Contract price/types (2 CFR 200.326) Cause: Lack of oversight, awareness, or understanding of all of the specific requirements under the Uniform Guidance and applicable CFR sections, and controls were not adequately designed to ensure compliance with these requirements. Effect: A lack of compliant policies increases the overall risk of non-compliance. Questioned Costs: None reported Context/Sampling: Overall procurement policy. Repeat Finding from Prior Year(s): No Recommendation: We recommend that management adopt a revised procurement policy addressing the avoidance of acquisition of duplicative items, Disadvantaged Business Enterprise Program, domestic preferences, recovered materials if subject to EPA requirements, and contract price/types. Views of Responsible Officials - There is no disagreement with the audit finding.
Finding Reference: 2025-001 - Procurement Policies and Procedures Federal Agency: U.S. Department of Agriculture Federal Program: Water and Waste Disposal System for Rural Communities - ALN 10.760 Compliance Requirement: Procurement, Suspension, and Debarment Criteria: The Uniform Guidance requires that non-federal entities must have and use documented procedures consistent with laws and regulations and the standards for the acquisition of property or services under a federal award or subaward in accordance with 2 CFR 200.318. Additionally, the non-federal entity is required to follow formal procurement methods when the value of the procurement property or service under a federal financial assistance award exceeds the simplified acquisition threshold in accordance with 2 CFR 200.320. Condition: The Authority does not have any documented procurement procedures. However, during our testing of compliance with procurement guidelines, no further deviations from federal guidelines were noted. This is a repeat report finding from the prior year (2024-002). Cause and Effect: The Authority was unacquainted with general procurement standards of the Uniform Guidance. Without documented procurement procedures, it is difficult for the Authority to ensure compliance with relevant compliance requirements. Questioned Cost: None Recommendation: The Authority should establish documented procedures related to federal procurement. Views of Responsible Officials: The Loysville Village Municipal Authority disagrees with this finding. The Authority is bound by the procurement procedures contained in the Municipal Authorities Act (Pennsylvania law) and has signed agreements with USDA governing its procurement procedures. These documents are in writing and any additional policy for this purpose would be either conflicting or superfluous.
Criteria Under 2 CFR 200.319, all procurement transactions must provide full and open competition and avoid restrictive practices. Additionally, 2 CFR 200.318 requires entities to maintain oversight of contractor performance and document procurement history in accordance with written standards. Condition From a sample of sixty-eight (68) Title V disbursements reviewed, three (3) instances were identified in which the procurement method applied and related supporting documentation were not adequately aligned with federal procurement standards. Specifically, the University utilized sole-source providers for certain purchases where the rationale provided was unsuitable since it did not sufficiently explain why alternative vendors were not considered. Cause The condition resulted from inadequate procurement documentation and insufficient enforcement of competitive procurement practices. While procurement activities were conducted, the University did not consistently document the justification for sole-source selections or demonstrate that full and open competition was considered. Additionally, procurement review and oversight controls were not consistently applied, leading to incomplete procurement histories and insufficient support for vendor selection decisions. Effect The procurement transactions identified resulted in noncompliance with federal requirements. While the procurement methods used did not fully comply with federal competition requirements, no evidence indicates that the related costs were unreasonable or unallowable. However, continued noncompliance could result in disallowed costs or increased administrative oversight by the U.S. Department of Education, including potential reconsideration of the University’s eligibility to operate under the advance payment. Questioned Costs None. Recommendation We recommend that the University update its procurement policies and related procedures to clearly and further define federal procurement methods, thresholds, and required documentation, and to consistently enforce them. Additionally, the evidence to document the use of sole provider justification must clearly state the unique nature of the source, any urgent circumstances, specific authorizations, and efforts to solicit competition in accordance with 2 CFR Part 200. Views of Responsible Officials Refer to Management's unaudited corrective action plan.
Child Nutrition Cluster - Procurement. Information on Federal Program: U.S. Department of Agriculture Child Nutrition Cluster (National School Breakfast Program, School Lunch Program, School Lunch Program Supply Chain- COVID 19 Assistance Listing Numbers 10.553 and 10.555) passed through the New York State Education Department. Criteria: 2 CFR Section 200.318 stipulates that a non-Federal entity must use its own documented procurement procedures which reflect applicable state, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in Part 200 Subpart D. Additionally, 2 CFR Section 200.214 refers to executive orders 12549 and 12689 as well as 2 CFR Part 180, which stipulates that no awards, subawards, or contracts be awarded to parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal assistance programs or activities. Statement of Condition: During our discussions with management, we noted that the District is not verifying the eligibility of vendors to participate in Federal assistance programs on an annual basis. They are however, checking the status of any new vendors. Statement of Cause: The District did not review compliance requirements related to procurement outlined in 2 CFR Section 200.314 and 2 CFR Part 180. Statement of Effect: The District is not in compliance with 2 CFR Section 200.214 and 2 CFR Part 180. The District is not performing required procedures, as a result, vendors that are not eligible for participation in Federal assistance programs or activities could be selected. Perspective Information: As part of the requirements under the Uniform Guidance, a review of vendors charged to the school lunch fund and therefore represent purchases with federal dollars was performed. Of the District’s vendors charged to the fund, none were suspended or debarred from participation in Federal assistance programs or activities. Questioned Cost: None. Repeat Finding: No Recommendation: We recommend that the District review the requirements of 2 CFR Section 200.214 and 2 CFR Part 180 and ensure that a review of the eligibility of potential vendors to participate in Federal assistance programs or activities is performed prior to disbursing funds to the vendor. Views of the Responsible Officials and Planned Corrective Actions: The Business Manager will review these requirements with the Sr. Account Clerk. The Sr. Account Clerk will verify that all vendors are eligible to participate in the federal assistance program on an annual basis. Specifically, a note will be entered on the vendor record in the accounting system each time a purchase order is issued, which will detail that the proper verification was performed.
Child Nutrition Cluster - Procurement. Information on Federal Program: U.S. Department of Agriculture Child Nutrition Cluster (National School Breakfast Program, School Lunch Program, School Lunch Program Supply Chain- COVID 19 Assistance Listing numbers 10.553 and 10.555) passed through the New York State Education Department. Criteria: CFR Section 200.318 stipulates that a non-Federal entity must use its own documented procurement procedures which reflect applicable state, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in Part 200 Subpart D. Additionally, 2 CFR Section 200.214 refers to executive orders 12549 and 12689 as well as 2 CFR Part 180, which stipulates that no awards, subawards, or contracts be awarded to parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal assistance programs or activities. Statement of Condition: During our discussions with management and testing of various vendors, we noted that the District is not following its procurement procedures for the Child Nutrition program purchases and is not verifying the eligibility of vendors to participate in Federal assistance programs on an annual basis. Statement of Cause: The District did not review compliance requirements related to procurement outlined in 2 CFR Section 200.314 and 2 CFR part 180. Statement of Effect: The District is not in compliance with 2 CFR Section 200.214. The District is not performing required procedures; as a result, vendors that are not eligible for participation in Federal assistance programs or activities could be selected or the District could be overpaying for goods and services. Questioned Costs: None Perspective Information: As part of required procurement testing, a review of vendors charged to the school lunch fund and therefore represented purchases with federal dollars was performed. Of the District’s vendors charged to the fund, none were suspended or debarred from participation in Federal assistance programs or activities. Repeat Finding: Yes Recommendation: We recommend that the District review the requirements of 2 CFR Section 200.214 and 2 CFR part 180 and ensure that their procurement procedures are being followed and that a review of the eligibility of potential vendors to participate in Federal assistance programs or activities is performed prior to disbursing funds to the vendor. Views of the Responsible Officials and Planned Corrective Actions: The District will review the requirements of 2 CFR Section 200.214 and 2 CFR Part 180 and ensure procurement procedures are being followed. Further, the District will perform and document a review of the eligibility of vendors to participate in Federal assistance programs. The District is in the process of corrective action, and is working toward compliance.
Criteria: Code of Federal Regulations, CFR 200.318-322, requires the non-Federal entity to have and use documented procurement procedures consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for the acquisition of property or services required under a Federal award or sub-award. For “formal purchases,” those where the aggregate dollar amount is higher than the simplified acquisition threshold, sealed bids are publicly solicited through an invitation and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid conforms with all the material terms and conditions of the invitation and is the lowest in price. Condition: During our testing, we noted one contract that did not include documentation demonstrating that competitive bids were obtained. Additionally, there was no evidence that due diligence was performed to substantiate the vendor’s designation as a sole source, nor was there documentation indicating that no other vendors could meet the district’s needs. Context: The matter was found in one of the two samples we reviewed. Questioned Cost: There is no questioned cost associated with this non-compliance. Cause: District relied on a letter from the vendor, believing that this was a sole source. Effect: This resulted in one contract totaling $632,765 being awarded without competitive bidding documentation. Recommendation: We recommend that the District comply with 2 CFR, section 200.318-322, which requires that an LEA maintain the documented procedures for procurement transactions under a federal award. Views of Responsible Officials: We agree with the auditor’s comments, and the following actions have or will be taken to ensure the procurement of goods and services for the nutrition services department follows all applicable steps according to Title 2, Code of Federal Regulations (2 CFR) sections 200.317-200.327; Title7, Code of Federal Regulations (7 CFR), parts 210 and 220; and all applicable state and local rules: 1. During the school year 2024/2025, changes were made to staff to allow for additional oversight. A Procurement Specialist reporting directly to the Director of Purchasing was added to staff in lieu of a Buyer that had previously reported to the Director of Nutrition Services. This move allowed for an additional step to ensure proper procurement is happening. 2. All purchasing methods, including Micropurchase, Simplified Acquisition, and Formal, will be followed in accordance with all applicable regulations, in line with RUSD’s written procurement procedures. 3. Any noncompetitive procurement will only occur if the conditions outlined in applicable regulations are met and sufficient evidence and documentation is received and retained, including participating in performing due diligence to ascertain whether a single source document is accurate from any given vendor. 4. In addition, documented annual training will take place for all staff involved in the procurement process. This procedure includes a review and annual update of procurement procedures, if applicable, and an acknowledgement of the nutrition services code of conduct in regards to purchasing.
National Endowment for the Arts Federal Financial Assistance Listing 45.025, Affects all grant awards included under Federal Financial Assistance Listing 45.025 on the Schedule Promotion of the Arts Partnership Agreements Procurement, Suspension, and Debarment 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 the terms and conditions of the federal award. 2 CFR 200.318 maintains that recipients must have and use documented procurement policies and must conform to procurement standards in sections 200.317 through 200.327. Condition: The Organization has documented procurement procedures that conform to applicable federal standards regarding testing vendors for suspension and debarment; however, the procedures were not followed for two vendors selected for testing. Cause: The Organization's internal control process did not identify the two vendors for whom the suspension and debarment verification was not performed. Effect: Payments could be made to recipients who were suspended or debarred. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 4 transactions out of 14 total transactions were selected for testing. Two vendors did not have support showing the search for suspension and debarment was performed which accounted for $155,100 of $716,818 of federal awards. Repeat Finding from Prior Year(s): No Recommendation: We recommend the Organization enhance internal control procedures to ensure all suspension and debarment verification procedures are performed prior to entering into the transactions. Views of Responsible Officials: Management agrees with the finding. The Organization takes compliance with federal procurement requirements seriously and has already implemented additional internal controls to address this.
Finding 2025-001, Significant deficiency Identification of federal program: US DEPARTMENT OF AGRICULTURE passed through the Indiana Department of Education Child Nutrition Cluster 10.553 & 10.555, US DEPARTMENT OF EDUCATION passed through the Indiana Department of Education Chater School Facilities Incentive Grant 84.282D Criteria: According to 2CFR 200.318(i) the recipient or subrecipient must maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price. Condition: The School did not maintain records for food and construction vendors that met the acquisition thresholds for the year. Cause: The School’s procurement policies do not address the frequency of which vendors should be evaluated. In addition, the policies also do not address records retention. Potential effect: The procurement may not have been proper under the grant requirements. Questioned costs: None. Repeat Finding: Repeat of finding 2024-004. Context: A total sample of two (2) of thirteen (13) purchases related to a certain food provider were selected as a part of procurement and suspension and debarment compliance requirement testing for the Child Nutrition Cluster. Additionally, one (1) of two (2) construction projects begun during the fiscal year did not undergo a formal RFP nor were posted publicly to obtain multiple bids. Recommendation: We recommend that the School follow federal procurement guidelines for each of the different purchase thresholds for each vendor. We further recommend that the School retain any documentation created related to the procurement selection and vetting process. Views of Responsible Officials: See attached Corrective Action Plan.
Child Nutrition Cluster - Procurement Information on Federal Program: U.S Department of Agriculture Child Nutrition Cluster (National School Breakfast Program, School Lunch Program, and Special Milk Program for Children Assistance Listing numbers 10.553, 10.555, and 10.556) passed through the New York State Education Department. Criteria: CFR Section 200.318 stipulates that a non-Federal entity must use its own documented procurement procedures which reflect applicable state, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in Part 200 Subpart D. Additionally, 2 CFR Section 200.214 refers to executive orders 12549 and 12689 as well as 2 CFR Part 180, which stipulates that no awards, subawards, or contracts be awarded to parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal assistance programs or activities. Statement of Condition: During our discussions with management and reverification of use of same vendors as previous year, we noted that the District is not verifying the eligibility of vendors to participate in Federal assistance programs on an annual basis. They are however, checking the status of any new vendors. In addition, the District does not have any procedures in place to verify purchases against the bidding documents for pricing. Statement of Cause: The District did not review compliance requirements related to procurement outlined in 2 CFR Section 200.314 and 2 CFR part 180. Statement of Effect: The District is not in compliance with 2 CFR Section 200.214 and 2 CFR Part 180. The District is not performing required procedures, as a result, vendors that are not eligible for participation in Federal assistance programs or activities could be selected or the District could be overpaying for goods and services. The District could also be overpaying for goods as the bid documentation is not being verified against the purchases made. Questioned Costs: None Perspective Information: As part of required follow up of prior year audit findings, a review of vendors charged to the school lunch fund and therefore represent purchases with federal dollars was performed. Of the District’s vendors charged to the fund, none were suspended or debarred from participation in Federal assistance programs or activities. Also as part of the required follow up of prior year audit findings, inquiries were performed to determine if bidding and procurement procedures were being followed, and they were not. Repeat Finding: Yes Recommendation: We recommend that the District review the requirements of 2 CFR Section 200.214 and 2 CFR part 180 and ensure that a review of the eligibility of potential vendors to participate in Federal assistance programs or activities is performed prior to disbursing funds to the vendor. The District should also implement procedures to verify their purchases against bidding documentation to ensure that they are paying the correct, bid upon price for their purchases. Views of the Responsible Officials and Planned Corrective Actions: The District will monitor vendors to ensure they are able to accept federal monies.
2025-003: Procurement Procedures (Significant Deficiency and Noncompliance) Federal Program: IDEA Special Education Federal ALN: 84.027/84.173 Criteria: Under 2 CFR §200.318-§200.320, non-federal entities must conduct all procurement transactions in a manner providing full and open competition and must follow documented procurement procedures consistent with federal standards. Additionally, 2 CFR §200.214 (previously §200.213) requires non-federal entities to verify that contractors are not suspended or debarred from doing business with the federal government. This verification may be accomplished by checking the System for Award Management (SAM.gov) or obtaining a certification from the vendor. Condition and Context: During our testing of procurement transactions, we identified two (2) contracts in which bids were not solicited as required by the District's procurement policy and Uniform Guidance. In addition, suspension and debarment checks were not performed or documented for these vendors prior to contract award. Cause: The exceptions occurred because procurement procedures were not consistently followed, and management did not perform or document required suspension/debarment verifications prior to contract execution. This may have been due to oversight or lack of staff training regarding Uniform Guidance procurement requirements. Effect or Potential Effect: Failure to solicit bids and perform suspension/debarment checks increases the risk of noncompliance with federal regulations, potential ineligible costs charged to federal programs, and diminished assurance that contracts are awarded fairly and to responsible parties. Questioned Costs: None. Identification as a Repeat Finding: No. Recommendation: We recommend that management strengthen procurement procedures to ensure compliance with Uniform Guidance requirements. Specifically: - Solicit bids or proposals in accordance with applicable competitive procurement thresholds; - Perform and document suspension and debarment checks (e.g., through SAM.gov) prior to awarding contracts; and - Provide staff training on federal procurement standards and maintain documentation supporting compliance for each federally funded procurement. Responsible Official's Response: Please see the last page of this report for the response to this finding.
Finding 2025-002: Procurement (50000) Assistance Listing # 10.553, 10.555 U.S. Department of Agriculture Passed Through: California Department of Education (pass through numbers 13526, 13523, 13391, 15655) Child Nutrition Cluster Repeat Finding? No Criteria: Code of Federal Regulations, CFR 200.320, requires the non-Federal entity to have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for the acquisition of property or services required under a Federal award or sub-award. For “small purchases,” those where the aggregate dollar amount is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. For acquisitions exceeding the simplified acquisition threshold, the non-federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR section 200.320(b); the competitive proposals method under the conditions specified in 2 CFR section 200.320((b) (2); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR section 200.320(c)). Condition: During our testing of procurement, we sampled two contracts that would qualify as “small purchases.” The district could not provide evidence that multiple quotes had been obtained prior to selecting the vendors. Cause: Due to turnover at the District, there has been a lack of oversight to ensure all appropriate documentation is maintained to demonstrate that the District is in compliance with Public Contract Code and that purchases are awarded after a reasonable number of quotes have been obtained. Context: Deficiency was noted in two of two vendors tested. Questioned Cost/Effect: This resulted in roughly $138,594 dollars awarded in contracts, without following proper procedures. Recommendation: We recommend that the District train and implement the required federal procurement procedures to ensure that the District is in compliance. Views of Responsible Officials: The District corrected this procedure for fiscal year 2025-26 and has the process in place going forward for each fiscal year.
Suspension and Debarment Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Assistance Listing Number: 93.323 Federal Award Number: NU50CK000556 Award Periods: January 1, 2024 – July 31, 2024 Criteria: 2 CFR sections 200.212 and 200.318(h); 2 CFR section 180.300; 48 CFR section 52.209-6 outlines that the non-Federal entity must verify that the agency in which it is entering into a contract is not suspended or debarred or otherwise excluded from participating in the transaction. Condition: The organization did not document that SAM.gov was checked prior to entering into a contract with a vendor. Questioned Costs: None. Context: This condition impacted five of five transactions selected for testing. None of the entities transacted with were determined to be excluded parties per SAM.gov. Cause: Based on the timing of when the grant was received by the Organization (June 2024) and when the period of performance expired (July 2024), the Organization had extremely limited time to accomplish the program objectives. Thus, the organization did not maintain documentation that vendors were verified as not being suspended or debarred prior to entering into the transaction. Effect: The Organization could potentially entered into a transaction with an entity that has been suspended or debarred. Repeat Finding: No. Recommendation: We recommend that the organization retain documentation that Sam.gov was used to verify that a vendor was not suspended, debarred, or otherwise excluded from participating in the transaction prior to contract. To the extent practicable, the organization can engage with a third party that will verify any new and existing vendors have not been suspended or debarred on a monthly basis. Views of Responsible Officials: There is no disagreement with the audit finding.
Finding 2025-002 Significant deficiency in internal controls over compliance and noncompliance with procurement and suspension and debarment procedures meeting the requirements of the Uniform Guidance. Federal Agency: Department of Health and Human Services Program Title: Congressional Directives Assistance Listing Number: 93.493 Award Number: CE1HS47357-01-00 Award Period: September 1, 2022 - August 31, 2025 Criteria 2 U.S. Code of Federal Regulations (CFR) 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requires a non-Federal entity that has expended federal awards to have written policies pertaining to its federal grants for procurement and that the history of each procurement is documented in accordance with 2 CFR section 200.318 to 200.320. Further, the regulations in 2 CFR part 180 restrict making Federal awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal awards. Condition/Context for Evaluation The Organization received and utilized the federal award to pay for general contractor services for Phase II of a multi-phase construction project that was ongoing at the time of the award. The general contractor was selected as part of a competitive RFQ process for Phase I of the construction prior to notice of the award. A cost and price analysis was completed on the general contractor during the RFQ process. During predevelopment, the general contractor selected for Phase I was contracted for consulting work for scoping Phase II of the project. The general contractor and Organization solicited competitive bids from subcontractors and performed a cost/price analysis that was used for subcontractor selection. A stipulated sum contract was signed with the general contractor based substantially on the competitive bids received from subcontractors. As a result, the Organization ultimately elected to utilize a noncompetitive procurement method for the selection of the general contractor for Phase II of the construction project, on the basis that the procurement could only be obtained from a single source. This was determined due to the specialized nature of the building itself, as well as the accumulated knowledge that the general contractor had from Phase I of the project, and consulting on the predevelopment of Phase II. Ultimately, the Organization did not have a procurement policy in place that specifically covered the criteria and documentation requirements for a noncompetitive procurement required under the Uniform Guidance. As a result, the Organization did not have a process in place that resulted in compliance with the Uniform Guidance, including the maintenance of records to detail the history of the procurement in accordance with 2 CFR 200.318 to 1 CFR 200.320 Cause The Organization did not have a procurement policy or internal controls in place to ensure that the Organization’s procurement activities were done in accordance with the Uniform Guidance and controls were in place to retain documentation of the history of the procurement. Effect or Potential Effect The Organization entered into agreements to procure goods and services for which appropriate documentation was not retained to support the history of the procurement. Questioned Costs $0 Repeat Finding No
U.S. Department of Treasury Federal Assistance Listing #21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Procurement, Suspension, & Debarment Material Weakness in Internal Control Over Compliance and Noncompliance 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. 2 CFR 200.318 requires the auditee to use its own documented procurement procedures which reflect State, local and tribal laws and regulations, provided that the procurements conform to applicable Federal law and standards. 2 CFR 200.214 restricts making federal awards with certain parties that are debarred, suspended, or otherwise excluded from participating in Federal awards. Condition: The Hospital did not have a written procurement policy in place that aligned with all federal regulations. The Hospital also did not review vendors to ensure that they were not debarred, suspended, or otherwise excluded from participating in federal awards. Cause: While the Hospital did have a policy in place, the policy did not follow all federal regulations, or include policies of determining if vendors are debarred, suspended, or otherwise excluded from participating in Federal awards. Effect: Noncompliance with the Uniform Guidance could jeopardize future federal funding. Questioned Costs: None reported Context: A nonstatistical sample of 3 vendors out of 9 vendors with actual or anticipated expenditures greater than the federal micro purchase threshold were tested for procurement testing. Repeat Finding from Prior Years: No. Recommendation: The Hospital should update their procurement policy to align with all federal requirements outlined in 2 CFR 200.318. We also recommend that the Hospital reviews vendors that are used for federal awards to ensure that they are not debarred, suspended, or otherwise excluded from participating in Federal awards in accordance with 2 CFR 200.214. Views of Responsible Officials: Management agrees with the finding.
MATERIAL WEAKNESSES 2025-001 – Procurement Federal Program Information: Department of Education - 10.553,10.555,10.556, 10.5599 and 10.582 Child Nutrition Cluster 84.027 and 84.173 Special Education Cluster Criteria: The following CFR(s) apply to this finding: 2 CFR 200.318-327, 2 CFR 400.2, 2 CFR 416.1(a), 7 CFR 210, 215, 220, and 225. Condition: During audit procedures, it was identified that the District l did not require service contracts and did not follow procurement methods. Cause: The District does not have the necessary internal controls over compliance and does not appear to have the understanding or knowledge of the contract requirements for service contracts. Effect: The District is not applying proper procurement methods for their service contract. This increases the likelihood of paying service providers that have been debarred or suspended for receiving federal funds, incorrect procurement method used could result in noncompliance. Identification of Questioned Costs: None identified. Context: In the review of the expenses we identified multiple vendors that we believe should have had contracts. The District was unable to provide contracts and stated they did not have them. This is not a statistically valid sample. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the District implement internal control processes and procedures to ensure compliance with federal procurement methods and internal policies. Views of Responsible Officials and Corrective Action Plan: Please see the Corrective Action Plan issued.
Procurement Federal Agency: United States Department of Education Federal Program Name: Special Education Cluster (IDEA) Assistance Listing Number: 84.027 / 84.173 Federal Award Identification Number and Year: HO27A230021 - 2023 (84.027) HO27A240021 - 2024 (84.027) H173A240024 - 2024 (84.173) H173A230024 - 2023 (84.173) Pass-Through Agency: Connecticut State Department of Education Pass-Through Number(s): 12060-SDE64370-20977-2024 12060-SDE64370-20983-2024 12060-SDE64370-20977-2025 12060-SDE64370-20983-2025 Award Period: 7/1/2023-6/30/2025 (2024 Grant) 7/1/2024-6/30/2026 (2025 Grant) Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: The Board of Education must comply with procurement standards set out at 2 CFR sections 200.318 through 200.326 within Uniform Guidance. Condition: The Board of Education failed to solicit written quotations (in noncompliance with federal UG for procurements over $10,000) related to a contract paid under the grant. Under local policy, sealed bids should have been obtained for a competitive procurement over $25,000. Questioned costs: None noted. Context: The Board of Education is required to solicit competitive quotations for contracts over $10,000 paid with federal grant funds or document a non-competitive procurement justification. Cause: The contract was renewed without conducting any procurement procedures or maintaining documentation supporting a non-competitive procurement justification. Effect: Noncompliance with local procurement policy and federal procurement guidelines. Repeat Finding: No Recommendation: We recommend that the Board of Education review its procurement processes to ensure they comply with local policies and federal guidance. Views of Responsible Officials and Planned Corrective Action: Management agrees with this finding. The Board of Education will review its procurement processes to ensure they comply with local policies and federal guidance.
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Continuum of Care Assistance Listing Number: 14.267 Federal Award Identification Number and Year: PA0504L3T002211 - FY25, PA0504L3T002312 - FY25, PA0911L3T002204 - FY25, PA0911L3T002305 - FY25, PA1067L3T002200 - FY25, PA1067L3T002301 - FY25 Award Period: July 1, 2024 through June 30, 2025 Type of Finding: - Material Weakness in Internal Controls over Procurement, Suspension and Debarment - Noncompliance Criteria or specific requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award requires compliance with the provisions of procurement, suspension, and debarment. The Organization should have internal controls designed to ensure compliance with those provisions. 2 CFR section 200.318(c) and 48 CFR sections 52.203-13 and 52.303-16 requires entities to maintain standards of conduct that cover conflicts of interest and govern the performance of its employees engaged in the selection, award, and administration of contracts. Condition: We noted the Organization did not have adequate internal controls designed to ensure all vendors were compliant with the Organization’s conflict of interest policy, procurement, suspension and debarment requirements and the requirements of Uniform Guidance. Questioned Costs: Known: $45,096 Context: Lack of contracts, agreements and procurement, suspension and debarment procedures when acquiring vendors for federal grant expenditures. Through our testing of 60 vendors, we identified 3 which did not follow the proper procurement, suspension and debarment practices per federal requirements. Of these 3 vendors, we identified a total of $45,096 of known questioned costs within the program tested, and furthermore $344,164 of likely questioned costs based on the population. Cause: The Organization had procured vendors without following the required procurement, suspension, and debarment procedures. Effect: The lack of internal controls over these compliance requirements provides an opportunity for noncompliance. Recommendation: We recommend that management review the procurement, suspension, and debarment requirements for federal programs as well as the organization's policies related to these areas. Management should ensure that such practices are being followed to comply with federal requirements. We also recommend that all current vendors in use are assessed and considered for compliance with procurement, suspension and debarment practices. Views of responsible officials and planned corrective actions: There is no disagreement with the audit finding. See attached corrective action plan.
2025-004 PROCUREMENT United States Department of Agriculture Passed through Louisiana Department of Agriculture and Forestry Child Nutrition Cluster (Federal Assistance No. 10.555) Passed through Louisiana Department of Education Child Nutrition Cluster (Federal Assistance Nos. 10.553, 10.555, 10.559, and 10.582) Criteria: Non-federal entities must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326 and use their own documented procurement procedures, which reflect applicable State and local laws and regulations provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR part 200. Internal controls should be designed to ensure compliance with these federal requirements. Condition: The School Board’s current procurement process for School Food Service contracts does not include an independent review of the bid analysis prepared after the public opening of sealed bids. The bid analysis, which summarizes and evaluates the bids received, is prepared solely by a School Food Service employee and is not reviewed or approved by any other individual or department prior to being utilized by the School Board to award the contract. Although no input errors were noted through testing procedures, the School Board relied on unverified information when making award decisions intended to comply with procurement regulations. A total of 12 contracts were tested, of which 6 required bid tabulation analysis summaries to be prepared. Through testing performed, it was noted there did not appear to be a review of the bid tabulation analysis summary inputs prior to approval by the board in each of the 6 instances. Cause: Proper procedures were not implemented to ensure compliance with all procurement regulations and the established procedures were not properly executed by Child Nutrition personnel. Questioned Costs: Not applicable as no input errors were identified on the bid analysis tabulation summaries tested. Effect: While procurement purchases were ultimately determined to be in compliance with Federal procurement standards, the opportunity existed for non-compliance with Federal regulations. Recommendation: The School Board should remind Child Nutrition personnel of established procedures and establish additional internal controls to ensure that all inputs are entered into the bid analysis summary are complete and accurate. View of Responsible Official: Management agrees with the finding and will take corrective action. See corrective action plan submitted by management.
FINDING 2025-002 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023-2024, FY 2024-2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 17 PIKE COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Procurement - Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, the informal procurement method is permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. A total of six claims were determined to require small purchase procedures. Of the six claims, totaling $334,605, four were selected for testing. For two of the four claims selected, the School Corporation did not obtain an adequate number of price or rate quotations. Additionally, documentation detailing the history of procurement, which must include the reason for the procurement method used, was absent for these two vendors. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAM exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Upon inquiry, the School Corporation indicated that all service contracts contain a provision regarding suspension and debarment and that the contracts were reviewed and signed by a knowledgeable member of the School Corporation. A population of four covered transactions for goods or services totaling $306,482, all of which equaled or exceeded the $25,000 threshold paid from the Child Nutrition funds during the audit period, was identified and selected for testing. For two of the four selected transactions, the School Corporation did not verify that the vendor was not suspended, debarred, or otherwise excluded from or eligible for participation in federal assistance programs or activities prior to issuing payment. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 18 PIKE COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) 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. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: (2) Small purchases — (i) Small purchase procedures. 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." 2 CFR 180.300 states: "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. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or INDIANA STATE BOARD OF ACCOUNTS 19 PIKE COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (c) Adding a clause or condition to the covered transaction with that person." Cause The School Corporation did not have adequate internal controls to ensure compliance with procurement and suspension and debarment requirements. The Food Service Director was unaware of specific federal requirements regarding procurement thresholds for small purchases and the mandatory verification of vendor suspension and debarment status for transactions exceeding $25,000. The Director relied solely on the Food Service Center to ensure compliance. In addition, the School Corporation utilized additional vendors outside of the center's management scope without independently verifying their compliance status. Effect The lack of an effective internal control system enabled material noncompliance to occur and remain undetected. Noncompliance with the Procurement and Suspension and Debarment compliance requirement could enable small purchases made by the School Corporation to be uncompetitive and could lead to contracting with vendors who are suspended or debarred from receiving federal grant funding. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are verified to not be suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding: 2025-003 Procurement, Suspension, and Debarment (Significant Deficiency) Federal Agency(ies): United States Department of Agriculture Federal Program(s): Partnerships for Climate-Smart Commodities Assistance Listing Number(s): 10.937 Pass-through Entity (if applicable): N/A Award Identification Number and Year: NR233A750004G045 (2023) Criteria or Specific Requirement: 2 CFR 200.320(a)(1)(iv) allows for an increased micro-purchase threshold of up to $50,000 only if the non-Federal entity self-certifies that it meets specific conditions, including internal controls, organizational risk, and procurement oversight capacity. 2 CFR 200.214 prohibits contracting with or making subawards to parties that are suspended or debarred, and entities are required to verify that contractors are not listed on the System for Award Management (SAM.gov) at the time of contact/award. 2 CFR 200.318(c)(1) requires non-Federal entities to maintain written standards of conduct covering conflicts of interest and governing the performance of employees engaged in the selection, award, and administration of contracts. Condition: Our testing identified the following exceptions: 1. CIF did not maintain a comprehensive written procurement, suspension, and debarment policy during the fiscal year under audit. A draft policy was developed during the audit planning phase and is pending approval from the Board of Directors. 2. The draft policy self-certified a micro-purchase threshold of $50,000, which is not appropriate given that CIF does not meet all criteria required under 2 CFR 200.320(a)(1)(iv), and the elevated threshold is excessive relative to the size and scope of the Organization’s operations. 3. CIF provided SAM.gov suspension and debarment checks for contractors in our sample; however, the checks were undated, and we were unable to confirm that the verification was performed at the time of contract execution. 4. CIF did not maintain a conflict of interest policy during the fiscal year under audit, as required by 2 CFR 200.318(c)(1). While a draft conflict of interest policy was included in the draft procurement policy, it was not in effect during the year under audit. Cause: These conditions occurred because the Organization did not have formalized procurement policies and procedures in place throughout the year. Effect or Potential Effect: Failure to maintain compliant procurement and conflict of interest policies and procedures increases the risk that Federal funds may be spent in a manner inconsistent with Uniform Guidance requirements. Questioned Costs: $172,572 (all contractual expenses changed to ALN #10.937) Context: We tested a statistically valid sample of contractual relationships charged to Federal awards. The deficiencies noted were consistent across the sample population, indicating a systemic issue rather than isolated exceptions. Identification as a Repeat Finding, if Applicable: Yes, repeat of Finding 2024-006Recommendation: We recommend that management: 1. Finalize and implement a comprehensive procurement, suspension, and debarment policy that incorporates all requirements of 2 CFR 200.318–200.320. 2. Amend the draft policy to adopt a micro-purchase threshold appropriate for the Organization’s size and risk profile, consistent with 2 CFR 200.320(a)(1)(iv). 3. Ensure that SAM.gov checks are performed and documented with date-stamps at the time of contract execution. 4. Adopt and enforce a formal conflict of interest policy as required by 2 CFR 200.318(c)(1), and amend the policy to require annual (written) reaffirmations from all employees and Board members.
Criteria: Under Uniform Guidance (2 CFR §200.302, §200.303, §200.305, §200.318–§200.326, and §200.430), a non-federal entity must establish, document, and maintain written policies and procedures for the management of federal awards. Effective internal control over federal awards provides reasonable assurance that the entity is managing the award in compliance with federal statutes, regulations, and the terms and conditions of the awards. Condition: The Town did not have written policies and procedures required by Uniform Guidance (2 CFR 200) for the administration of its federal programs. Specifically, the Town has not formally documented policies and procedures addressing key areas required under the Uniform Guidance, including but not limited to allowable and unallowable costs and cost principles, procurement standards, suspension and debarment, conflicts of interest, cash management, and reporting and record retention requirements. While informal processes exist, they are not sufficiently documented to ensure consistent application or compliance with federal requirements. Cause: The Town has not developed or formally adopted written federal grant management policies and procedures. Effect: Without formal written policies and procedures, there is an increased risk of noncompliance with federal program requirements. This condition exposes the Town to potential noncompliance with federal regulations, increases the risk of unallowable costs being charged to federal awards, and may affect the Town’s ability to properly administer, monitor, and report federal program activity. Additionally, the lack of documentation may impair continuity of compliance in the event of change in key personnel. Recommendation: The Town should develop, formally adopt, and implement written policies and procedures to comply with Uniform Guidance (2 CFR 200). The policies should address all major compliance areas, including but not limited to allowable and unallowable costs and cost principles, procurement standards, suspension and debarment, conflicts of interest, cash management, and reporting and record retention requirements. The Town should ensure that staff responsible for federal grant administration are properly trained to ensure adherence to these policies and that the policies are reviewed periodically and updated as needed. Views of responsible officials: See management’s responses to findings on Page 78.
Criteria: Per 2 CFR § 200.318(d), non-Federal entities must avoid the acquisition of unnecessary or duplicative items. Non-federal entities are required to maintain effective procurement procedures and internal controls to ensure goods and services procured with federal funds are necessary, reasonable, and not duplicative. Condition: While performing procedures over the Town’s federal grant program activity, we noted that the Town incurred a duplicated cost when it processed and paid the same contractor invoice twice. Cause: The Town has not established or implemented written procedures requiring staff to review previous purchases or confirm whether services have been performed before initiating new procurements. Effect: Failure to ensure that goods purchased and services procured are necessary and nonduplicative increases the risk of waste and mismanagement of federal funds. This may result in unallowable costs being charged to federal awards and could require repayment of questioned costs to the granting agency. Questioned Cost: $37,430. Recommendation: As discussed at item 2025-001, we recommend Town develop, formally adopt, and implement written policies and procedures to comply with Uniform Guidance (2 CFR 200). Views of responsible officials: See management’s responses to findings on Page 78.
Criteria: Uniform Guidance (2 CFR §200.214 and §200.318(h)) prohibits non-federal entities from contracting with or making subawards to parties that are suspended or debarred. Entities must verify vendor eligibility by: Checking SAM.gov, Obtaining a vendor certification, or Adding a clause in contracts stating the vendor is not suspended or debarred. Condition: The Town did not have adequate internal controls to ensure compliance with the suspension and debarment requirements of the Uniform Guidance when procuring goods or services using federal funds. Cause: The Town had not established written procedures or implemented controls to ensure required suspension and debarment checks were performed and documented during procurement involving federal funds. Effect: Without controls to ensure compliance with suspension and debarment requirements, the Town is at increased risk of awarding federal funds to ineligible vendors. This could result in unallowable costs, questioned costs, or potential repayment of federal funds. Recommendation: The Town should develop and implement written policies and procedures requiring documentation of suspension and debarment checks before entering into contracts funded with federal awards. Acceptable methods include maintaining SAM.gov eligibility verification screenshots, obtaining vendor certifications, or including appropriate contract language. Views of responsible officials: See management’s responses to findings on Page 78.
Federal agency: U.S. Department of Agriculture Federal program name: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559 Federal Award Identification Number and Year: 202121N109942, 2025 Pass-Through Agency: Minnesota Department of Agriculture Pass-Through Number: 202121N109942 Award Period: Year ended June 30, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Non-federal entities other than states must follow the procurement standards set out at CFR sections 200.318 through 200.326. This includes utilizing one of the five allowable procurement methods, including small purchase guidelines for items over the micro-purchase threshold and sealed bids, competitive proposals, or noncompetitive proposals when items exceed the simplified acquisition threshold. In addition, the Uniform Guidance requires that the entity maintain records sufficient to detail the history of the procurement. 2 CFR 200.303 requires that the entity have sufficient controls over compliance related to federal awards. Condition: During our testing of the District’s procurements within the Child Nutrition program, it was noted that not all procurements followed the appropriate method and history of the transaction was not sufficiently documented. Questioned Costs: ALN 10.553 and 10.555 - $220,560.64 Context: Out of thirteen procurement which were tested, we noted one of them for which the District did not retain documentation detailing the history of the procurement, including the rationale for choosing the particular vendor. This was a statistically valid sample. Cause: Controls were insufficient to ensure this process occurred. Effect: The District was not in compliance with Uniform Guidance requirements for the proper documentation of all procurement transactions. Repeat Finding: No Recommendation: We recommend the District reviews its procedures and controls over procurement to ensure that all procurements are documented such that a third party can clearly see and understand the detailed history of the procurement. Views of responsible officials: There is no disagreement with the audit finding.
Federal program information: Funding agency: U.S. Department of Treasury ALN Title: Coronavirus State and Local Fiscal Recovery Funds ALN number: 21.027 Award period and number: 7/23/2021 – 12/31/2024; SLFRP4454 Criteria or Specific Requirement: Uniform Guidance, 2 CFR Section 200.318(a) requires the City to have documented procurement procedures. The recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations and the standards identified in §§ 200.317 through 200.327. Uniform Guidance, 2 CFR Section 200.318(c)(1), requires non-federal entities to maintain written standards of conduct covering conflicts of interest for employees engaged in the selection, award, and administration of contracts. 2 CFR 200.321 requires affirmative steps to assure that minority businesses, women’s business enterprises, veteran-owned businesses, and labor surplus area firms are included in procurement opportunities. 2 CFR 200.318(i) requires recipients or subrecipients to maintain records sufficient to detail the history of each procurement, including rationale for selection, method, and price. Condition: Based on review of the City’s procurement policy (Public Contracting Rules), we noted that the policy does not incorporate all procurement requirements established in 2 CFR sections 200.317 through 200.326, as required by the Uniform Guidance for recipients of federal awards. Specifically, we observed the following areas of noncompliance or omissions: . The policy does not contain all written standards of conduct related to conflicts of interest as required by 2 CFR 200.318(c)(1); . The policy does not explicitly include requirements for taking affirmative steps to ensure that small, minority, women-owned, veteran-owned, and labor surplus area firms are solicited and considered in procurement opportunities, as required by 2 CFR 200.321(b); . The policy lacks explicit provisions to ensure that sufficient procurement records are maintained to detail the history of procurement transactions, as required by 2 CFR 200.318(i). Due to this, there is an increased risk that procurements funded by federal awards may not be conducted in full compliance with Uniform Guidance. Cause and Effect: The City’s procurement policy has not been fully updated to reflect all applicable procurement requirements of the Uniform Guidance. Procurements conducted under federal awards are at increased risk of noncompliance with Uniform Guidance requirements, which could result in findings, questioned costs, or potential repayment of federal funds. Furthermore, there is an increased risk that opportunities for small, minority, and women-owned businesses are not equitably considered and that procurement records may not be sufficient for federal review. Questioned Costs: None. Recommendation: We recommend that the City update its procurement policy and procedures to address the missing requirements under 2 CFR 200.317 through 200.326, specifically ensuring coverage of standards of conduct for conflicts of interest, affirmative steps for inclusion of targeted businesses, and comprehensive procurement recordkeeping. The City should ensure staff are trained on these updated requirements and monitor compliance for all federally funded procurements. Views of Responsible Officials: The City agrees with the findings as specified above. The procurement policy will be updated to reflect these changes.
NONCOMPLIANCE WITH PROCUREMENT, SUSPENSION & DEBARMENT REQUIREMENTS, CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS; AL No. 21.027, YEAR ENDED JUNE 30, 2025 Criteria: Per section 13 of Treasury’s Final Rule FAQs and 2 CFR 200.214, counties must comply with the procurement standards set forth in 2 CFR 200.318, through 2 CFR 200.327, when using their SLFRF award funds to procure goods and services to carry out the objectives of their SLFRF award. In addition, 2 CFR 200.214, prohibits recipients from using SLFRF funds to enter into subawards and contracts with parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs. Condition: The city did not verify that program recipients/participants were not suspended, debarred, or otherwise excluded from participation in the program. Cause: The city does not have procurement policies and procedures in place that allows it to comply with procurement standards outlined in the Uniform Guidance. Effect: Non-compliance with program terms and conditions. Questioned Costs: None Recommendation: Management should develop procedures that will provide reasonable assurance that procurement of goods and services are made in compliance with applicable federal regulations and other procurement requirements specific to a federal award or subaward, and that no subaward, contract, or agreement for purchase of goods or services is made with any suspended or debarred party. Views of responsible officials and planned corrective action: The government agrees with this finding and will adhere to the attached corrective action plan.
FINDING 2025-001 Subject: Special Education Cluster (IDEA) - Procurement Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States Assistance Listings Numbers: 84.027, 84.027X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-043-ARP, 23611-043-PN01, 24611-043-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 15 RIVER FOREST COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation is a member of the Northwest Indiana Special Education Cooperative (Cooperative). During fiscal year 2023-2024, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Procurement and Suspension and Debarment compliance requirement. When the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a nonfederal entity, formal procurement methods are required. The SAT is typically set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold, and, therefore, the SAT threshold is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with procurement requirements. The Cooperative did not have procedures in place to ensure compliance with procurements in excess of the SAT threshold. During 2023-2024, the Cooperative had three vendors which exceeded the SAT and all three vendors were tested. The Cooperative did not obtain sealed bids or competitive proposals, nor was a circumstance met that would have allowed for a noncompetitive procurement for the purchases. The total dollar amount spent with all three vendors was $1,417,349. The lack of internal controls and noncompliance were systemic issues limited to 2023-2024. Criteria 2 CFR 200.303 states in part: "The recipient and subrecipient must: (a) Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control-Integrated Framework' issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . INDIANA STATE BOARD OF ACCOUNTS 16 RIVER FOREST COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Formal Procurement Methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. . . . (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." Cause The Cooperative noted they were unaware of the procurement requirements of expenditures exceeding the SAT. They stated they have used the same vendors to provide professional services for several years but only recently started using federal grant award funds for the services. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation cannot ensure the vendors paid with federal award funds by the Cooperative are procured using the required methods. Without following the required methods for procurement, the Cooperative could be overpaying for services. Questioned Costs There were no questioned costs identified. Recommendation Management of the School Corporation should develop written policies and procedures which would require that appropriate procurement methods are used by the Cooperative for vendors that exceed the SAT. Appropriate documentation should be maintained to ensure the procurement methods are being followed and compliance with procurement methods are being followed. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-001 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children, Fresh Fruit and Vegetable Program Assistance Listings Numbers: 10.553, 10.555, 10.559, 10.582 Federal Award Numbers and Years (or Other Identifying Numbers): FY 23/24, FY 24/25 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-002. Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. During the audit period, a total of four vendors were determined to require small purchase procedures, and all four vendors were selected for testing. For two of the four vendors, the School Corporation could not provide the procurement history or the rationale for the method of procurement, selection of vendors, and basis for price. The total dollar amount spent with these two vendors was $165,131. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. INDIANA STATE BOARD OF ACCOUNTS 14 SOUTH SPENCER COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) During review of the School Corporation's procedures, officials stated that the Food Service Director verified that vendors were not suspended or debarred by including a clause in the vendor contract or by collecting a certification from the vendor prior to entering into a covered transaction. We identified ten transactions during the audit period that equaled or exceeded $25,000 and were therefore determined to be covered transactions. All ten transactions, totaling $767,259, were selected for testing. The School Corporation was unable to provide documentation that the vendor's suspension and debarment status was verified for four of these transactions, which comprised the same two vendors for both years of the audit period. The total dollar amount spent with these two vendors was $268,962. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "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). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) 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. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. INDIANA STATE BOARD OF ACCOUNTS 15 SOUTH SPENCER COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases– (i) Small purchase procedures. 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. . . ." 2 CFR 180.300 states: "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. You do this 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 The School Corporation's corrective action plan from the prior audit stated that the Food Service Director was the individual responsible for implementing the corrective action measures and that those measures would be implemented in June 2024. The Food Service Director resigned, however, in May 2024. Therefore, the new Food Service Director was unaware of the compliance issues and the need to implement the corrective action measures during the current audit period. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of preventing, or detecting and correcting, noncompliance. As a result, the School Corporation did not comply with the small purchase procurement requirements or the suspension and debarment requirements of the federal award. By not properly completing the procurement process, the School Corporation could have overpaid for the goods or services that were procured. Additionally, the School Corporation could have made payment to a vendor that was suspended or debarred. Payments to such vendors are unallowable. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. INDIANA STATE BOARD OF ACCOUNTS 16 SOUTH SPENCER COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure expenditures made from federal awards are in compliance with the procurement and suspension and debarment compliance requirements. The School Corporation's system of internal controls should be designed to ensure that the appropriate procurement method is utilized and that documentation is retained to support the procurement methods used in order to ensure compliance with the terms and conditions of the federal award. Additionally, the system should be designed to ensure that vendors are not suspended or debarred, or otherwise excluded, prior to the School Corporation entering into a covered transaction. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Findings and Questioned Costs Related to Federal Awards Finding Number: 2025‐001 Repeat Finding: No Program Name/Assistance Listing Title: Child Nutrition Cluster Assistance Listing Numbers: 10.553, 10.555, 10.559, 10.582 Federal Agency: U.S. Department of Agriculture Federal Award Number: 6AZ300400, 7AZ300AZ3, 7AZ310AZ1 Pass‐Through Agency: Arizona Department of Education Questioned Costs: N/A Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Procurement, Suspension and Debarment Criteria Non‐federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR §§200.318 through 200.326. Subrecipients must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR part 200. Condition The District did not follow Federal, State, and Board policies and regulations governing procurement. Cause The District’s review procedures over each transaction did not operate as designed. Effect The District was not in compliance with Federal, State, and Board policies and regulations governing procurement. Context The District issued requests for written quotes to multiple vendors, and awarded the quote to three vendors to avoid spending over $100,000 with one vendor. However, as the items purchased were homogenous items, and the expenses with the three vendors totaled $252,424, the District should have issued a sealed procurement. The sample was not intended to be, and was not, a statistically valid sample. Recommendation Approvers should ensure requisitions exceeding the formal procurement threshold are appropriately procured in accordance with Federal, State and Board policies and regulations. Views of Responsible Officials See Corrective Action Plan.
Finding Number: 2025‐001 Repeat Finding: No Program Name/Assistance Listing Title: Child Nutrition Cluster Assistance Listing Numbers: 10.553, 10.555, 10.559, 10.582 Federal Agency: U.S. Department of Agriculture Federal Award Numbers: 7AZ300AZ3, 6AZ300400, 7AZ310AZ1 Pass‐Through Agency: Arizona Department of Education Questioned Costs: N/A Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Procurement and Suspension and Debarment Criteria Non‐federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR §200.318 through 200.326. Subrecipients must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR part 200.A Condition The District did not follow Federal, State, and Board policies and regulations governing procurement. Cause The District’s review procedures over each transaction did not operate as designed. Effect The District was not in compliance with Federal, State, and Board policies and regulations governing procurement. Context The District procured supplies from a vendor that totaled $50,663. However, the District could not provide documentation showing that the District procured the supplies in accordance with Federal, State, and Board policies and regulations; specifically, that price or rate quotations were obtained from an adequate number of qualified sources. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The District should ensure that it maintains procurement documentation to document that expenditures are completed in compliance with Federal, State, and Board procurement policies and regulations. Views of Responsible Officials See Corrective Action Plan.
Criteria: The Uniform Guidance requires that Organization have written procurement policies in place that comply with 2 CFR 200, Sections Subparts D and E. Condition: While testing compliance with 2 CFR 200, Sections Subparts D and E we found that management had not adopted the required procurement policies under 2 CFR Sections 200.318 – 200.327. Cause: Management does not regularly expend federal dollars above the threshold requiring a Single Audit under the Uniform Guidance. As such, policies related to procurement were not adopted. Effect: Internal controls surrounding Uniform Guidance are incomplete. Recommendation: Management should review 2 CFR Sections 200.138 – 300.327 and develop written policies that comply with the compliance requirements. Questioned Costs: None Management’s Response: Management has started incorporating 2 CFR Sections 200.138 – 300.327 into their current procurement policies and will adopt the policy changes in fiscal year 2026.
Finding Type. Significant Deficiency in Internal Control over Compliance (Procurement, Suspension and Debarment). Program. Coronavirus State and Local Fiscal Recovery Funds; U.S. Department of Treasury; Passed through MiLEAP; ADN - BSN Completion Grant Program; Assistance Listing Number 21.027; Award Number SLFRP0127. Criteria. Per 2 C.F.R. §200.318–§200.320 (Uniform Guidance) and the College’s established procurement policies, noncompetitive (sole-source) procurements must be appropriately justified and documented. Required documentation includes the rationale for using a sole-source method and evidence that the procurement meets allowable circumstances under federal regulations and internal policy. Condition. During our review of procurement transactions, we identified one instance of sole-source procurement for which the College did not properly document a procurement decision in accordance with 2 CFR 200.320 related to justifying the use of a noncompetitive procurement method. Specifically, the procurement files lacked written justification demonstrating why competition was not feasible and did not include evidence of required approvals in accordance with the College’s procurement policies even though the arrangement was allowable under the circumstances. Cause. The lack of documentation resulted from inconsistent adherence to procurement documentation requirements for sole-source arrangements. Personnel responsible for initiating and approving procurements did not consistently complete or retain the required justification forms or supporting documentation when noncompetitive methods were utilized. Effect. As a result of this condition, the College could not document a procurement decision for one vendor in accordance with federal regulations. Questioned Costs. No costs were questioned related to this finding. Recommendation. We recommend the College strengthen controls over sole-source procurements by requiring documented justification and formal approval prior to executing noncompetitive procurement arrangements. Management should also provide additional training to procurement and program staff to ensure consistent compliance with federal procurement requirements and internal policies. View of Responsible Officials. Management agrees with finding and has prepared a corrective action plan.