Suspension and Debarment Federal Agency: U.S. Department of Education Federal Program Name: Special Education Cluster (Individuals with Disabilities Education Act) Federal Award Identification Number: Grant Year: 2023 Assistance Listing Number: 84.027 Pass-Through Agency: State of Connecticut Department of Education Pass-Through Number(s): 12060-SDE64370-20977 Award Period: June 7, 2022, through December 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Other Matters 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 including the verification that an entity with which the Board of Education plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded. Condition: The Board of Education procurement policies do not include the essential elements as outlined in 2 CFR sections 200.318 through 200.326. Policies regarding verification of compliance with suspension and debarment requirements were not found. Client did not have adequate support for verification by management of vendor status for suspension or debarment. Questioned Costs: None Context: Per review of vendor agreements during testing over suspension and debarment, there was no indication of a suspension and debarment clause or verification of vendor status by management. Cause: The significant deficiency is primarily due to inadequate internal controls over the procurement process. Effect: With the absence of a compliant policy, the City could process transactions that do not follow federal Uniform Guidance procurement standards. Repeat Finding: No Recommendation: We recommend that management review and enhance the procedures over the procurement and purchasing process, to be sure that all federal grant expenditures and contracts with vendors are performed properly in accordance with the Uniform Guidance. Views of Responsible Officials: Management agrees with the auditors’ recommendations.
Suspension and Debarment Federal Agency: U.S. Department of Education Federal Program Name: Special Education Cluster (Individuals with Disabilities Education Act) Federal Award Identification Number: Grant Year: 2023 Assistance Listing Number: 84.027 Pass-Through Agency: State of Connecticut Department of Education Pass-Through Number(s): 12060-SDE64370-20977 Award Period: June 7, 2022, through December 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Other Matters 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 including the verification that an entity with which the Board of Education plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded. Condition: The Board of Education procurement policies do not include the essential elements as outlined in 2 CFR sections 200.318 through 200.326. Policies regarding verification of compliance with suspension and debarment requirements were not found. Client did not have adequate support for verification by management of vendor status for suspension or debarment. Questioned Costs: None Context: Per review of vendor agreements during testing over suspension and debarment, there was no indication of a suspension and debarment clause or verification of vendor status by management. Cause: The significant deficiency is primarily due to inadequate internal controls over the procurement process. Effect: With the absence of a compliant policy, the City could process transactions that do not follow federal Uniform Guidance procurement standards. Repeat Finding: No Recommendation: We recommend that management review and enhance the procedures over the procurement and purchasing process, to be sure that all federal grant expenditures and contracts with vendors are performed properly in accordance with the Uniform Guidance. Views of Responsible Officials: Management agrees with the auditors’ recommendations.
2023-007 – Procurement, Small Purchases (Significant Deficiency in Internal Controls over Compliance, Questioned Costs Greater than $25k) Federal Program Information Federal Award Title and ALN: Research & Development Cluster, 84.031 Federal Awarding Agency: U.S. Department of Education Federal Award ID Number: P031S210288, P031C200002 Federal Award Year: 2023 Condition: During our review of procurement testing, the College did not follow small purchase procedures and obtain quotes to ensure the vendor with the lowest price was used for one sample. Criteria: Per 2 CFR 200.303(a), the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 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 200.320(a) sets the micro-purchase threshold at $10,000 and requires purchases over the micro-purchase threshold to use small purchase procedures, whereby price or rate quotations must be obtained. Per 2 CFR 200.318(i), non-federal entities must retain documentation sufficient to detail the history of procurement decisions. Cause: The College did not obtain three quotes prior to using vendor for a purchase. Effect: The College may unintentionally use a higher-cost vendor when failing to obtain price or rate quotations for items over the micro-purchase threshold. Questioned Costs: Known and likely questioned costs of $32,607 Auditor recommendation: We recommend the College strengthen controls to ensure purchasing policies and procedures are being followed and train staff in the purchasing department to comply with all relevant federal procurement requirements.
2023-008 – Procurement, Above Simple Acquisition (Significant Deficiency in Internal Controls over Compliance) Federal Program Information Federal Award Title and ALN: Research & Development Cluster, 84.031 Federal Awarding Agency: U.S. Department of Education Federal Award ID Number: P031S210288, P031C200002 Federal Award Year: 2023 Condition: During our review of procurement testing, the College did not get Board approval per policy on a purchase over the threshold. Criteria: Per 2 CFR 200.303(a), the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 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). Per 2 CFR 200.318(i), non-federal entities must retain documentation sufficient to detail the history of procurement decisions. Cause: The College did not get Board approval for purchases above simple acquisition. Effect: The College may unintentionally charge expenses to the program that do not qualify and in turn lead to questioned costs and/or repayment of funds to the grantor agency. Questioned Costs: None Auditor recommendation: We recommend the College strengthen controls to ensure purchasing policies and procedures are being followed and train staff in the purchasing department to comply with all relevant federal procurement requirements.
2023-007 – Procurement, Small Purchases (Significant Deficiency in Internal Controls over Compliance, Questioned Costs Greater than $25k) Federal Program Information Federal Award Title and ALN: Research & Development Cluster, 84.031 Federal Awarding Agency: U.S. Department of Education Federal Award ID Number: P031S210288, P031C200002 Federal Award Year: 2023 Condition: During our review of procurement testing, the College did not follow small purchase procedures and obtain quotes to ensure the vendor with the lowest price was used for one sample. Criteria: Per 2 CFR 200.303(a), the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 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 200.320(a) sets the micro-purchase threshold at $10,000 and requires purchases over the micro-purchase threshold to use small purchase procedures, whereby price or rate quotations must be obtained. Per 2 CFR 200.318(i), non-federal entities must retain documentation sufficient to detail the history of procurement decisions. Cause: The College did not obtain three quotes prior to using vendor for a purchase. Effect: The College may unintentionally use a higher-cost vendor when failing to obtain price or rate quotations for items over the micro-purchase threshold. Questioned Costs: Known and likely questioned costs of $32,607 Auditor recommendation: We recommend the College strengthen controls to ensure purchasing policies and procedures are being followed and train staff in the purchasing department to comply with all relevant federal procurement requirements.
2023-008 – Procurement, Above Simple Acquisition (Significant Deficiency in Internal Controls over Compliance) Federal Program Information Federal Award Title and ALN: Research & Development Cluster, 84.031 Federal Awarding Agency: U.S. Department of Education Federal Award ID Number: P031S210288, P031C200002 Federal Award Year: 2023 Condition: During our review of procurement testing, the College did not get Board approval per policy on a purchase over the threshold. Criteria: Per 2 CFR 200.303(a), the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 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). Per 2 CFR 200.318(i), non-federal entities must retain documentation sufficient to detail the history of procurement decisions. Cause: The College did not get Board approval for purchases above simple acquisition. Effect: The College may unintentionally charge expenses to the program that do not qualify and in turn lead to questioned costs and/or repayment of funds to the grantor agency. Questioned Costs: None Auditor recommendation: We recommend the College strengthen controls to ensure purchasing policies and procedures are being followed and train staff in the purchasing department to comply with all relevant federal procurement requirements.
2023-007 – Procurement, Small Purchases (Significant Deficiency in Internal Controls over Compliance, Questioned Costs Greater than $25k) Federal Program Information Federal Award Title and ALN: Research & Development Cluster, 84.031 Federal Awarding Agency: U.S. Department of Education Federal Award ID Number: P031S210288, P031C200002 Federal Award Year: 2023 Condition: During our review of procurement testing, the College did not follow small purchase procedures and obtain quotes to ensure the vendor with the lowest price was used for one sample. Criteria: Per 2 CFR 200.303(a), the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 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 200.320(a) sets the micro-purchase threshold at $10,000 and requires purchases over the micro-purchase threshold to use small purchase procedures, whereby price or rate quotations must be obtained. Per 2 CFR 200.318(i), non-federal entities must retain documentation sufficient to detail the history of procurement decisions. Cause: The College did not obtain three quotes prior to using vendor for a purchase. Effect: The College may unintentionally use a higher-cost vendor when failing to obtain price or rate quotations for items over the micro-purchase threshold. Questioned Costs: Known and likely questioned costs of $32,607 Auditor recommendation: We recommend the College strengthen controls to ensure purchasing policies and procedures are being followed and train staff in the purchasing department to comply with all relevant federal procurement requirements.
2023-008 – Procurement, Above Simple Acquisition (Significant Deficiency in Internal Controls over Compliance) Federal Program Information Federal Award Title and ALN: Research & Development Cluster, 84.031 Federal Awarding Agency: U.S. Department of Education Federal Award ID Number: P031S210288, P031C200002 Federal Award Year: 2023 Condition: During our review of procurement testing, the College did not get Board approval per policy on a purchase over the threshold. Criteria: Per 2 CFR 200.303(a), the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 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). Per 2 CFR 200.318(i), non-federal entities must retain documentation sufficient to detail the history of procurement decisions. Cause: The College did not get Board approval for purchases above simple acquisition. Effect: The College may unintentionally charge expenses to the program that do not qualify and in turn lead to questioned costs and/or repayment of funds to the grantor agency. Questioned Costs: None Auditor recommendation: We recommend the College strengthen controls to ensure purchasing policies and procedures are being followed and train staff in the purchasing department to comply with all relevant federal procurement requirements.
2023-007 – Procurement, Small Purchases (Significant Deficiency in Internal Controls over Compliance, Questioned Costs Greater than $25k) Federal Program Information Federal Award Title and ALN: Research & Development Cluster, 84.031 Federal Awarding Agency: U.S. Department of Education Federal Award ID Number: P031S210288, P031C200002 Federal Award Year: 2023 Condition: During our review of procurement testing, the College did not follow small purchase procedures and obtain quotes to ensure the vendor with the lowest price was used for one sample. Criteria: Per 2 CFR 200.303(a), the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 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 200.320(a) sets the micro-purchase threshold at $10,000 and requires purchases over the micro-purchase threshold to use small purchase procedures, whereby price or rate quotations must be obtained. Per 2 CFR 200.318(i), non-federal entities must retain documentation sufficient to detail the history of procurement decisions. Cause: The College did not obtain three quotes prior to using vendor for a purchase. Effect: The College may unintentionally use a higher-cost vendor when failing to obtain price or rate quotations for items over the micro-purchase threshold. Questioned Costs: Known and likely questioned costs of $32,607 Auditor recommendation: We recommend the College strengthen controls to ensure purchasing policies and procedures are being followed and train staff in the purchasing department to comply with all relevant federal procurement requirements.
2023-008 – Procurement, Above Simple Acquisition (Significant Deficiency in Internal Controls over Compliance) Federal Program Information Federal Award Title and ALN: Research & Development Cluster, 84.031 Federal Awarding Agency: U.S. Department of Education Federal Award ID Number: P031S210288, P031C200002 Federal Award Year: 2023 Condition: During our review of procurement testing, the College did not get Board approval per policy on a purchase over the threshold. Criteria: Per 2 CFR 200.303(a), the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 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). Per 2 CFR 200.318(i), non-federal entities must retain documentation sufficient to detail the history of procurement decisions. Cause: The College did not get Board approval for purchases above simple acquisition. Effect: The College may unintentionally charge expenses to the program that do not qualify and in turn lead to questioned costs and/or repayment of funds to the grantor agency. Questioned Costs: None Auditor recommendation: We recommend the College strengthen controls to ensure purchasing policies and procedures are being followed and train staff in the purchasing department to comply with all relevant federal procurement requirements.
2023-002 Improve Documentation and Controls Over Procurement Federal Program(s) Information Federal Agency: U.S. Department of the Treasury Cluster/Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds AL Number(s): 21.027 Award Year: 2023 Compliance Requirement: Procurement Type of Finding Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement Per 2 CFR 200.318–200.327, non-federal entities must use their 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 set forth in the Uniform Guidance. In some cases, the Uniform Guidance may establish stricter requirements for procurement, including the need for full and open competition, documentation of procurement history, and specific justifications for sole source or exempt procurements. Entities must comply with the stricter requirements when procuring services. Condition and Context During testing of procurement transactions, the Town was unable to provide documentation supporting procurement for one selected vendor for a design project. The project proceeded with an existing provider for the Town engaged on other projects rather than following the policies and procedures for soliciting competitive sealed bids or proposals for the specific project under the grant. The Procurement Manager relied on an exemption for engineering services under Massachusetts procurement law, which in this case is less restrictive than Uniform Guidance requirements. As a result, the Town did not comply with the federal procurement standards applicable to this transaction. Cause The Town’s internal controls over procurement did not ensure that federal requirements under Uniform Guidance were followed when state and federal rules differed. The Procurement Manager applied state-level exemptions rather than adhering to more restrictive federal standards. Effect or Potential Effect The absence of procurement documentation and use of state exemptions rather than federal requirements increase the risk of non-compliance and may result in unallowable costs. Questioned costs reported as a result of this transaction are $110,901. TOWN OF NORWOOD, MASSACHUSETTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) FOR THE YEAR ENDED JUNE 30, 2023 13 SECTION III - FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS (CONTINUED) 2023-002 Improve Documentation and Controls Over Procurement (Continued) Recommendation The Town strengthen its internal controls over procurement to ensure compliance with Uniform Guidance requirements, regardless of state law exemptions. The Town should ensure adequate documentation is retained for all federally funded procurements, and that procurement staff are trained on the distinction between federal and state procurement requirements. Views of Responsible Officials Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.
2023-002 Improve Documentation and Controls Over Procurement Federal Program(s) Information Federal Agency: U.S. Department of the Treasury Cluster/Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds AL Number(s): 21.027 Award Year: 2023 Compliance Requirement: Procurement Type of Finding Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement Per 2 CFR 200.318–200.327, non-federal entities must use their 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 set forth in the Uniform Guidance. In some cases, the Uniform Guidance may establish stricter requirements for procurement, including the need for full and open competition, documentation of procurement history, and specific justifications for sole source or exempt procurements. Entities must comply with the stricter requirements when procuring services. Condition and Context During testing of procurement transactions, the Town was unable to provide documentation supporting procurement for one selected vendor for a design project. The project proceeded with an existing provider for the Town engaged on other projects rather than following the policies and procedures for soliciting competitive sealed bids or proposals for the specific project under the grant. The Procurement Manager relied on an exemption for engineering services under Massachusetts procurement law, which in this case is less restrictive than Uniform Guidance requirements. As a result, the Town did not comply with the federal procurement standards applicable to this transaction. Cause The Town’s internal controls over procurement did not ensure that federal requirements under Uniform Guidance were followed when state and federal rules differed. The Procurement Manager applied state-level exemptions rather than adhering to more restrictive federal standards. Effect or Potential Effect The absence of procurement documentation and use of state exemptions rather than federal requirements increase the risk of non-compliance and may result in unallowable costs. Questioned costs reported as a result of this transaction are $110,901. TOWN OF NORWOOD, MASSACHUSETTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) FOR THE YEAR ENDED JUNE 30, 2023 13 SECTION III - FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS (CONTINUED) 2023-002 Improve Documentation and Controls Over Procurement (Continued) Recommendation The Town strengthen its internal controls over procurement to ensure compliance with Uniform Guidance requirements, regardless of state law exemptions. The Town should ensure adequate documentation is retained for all federally funded procurements, and that procurement staff are trained on the distinction between federal and state procurement requirements. Views of Responsible Officials Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.
2023-004 – Procurement, Suspension and Debarment Federal Program Information: Department of Transportation – ALN: - 20.500, 20.507, 20.525 & 20.526 – Federal Transit Cluster 20.509 – Formula Grants for Rural Areas and Tribal Transit Program Criteria: The following CFR(s) apply to this finding: 2 CFR 200.318 to 327. Condition: During audit procedures, it was identified that the Committee did not follow policies and procedures as adopted. Cause: The Committee does not have the necessary internal controls over compliance. Effect: Insufficient controls could result in unallowable expenses being charged to the program and subsequently improperly reimbursed by federal funds. Identification of Questioned Costs: None identified. Context: While reviewing the procurement policies and procedures, the auditor requested the micro and small purchases form, as found in the procurement policies and procedures documents, but none could be provided for the samples originally requested. Repeat Finding: This is not a repeat finding. Recommendation: The auditor recommends that the Committee update its procurement policy and implement internal control processes and procedures to ensure that they are following the criteria above. Views of Responsible Officials and Corrective Action Plan: Please see the Corrective Action Plan issued by the Biddeford-Saco-Old Orchard Beach Transit Committee.
2023-005 Procurement Policies and Covered Transactions Compliance Requirement Procurement, Suspension, and Debarment Category Significant Deficiency in Internal Control and Noncompliance Federal Agency U.S. Department of the Treasury Pass-Through Entity Puerto Rico Fiscal Agency and Financial Advisory Authority ALN 21.027 Federal Program COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Federal Agency U.S. Department of Homeland Security through the Federal Emergency Management Agency Pass-through Entity Central Office for Recovery, Reconstruction and Resiliency ALN 97.036 Federal Program Disaster Grants - Public Assistance (Presidentially Declared Disasters) Criteria 2 CFR section 200.318 General procurement standards. (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. 2 CFR section 180.220 Are any procurement contracts included as covered transactions? (a) Covered transactions under this part— (1) Do not include any procurement contracts awarded directly by a Federal agency; but (2) Do include some procurement contracts awarded by non-Federal participants in nonprocurement covered transactions. (b) Specifically, a contract for goods or services is a covered transaction if any of the following applies: (1) The contract is awarded by a participant in a nonprocurement transaction that is covered under § 180.210, and the amount of the contract is expected to equal or exceed $25,000. (2) The contract requires the consent of an official of a Federal agency. In that case, the contract, regardless of the amount, always is a covered transaction, and it does not matter who awarded it. For example, it could be a subcontract awarded by a contractor at a tier below a nonprocurement transaction, as shown in the appendix to this part. (3) The contract is for Federally-required audit services. (c) A subcontract also is a covered transaction if,— (1) It is awarded by a participant in a procurement transaction under a nonprocurement transaction of a Federal agency that extends the coverage of paragraph (b)(1) of this section to additional tiers of contracts (see the diagram in the appendix to this part showing that optional lower tier coverage); and (2) The value of the subcontract is expected to equal or exceed $25,000. Condition General Procurement Standards - Written Policies The Corporation has an outdated institutional procurement manual approved in 2014 that lacks written policies to ascertain compliance with the provisions of federal statutes, regulations, or the terms and conditions of federal awards regarding procurement, suspension, and debarment requirements. Suspension and Debarment - Covered Transaction From a sample of eighteen disbursements, we selected eight disbursements to ascertain compliance with 2 CFR section 180.220, specifically regarding the inclusion of procurement contracts as covered transactions. We examined the procurement documents provided by the Corporation. From that sample, we identified that the Corporation did not perform the required verification process for covered transactions during the year ended June 30, 2023. Cause The Corporation lacks internal controls and policies to ensure compliance with federal procurement requirements. In addition, the Corporation relies on the procedures performed by the Administration of General Services to comply with procurement requirements. As a result, the Corporation did not maintain its own documentation. Effect Failure to comply with 2 CFR sections 200.318 and 180.220 may result in the Corporation facing temporary withholding of cash payments until the deficiency is corrected and/or suspension of future federal awards for the program. This noncompliance could also lead to the potential use of suspended or debarred suppliers. Questioned Costs None. Repeated Item Repeated, refer to Item No. 2022-003 in the Summary Schedule of Prior Audit Findings. Recommendation General Procurement Standards - Written Policies and Suspension and Debarment - Covered Transaction We recommend that the Corporation revise its internal procurement policies to align with current state statutes and regulations and create separate procurement policies that adhere to federal laws, regulations, and the terms and conditions of federal awards. These policies should incorporate the Procurement Standards outlined in 2 CFR sections 200.317 through 200.327, as applicable. Views of responsible officials Refer to Unaudited Corrective Action Plan (Unaudited)
Finding Number 2023-001: Internal Control over Compliance Significant Deficiency Federal Grantor: U.S. Department of Treasury Federal Program: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Pass Through Entity: County of Santa Cruz Criteria: According to 2 CFR 200.303 (Uniform Guidance) – Internal Controls, non-federal entities that receive federal awards are required to establish and maintain effective internal controls to ensure compliance with federal statutes, regulations, and award terms. Additionally, these entities must adhere to the procurement standards outlined in 2 CFR sections 200.318 through 200.327 and use their own documented procurement procedures that reflect all applicable federal, state, and local laws and regulations. Condition: The Organization does not have a written procurement policy. Cause: Internal controls were not functioning as intended because management was unaware of the procurement compliance requirements specified in the federal Uniform Guidance. This is the Organization’s first experience with receiving federal funding. Effect: In the absence of effective internal controls, there is an increased risk that material noncompliance may occur and go undetected. Furthermore, procurement practices may fail to align with federal guidelines. Questioned Costs: None Repeat Finding: No Recommendation: We recommend that management develop and implement a formal, written procurement policy. Additionally, management should review Uniform Guidance 2 CFR sections 200.318 through 200.327 to ensure the Organization’s procurement policy fully incorporates all federal compliance requirements. Views of Responsible Official: We agree with the auditors’ recommendation. See comments at finding 2023-001.
FA 2023-001 Improve/Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Period of Performance Procurement and Suspension and Debarment Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education Assistance Listing Number and Title: 84.371C – Comprehensive Literacy Development Federal Award Number: S371C190016-19A (Years: 2017-21) Questioned Costs: $124,399.84 Repeat of Prior Year Finding: FA 2022-002 Description: A review of expenditures and journal entries related to the Comprehensive Literacy Development program revealed that the School District’s internal control procedures were not operating to ensure that appropriate reviews and approvals occurred and the School District’s procurement procedures were followed. Background Information: The Comprehensive Literacy Development Program (CLD) was authorized under Sections 2222-2225 of the Elementary and Secondary Education Act of 1965 to create a comprehensive literacy program to advance literacy skills, including pre-literacy skills, reading, and writing, for children from birth to grade 12, with an emphasis on disadvantaged children, including children living in poverty, English learners, and children with disabilities. CLD funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the expenditure of funds by LEAs. CLD funds totaling $802,825.69 were expended and reported on the Burke County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2023. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented, (h) Cost must be incurred during the approved budget period…” Additionally, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state in part that “(a) the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations and… (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.” In addition, provisions included in the Uniform Guidance, Section 200.320 – Methods of Procurement to Be Followed provide guidance for procurement through small purchase procedures and state “If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources.” Condition: Auditors performed a review of various expenditure activity associated with the CLD program to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The following deficiencies were identified: • A sample of 60 expenditures was randomly selected for testing using a non-statistical sampling approach. Evidence of review and approval was not reflected for 11 expenditures, and adequate evidence of receipt was not maintained for 14 expenditures. • A sample of two journal entries was randomly selected for testing using a non-statistical sampling approach. Evidence of review to ensure that the activity was allowable and occurred during the period of performance was not reflected for either journal entry tested. • A sample of 43 procurement transactions was randomly selected for testing using a nonstatistical sampling approach. Four procurement transactions did not reflect evidence of supervisory review and approval, and the School District could not provide evidence that an adequate number of rate or price quotations were obtained from qualified sources for 13 small purchase procurements reviewed. Questioned Costs: Upon testing a sample of $157,184.97 in procurement transactions, known questioned costs of $124,399.84 were identified for expenditures that did not follow the School District’s procurement procedures. Using the total population of $743,095.26 in procurement transactions, we project the likely questioned costs to be approximately $588,102.87. Cause: The School District did not maintain evidence of review and approval of expenditures, journal entries, and procurement transactions as a result of oversight. Small purchase procurement transactions did not follow the School District’s procurement policy because the Federal Programs Directors was unaware that it was necessary to follow these procedures for the purchase of instructional materials. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to review expenditures for allowability, and journal entries for allowability and period of performance compliance exposes the School District to unnecessary risk of error and misuse of federal funds. In addition, failure to appropriately follow applicable procurement procedures exposes the School District to unnecessary risk of error and misuse of federal funds. Lastly, this deficiency could lead to the return of grant funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to the CLD program. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all expenditures, journal entries, and procurement transactions reflect evidence of review for associated compliance requirements. In addition, expenditure voucher packages should contain all required components. Furthermore, the School District should evaluate and improve internal control procedures to ensure that required procurement methods are properly identified and followed and required procurement documentation is properly identified, safeguarded, and retained. Management should develop a monitoring process to ensure that these procedures are operating appropriately. Views of Responsible Officials: We concur with this finding. The finding states evidence of review and approval was not reflected for 11 expenditures. While 11 invoices were not approved by the Director in charge of the grant, 10 were approved by the building level Principal or Central Office Director and the Superintendent, and 1 was approved by the Superintendent. Additionally, all expenditures charged to the grant were submitted to the Georgia Department of Education for review and approval for reimbursement of expenditures. All expenditures were approved and reimbursed. The finding states adequate evidence of receipt was not maintained for 14 expenditures. While packing slips weren’t provided for 14 voucher packages, 13 of the packages were reviewed and approved for payment by the Director in charge of the grant, and 1 was approved by the Principal and Superintendent. Approval for payment isn’t granted unless items are received. The finding states evidence of review to ensure that the activity was allowable and occurred during the period of performance was not reflected for 2 journal entries. The journal entry to record indirect costs in the amount of $3,572 did not exceed the indirect costs budgeted amount of $20,000 included in the grant budget submitted by the School District and approved by the Georgia Department of Education. While not approved by the Director in charge of the grant, the journal entry was accurate and properly recorded indirect costs. Additionally, the journal entry was submitted to the Georgia Department of Education for review and approval for reimbursement of expenditures. As stated above, all expenditures were approved and reimbursed. The journal entry to reverse salary and benefit accruals is an annual, standard journal entry utilized for operational efficiency and best practice to reverse salary and benefit accruals that are required under Generally Accepted Accounting Principles. While not approved by the Director in charge of the grant, the journal entry was appropriate and necessary to ensure expenditures were accurately recorded in the proper accounting period and only included reversals related to personnel the Director approved to be paid from the grant. The finding states 3 procurement transactions did not reflect evidence of supervisory review and approval. While 3 transactions included invoices that were not approved by the Director in charge of the grant, 2 invoices were approved by the building level Principal and the Superintendent, and 1 was approved by the Superintendent. All 3 of the transactions included purchase orders that were properly approved by the Director in charge of the grant. Auditor’s Concluding Remarks: Under the Uniform Guidance, auditees are required to implement internal controls over federal awards. Upon completing procedures over internal controls associated with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance, and Procurement and Suspension and Debarment compliance requirements, auditors obtained an understanding of internal controls put in place and subsequently tested those controls. Auditors noted that the internal controls described by the School District were not in place for the transactions identified. Based on this information, we reaffirm our finding and will review the status of the finding during our next audit.
2023-007 Improve Controls and Compliance with Procurement Federal Program Information Federal Agency: U.S. Department of Treasury Award Name(s): COVID-19 Coronavirus State and Local Fiscal Recovery Fund Assistance Listing Number(s): 21.027 Award Year: 2023 SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (CONTINUED) Compliance Requirement: Procurement and Suspension and Debarment Type of Finding Compliance Internal Control over Compliance – Material Weakness Criteria or Specific Requirement Per Uniform Guidance (2 CFR § 200.318–200.327), recipients of American Rescue Plan Act (ARPA) State and Local Fiscal Recovery Funds must follow documented procurement procedures and maintain evidence of compliance with applicable requirements, including obtaining fully executed contracts for purchases made with federal funds. Condition and Context As part of testing of two procurement transactions totaling $451,059 in the ARPA program, support was unable to be provided for both selections. There was no evidence of compliance with procurement policies, and no executed contracts were maintained to support the expenditures. Cause The City did not implement effective controls to ensure that all procurement transactions were conducted following requirements in place under the Uniform Guidance, supported by documentation, and executed contracts were in place. Effect or Potential Effect Lack of documentation and executed contracts for federally funded procurements exposes the City to increased risk of unallowable costs, noncompliance, and questioned costs. Questioned Costs Known questioned costs under the program totaling $451,059 were identified. Identification as a Repeat Finding This was not a finding in the prior year. Recommendation The City should strengthen its internal controls over procurement by implementing procedures to ensure that all federally funded purchases are fully documented, including compliance with procurement policies and maintenance of executed contracts. All such documentation should be retained and readily available. Views of Responsible Official Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.
Finding 2023-008: Procurement – Significant Deficiency Information on the federal program: Federal program is Crime Victim Assistance from the U.S. Department of Justice passed through the Criminal Justice Information Authority. Criteria: Non-federal entities other than states must follow the procurement standards set out in 2 CFR sections 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 statues and the procurement requirements identified in 2 CFR Part 200. Condition: The Organization does not maintain a formal procurement policy and procedures that meets the requirements of the Uniform Guidance, including procedures addressing allowable costs exceeding the small purchase threshold. The lack of such a formal policy increases the risk that purchases are made that do not comply with Uniform Guidance. Cause: The Organization has not implemented a formal procurement policy and procedures that meets the requirements for the Uniform Guidance. Effect: The lack of such a formal policy increases the risk that purchases are made that do not comply with Uniform Guidance requirements. Questioned Costs: None. Context: As part of our testing over procurement standards under the Uniform Guidance, we requested documentation supporting the Organization’s procurement policies and procedures, including thresholds, required competition, documentation requirements, and approval processes. The Organization was unable to provide a formalized or adopted procurement policy. Additionally, procurement documentation reviewed during the audit indicated that purchases were made without evidence of compliance with federal procurement standards, confirming that the deficiency was systemic and not limited to a single transaction or department. Identification as a Repeat Finding: 2022-008 Recommendation: We recommend that management implement a formal procurement policy and procedures that meets the requirements of the Uniform Guidance. Views of responsible officials and planned corrective actions: While Saint Anthony Hospital has a procurement policy in place, we need to order computers within a certain time frame in order to secure funds from the grant and utilize our main supplier. The procurement policy as well as all policies are reviewed every three years to comply with Joint Commission Standards. Saint Anthony will review its existing procurement policy to ensure that all elements required by the Uniform Guidance are incorporated. The review was completed on March 28, 2025.
Material Weakness Finding No. 2023-003: Procurement Policies U.S. Department of Education Native Hawaiian Education Act Program Federal Assistance Listing Number 84.362A. U.S. Department of Health and Human Services Health Care for Native Hawaiians Federal Assistance Listing Number 93.932. Criteria The Uniform Guidance 2 CFR §200.320 sets forth the methods of procurement to be followed in the acquisition of property or services required under a Federal award or subaward, which includes formal purchase methods such as proposal or bids when the value of the property or services under a Federal financial assistance award exceeds a certain threshold, as defined. Furthermore, 2 CFR §200.320(c) provides specific circumstances in which noncompetitive procurement can be used. Condition During our audit, we noted that the Organization made subawards to entities which were subject to a formal purchase method, for which competitive processes for selection were not performed, nor was documentation of the specific criteria of 2 CFR §200.320(c) met to support noncompetitive procurements maintained. Cause Management had not updated its policies and procedures to incorporate certain pertinent sections of the procurement standards of the Uniform Guidance. Effect The lack of procurement standards in accordance with the Uniform Guidance may result in allowable cost issues. Identification of a Repeat Finding This finding was reported as a federal award finding in the immediately previous audit as Finding No. 2022-003. Recommendation We recommend that the Organization incorporate the procurement standards of the Uniform Guidance to its policies and procedures manual to ensure compliance with Federal standards, including 2 CFR §200.318(h) which stipulates that sufficient detail of the history of the procurement must be maintained, including the selection of the contractor.
Revise Written Policies and Develop Procedures over Administration of Federal Grants Federal Agency: U.S. Department of Education Pass-through Agency: New Hampshire Department of Education Program: Elementary and Secondary School Emergency Relief Fund Assistance Listing Number: 84.425 Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Equipment Management; and Procurement, Suspension and Debarment Criteria: The Uniform Guidance requires nonfederal entities that receive federal awards to establish written policies and procedures as described in the following sections: • Time and effort (2 CFR 200.431) • Equipment (2 CFR 200.313) • General procurement standards (2 CFR 200.318) • Competition (2 CFR 200.319) • Methods of procurement to be followed (2 CFR 200.320) Condition: The School District did not have procedures to comply with its written policies relative to federal awards as required by the Uniform Guidance. Cause: The School District was not aware of these compliance requirements. Effect: The School District is not in compliance with the Uniform Guidance with respect to these written policies. Recommendation: We recommend that the School District update its policies and procedures to comply with the Uniform Guidance requirements stated above. Management’s Response: Management agrees with the finding.
Finding: Procurement and Suspension & Debarment Federal Assistance Listing Number 21.027 - COVID-19 - Coronavirus State and Local Fiscal Recovery U.S. Department of Health and Human Services Criteria: In accordance with 2 CFR Part 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. Condition: The following matters were noted in regards to policies and procedures surrounding compliance with Procurement and Suspension & Debarment: a. The Organization's an internal policy regarding purchases contained thresholds for procurement quotes and bid processes; however, did not align with Uniform Guidance and were less restrictive than Uniform Guidance requirements. b. The Organization had support showing vendor checks on sam.gov; however, the policy did not contain procedures around suspension and debarment checks. c. The Organization's purchasing policy did not contain procedures to look for geographic preferences as required by Uniform Guidance. d. The Organization's conflict of interest policy did not specifically cover the performance of its employees engaged in the selection, award, and administration of contracts as required by Uniform Guidance. Questioned Costs: N/A Context: The Organization's purchasing policy did not contain elements of federal procurement requirements specified by Uniform Guidance. Effect: Lack of policies and procedures could prevent internal controls from detecting noncompliance with a federal requirements. Cause: Purchasing policies did not contain adequate references to Uniform Guidance procurement and suspension and debarment requirements. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that the Organization update their procurement policy to include updated Unform Guidance thresholds, documented procedures for suspension and debarment checks, and geographic preferences processes. Views of Responsible Officials: The Organization agrees with the finding. See separate auditee document for planned corrective action.
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 county did not verify that program recipients/participants were not suspended, debarred, or otherwise excluded from participation in the program. Cause: The county 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.
2023-005 Procurement Program Information Federal Organization Federal Communications Commission Assistance Listing Numbers 32.006 COVID-19 Telehealth Program Award Numbers CA2067511 Criteria [ ] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Entities receiving federal awards must have documented policies and procedures that comply with 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 also conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. Condition The Hospital did not have a documented procurement policy in place that complied with the Uniform Guidance requirements. Cause Management had not researched and implemented the procurement policy requirements prescribed by the Uniform Guidance, resulting in the Hospital not having a documented procurement policy in place. Effect The absence of a documented procurement policy that complies with Uniform Guidance increases the risk of noncompliance with federal procurement requirements and may result in questioned costs or disallowed expenditures. Questioned Costs None. Context During our testing of procurement compliance, we reviewed the Hospital’s policies and procedures to determine compliance with Uniform Guidance requirements. We noted that the Hospital had not adopted a documented procurement policy addressing the procurement standard required. Recommendation We recommend that management develop, adopt, and implement a documented procurement policy that complies with Uniform Guidance requirements. Management should also establish procedures to ensure procurement transactions are documented and performed in accordance with federal requirements. Views of responsible officials and planned corrective action Management is in agreement with this finding and will implement the suggested actions as outlined in the corrective action plan.
Finding 2023-004 Significant Deficiency – Suspension and Debarment Criteria: Per 2 CFR 200.212, 2 CFR 180.300, 2 CFR 200.318(h), and 48 CFR 52.209-6, the Town is required toverify that entities receiving covered contracts are not suspended, debarred, or otherwise excluded from participation in federal programs prior to award. Condition: The Town could not provide evidence that suspension and debarment verification was performed prior to contract award. The audit team independently verified the vendor's status through FAC.gov and noted no suspension or debarment concerns; however, documentation demonstrating that the Town performed this verification before awarding the contract was not available. Effect: Because the vendor was subsequently verified by the audit team as eligible, no known cost questioned were identified. However, the lack of documented verification increases the risk of contracting with an ineligible vendor and noncompliance with federal procurement requirements. Cause: Management did not maintain documentation evidencing that suspension and debarment verification procedures were performed and reviewed prior to contract execution. Recommendation: The Town should implement procedures requiring suspension and debarment verification prior to contract award and retain evidence of the verification in the procurement file to demonstrate compliance with federal requirements. Management Response: Management agrees with the finding and is implementing procedures to correct this, which is further discussed in the corrective action plan.
Identification of Major Programs Affected: This finding relates to all major programs Criteria: Title 2, U.S. Code of Federal Regulations (CFR), Part 200 establishes procurement requirements applicable to purchases made with Federal awards. 2 CFR § 200.318(i) requires the School to maintain records sufficient to detail the history of procurement transactions. Such records should include, as applicable, the rationale for the method of procurement, selection of the contractor, reasons for contractor selection or rejection, and the basis for the contract price. Additionally, 2 CFR § 200.214 requires compliance with the suspension and debarment requirements contained in 2 CFR Part 180. Under 2 CFR § 180.300, prior to entering into an applicable covered transaction, the School is required to verify that the prospective contractor or vendor is not excluded or disqualified from participation in Federal programs. Verification may be accomplished by reviewing the System for Award Management (SAM.gov), obtaining an appropriate certification from the vendor, or including an applicable clause or condition in the transaction. According to 2 CFR section 200.319, all procurement transactions for acquiring property or services required under a Federal award must be conducted with full and open competition. This ensures fairness and transparency in the procurement process, consistent with the standards outlined in this section and § 200.320. Condition: During our testing of procurement transactions charged to the Federal program, we noted that the School did not maintain sufficient documentation to demonstrate that suspension and debarment verification was performed at the time applicable contracts or covered transactions were entered into. In addition, for certain noncompetitive procurements, the School was unable to provide documentation supporting the sole-source justification or demonstrating that an allowable condition for noncompetitive procurement was met. Cause: The School did not have adequate procedures in place to ensure that suspension and debarment verification and documentation supporting sole-source procurements were completed and retained prior to entering into federally funded contracts. Effect: Noncompliance with procurement requirements under Uniform Guidance and School procurement policy. The lack of adequate procurement documentation increases the risk that purchases made with Federal funds may not comply with Federal procurement requirements or may not be obtained through appropriate competition. Additionally, failure to document suspension and debarment verification increases the risk that the School could enter into a covered transaction with a vendor that is suspended, debarred, or otherwise excluded from participation in Federal programs. Auditor's Recommendations: The School should strengthen its vendor selection procedures and ensure adherence to procurement policies to minimize risks and enhance efficiency. Noncompetitive or sole-source procurements should include written documentation supporting the applicable allowable circumstance under 2 CFR § 200.320. The rationale for the procurement method, vendor selection, and basis for the contract price should be retained in the procurement file. Suspension and debarment status is verified prior to entering into applicable covered transactions using one of the methods permitted under 2 CFR Part 180, and evidence of such verification is retained.
Federal Program Name: Research and Development Cluster Federal Agency: National Science Foundation Federal Assistance Listing Title and Number: 47.074 Award Year: June 1, 2022 – May 31, 2023 Criteria or Specific Requirement: Procurement, Suspension and Debarment Condition: The University’s procurement policy does not contain adequate documentation to demonstrate compliance with federal procurement regulations. (Deficiency) Questioned Costs: None. Context: The University’s documented procurement policies do not contain all the specified requirements of 2 CFR sections 200.318 through 200.326. Effect: The risks exist that the University could follow their procurement policy and procure an item with federal funds, which would not meet the federal procurement regulations. Cause: The writing of the policy did not take into account federal procurement regulations which are required to be incorporated for items procured with federal funds. Repeat Finding: Yes Recommendation: We recommend the University revise procurement policies to incorporate all required elements of federal procurement regulations. Views of Responsible Officials and Planned Corrective Action: The University agrees with the finding, a revised policy has been drafted and was approved in September 2023.
Federal Program Name: Research and Development Cluster Federal Agency: National Science Foundation Federal Assistance Listing Title and Number: 47.074 Award Year: June 1, 2022 – May 31, 2023 Criteria or Specific Requirement: Procurement, Suspension and Debarment Condition: The University’s procurement policy does not contain adequate documentation to demonstrate compliance with federal procurement regulations. (Deficiency) Questioned Costs: None. Context: The University’s documented procurement policies do not contain all the specified requirements of 2 CFR sections 200.318 through 200.326. Effect: The risks exist that the University could follow their procurement policy and procure an item with federal funds, which would not meet the federal procurement regulations. Cause: The writing of the policy did not take into account federal procurement regulations which are required to be incorporated for items procured with federal funds. Repeat Finding: Yes Recommendation: We recommend the University revise procurement policies to incorporate all required elements of federal procurement regulations. Views of Responsible Officials and Planned Corrective Action: The University agrees with the finding, a revised policy has been drafted and was approved in September 2023.
Finding 2023-004 (Material Weakness) Program: Choice Neighborhoods Implementation Grants Federal Agency: Department of Housing and Urban Development (HUD) AL #: 14.889 Federal Award Identification Number and Year: Various - See SEFA Pass-through Entity: N/A Type of Compliance Finding: I) Procurement, Suspension & 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 sections 200.318 through 200.326. They must use their own documented procurement procedures which reflect applicable state and local laws and regulation, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR part 200 and they must not be suspended or debarred. Condition/Context The City did not provide evidence supporting the City's compliance with this requirement. Cause The City did not follow their internal control processes and procedures. Effect The failure of the City to adhere to all Choice Neighborhoods Implementation Grants requirements could result in the repayment of grant funds. Questioned Costs Unknown Is the finding a repeat finding No Recommendations We recommend that the City submit/provide all required documentation to meet compliance requirements. Views of Responsible Officials/Planned Corrective Actions Management agrees with the finding. See Corrective Action Plan on Organization's letterhead.
Department of Health and Human Services Federal Financial Assistance Listing #93.697 COVID‐19 Testing and Mitigation for Rural Health Clinics Procurement, Suspension, and Debarment Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over federal awards that provides reasonable assurance that the Health System is managing the federal award in compliance with federal statutes, regulations and terms and conditions of the federal award. The non‐Federal entity’s documented procurement procedures must conform to the procurement standards identified in 2 CFR 200.318 through 200.327 which also requires documentation to be retained to detail the history of procurements. Condition: The Health System did not obtain quotes from multiple vendors as it relates to the procurement and purchasing of flooring which was over the micro‐purchase threshold. In addition, Health System did not have a written procurement policy or written standards of conduct policy related to procurement. Cause: The Health System did not have a procurement policy in place. Effect: Without obtaining multiple quotes and having a procurement policy or standards of conduct policy related to procurement, demonstrating that the Health System complies with laws, regulations, and other compliance requirements is difficult. Questioned Costs: Covered transactions entered into by the Health System over the micro‐purchase threshold without multiple quotes totaled $147,460. Questioned costs are unable to be identified as multiple quotes were not received by the Health System to ensure the price paid was reasonable. Context: Sampling was not used as only three vendors had purchases over $10,000. Repeat Finding from Prior Years: No Recommendation: We recommend the Health System implement a procurement policy and standards of conduct policy related to procurement, implement internal control processes to ensure compliance with their procurement policy, and retain documentation to support procurement, suspension and debarment procedures performed. Views of Responsible Officials: Management agrees with the finding.
Finding 2023-004 (Material Weakness) Program: Choice Neighborhoods Implementation Grants Federal Agency: Department of Housing and Urban Development (HUD) AL #: 14.889 Federal Award Identification Number and Year: Various - See SEFA Pass-through Entity: N/A Type of Compliance Finding: I) Procurement, Suspension & 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 sections 200.318 through 200.326. They must use their own documented procurement procedures which reflect applicable state and local laws and regulation, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR part 200 and they must not be suspended or debarred. Condition/Context The City did not provide evidence supporting the City's compliance with this requirement. Cause The City did not follow their internal control processes and procedures. Effect The failure of the City to adhere to all Choice Neighborhoods Implementation Grants requirements could result in the repayment of grant funds. Questioned Costs Unknown Is the finding a repeat finding No Recommendations We recommend that the City submit/provide all required documentation to meet compliance requirements. Views of Responsible Officials/Planned Corrective Actions Management agrees with the finding. See Corrective Action Plan on Organization's letterhead.
Department of Health and Human Services Federal Financial Assistance Listing #93.697 COVID‐19 Testing and Mitigation for Rural Health Clinics Procurement, Suspension, and Debarment Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over federal awards that provides reasonable assurance that the Health System is managing the federal award in compliance with federal statutes, regulations and terms and conditions of the federal award. The non‐Federal entity’s documented procurement procedures must conform to the procurement standards identified in 2 CFR 200.318 through 200.327 which also requires documentation to be retained to detail the history of procurements. Condition: The Health System did not obtain quotes from multiple vendors as it relates to the procurement and purchasing of flooring which was over the micro‐purchase threshold. In addition, Health System did not have a written procurement policy or written standards of conduct policy related to procurement. Cause: The Health System did not have a procurement policy in place. Effect: Without obtaining multiple quotes and having a procurement policy or standards of conduct policy related to procurement, demonstrating that the Health System complies with laws, regulations, and other compliance requirements is difficult. Questioned Costs: Covered transactions entered into by the Health System over the micro‐purchase threshold without multiple quotes totaled $147,460. Questioned costs are unable to be identified as multiple quotes were not received by the Health System to ensure the price paid was reasonable. Context: Sampling was not used as only three vendors had purchases over $10,000. Repeat Finding from Prior Years: No Recommendation: We recommend the Health System implement a procurement policy and standards of conduct policy related to procurement, implement internal control processes to ensure compliance with their procurement policy, and retain documentation to support procurement, suspension and debarment procedures performed. Views of Responsible Officials: Management agrees with the finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Grants for New and Expanded Services Under the Health Center Program Assistance Listing Number: 93.224/93.527 Federal Award Identification Number: L2C42352-01-00 Award Periods: July 1, 2021 – June 30, 2023 Type of Finding: Significant deficiency in internal control over compliance 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: Legacy did not document that sam.gov was checked prior to entering into a contract with a vendor. Questioned Costs: None. Context: Two (2) of two (2) vendors tested. Documentation was provided to show that sam.gov was checked, however it occurred on the last day of the fiscal year. Cause: Legacy did not create and maintain documentation showing that suspension and debarment had be checked prior to engaging a vendor. Effect: Contracted vendors may be ineligible to receive federal dollars for services performed. Repeat Finding: Yes. Prior Year Finding: 2022-003. Recommendation: We recommend that Legacy check, and document, the use of Sam.gov to verify that a vendor was not suspended, debarred, or otherwise excluded from participating in the transaction prior to entering into a contract. Views of Responsible Officials: There is no disagreement with the audit finding.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 66.458, Environmental Protection Agency, Capitalization Grants for Clean Water State Revolving Funds Federal Award Identification Number and Year: 5749-01, Loan Period 06/18/2022-11/15/2024 Pass-through Entity: Michigan Department of Environment, Great Lakes, and Energy Finance Division - Water Infrastructure Financing Section (EGLE) Type: Material weakness in internal control and material noncompliance with laws and regulations Repeat Finding: No Criteria: Per 2 CFR 200.318 (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. In addition, per 2 CFR 200.318 (i), the non-Federal entity must maintain records sufficient to detail the history of procurement. Condition: The Township did not utilize federal procurement requirements cited above for the engineering services for the State Clean Water Revolving Fund project. Identification of How Likely Questioned Costs Were Computed: The questioned costs were determined from actual engineering design and construction cost billed (federal portion) during the June 18, 2022 through March 31, 2023 period as summarized from the request for disbursement of funds submitted to EGLE. Known Questioned Costs: $295,854 Context: We tested the procurement of four contracts, 100% of the contracts, and identified one contract that did not follow federal procurement requirements. Cause/Effect: A number of years ago the Township bid engineering services and selected an engineer firm however there were issues with that firm therefore the Township replaced the original engineer with a local engineering firm that they have utilized on other Township projects. Therefore, they did not belief they need to bid engineering services for this project. The Township did not utilize federal procurement requirements to ensure fair and open competition and reasonable cost for engineering services for the State Clean Water Revolving Fund project. Recommendation: We recommend the Township follow federal procurement as required in 2 CFR 200.319 (d) for all contracts reimbursed with federal funds. View of responsible officials and planned corrective action plan: See attached corrective action plan.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 66.458, Environmental Protection Agency. Capitalization Grants for Clean Water State Revolving Funds Federal Award Identification Number and Year: 5749-01, Loan Period 06/18/2022-11/15/2024 Pass-through Entity: Michigan Department of Environment, Great Lakes, and Energy Finance Division - Water Infrastructure Financing Section Type: Material weakness in internal control and material noncompliance with laws and regulations Repeat Finding: No Criteria: As a precondition to receive federal awards, prospective recipients must have effective internal controls over the federal award. As described in 2 CFR, Part 200.303, nonfederal entities must have certain written policies and procedures surrounding the management of their federal awards. Such policies should include procedures for collecting payments of federal funds per 2 CRF 200.305, cash management (i.e., minimizing the time between draws and actual disbursing of federal awards) per 2 CFR 200.302(b)(6), allowable cost per 2 CFR 200.403, and conflict of interest per 2 CFR 200.318. Per 2 CFR 200.319 (d), the non-Federal entity must have written procedures for procurement transactions. Condition: The Township did not have written procedures for cash management, allowable cost or conflict of interest. In addition, the Township procurement policy did not include all necessary items specified in the Uniform Guidance. Identification of How Likely Questioned Costs Were Computed: N/A Known Questioned Costs: None Context: N/A Cause/Effect: The Township was not aware that they were required to have written policies and procedures for the items noted above and was using the grant agreement requirements for guidelines. The Township's controls were not adequate to ensure it followed the federal requirement over these processes. Recommendation: We recommend the Township adopt written policies and procedures over cash management, allowable costs, and conflicts of interest. In addition, we recommend that management review and modify the procedure policy to include all the necessary items outline in the Uniform Guidance. View of responsible officials and planned corrective action plan: See attached corrective action plan.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 66.458, Environmental Protection Agency. Capitalization Grants for Clean Water State Revolving Funds Federal Award Identification Number and Year: 5749-01, Loan Period 06/18/2022-11/15/2024 Pass-through Entity: Michigan Department of Environment, Great Lakes, and Energy Finance Division - Water Infrastructure Financing Section Type: Material weakness in internal control and material noncompliance with laws and regulations Repeat Finding: No Criteria: A nonfederal entity must have adequate procedures in place to verify that an entity with which it plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded (2 CFR sections 200.212 and 200.318(h); 2 CRF section 180.300; 48 CFR section 52.209-6). Condition: During procurement testing of the Capitalization Grants for Clean Water Revolving Funds, we noted that the Township did not have documentation that sam.gov was reviewed to ensure the contractors were not suspended or debarred. The only consideration of debarment or suspension appears to be requirement to have contractors provide a signed certification to the effect of not being debarred or suspended from participation in federally funded projects. Identification of How Likely Questioned Costs Were Computed: N/A Known Questioned Costs: None. Subsequently, the sam.gov was reviewed to ensure that the contractors were not suspended or debarred. Context: None of the four contractors utilized for the Capitalization Grants for Clean Water Revolving Funds project were evaluated. Cause/Effect: The lead engineer left the employment of the engineering company, and they believe that he would have tested for suspension or debarment at the time of initiating the contracts, however no documentation could be located. The Township did not have controls in place to comply with suspension and debarment evaluation requirements. Recommendation: We recommend the Township implement adequate controls to ensure verification of debarment, suspension, or exclusion takes place before entering into covered transactions. View of responsible officials and planned corrective action plan: See attached corrective action plan.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Grants for New and Expanded Services Under the Health Center Program Assistance Listing Number: 93.224/93.527 Federal Award Identification Number: L2C42352-01-00 Award Periods: July 1, 2021 – June 30, 2023 Type of Finding: Significant deficiency in internal control over compliance 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: Legacy did not document that sam.gov was checked prior to entering into a contract with a vendor. Questioned Costs: None. Context: Two (2) of two (2) vendors tested. Documentation was provided to show that sam.gov was checked, however it occurred on the last day of the fiscal year. Cause: Legacy did not create and maintain documentation showing that suspension and debarment had be checked prior to engaging a vendor. Effect: Contracted vendors may be ineligible to receive federal dollars for services performed. Repeat Finding: Yes. Prior Year Finding: 2022-003. Recommendation: We recommend that Legacy check, and document, the use of Sam.gov to verify that a vendor was not suspended, debarred, or otherwise excluded from participating in the transaction prior to entering into a contract. Views of Responsible Officials: There is no disagreement with the audit finding.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 66.458, Environmental Protection Agency, Capitalization Grants for Clean Water State Revolving Funds Federal Award Identification Number and Year: 5749-01, Loan Period 06/18/2022-11/15/2024 Pass-through Entity: Michigan Department of Environment, Great Lakes, and Energy Finance Division - Water Infrastructure Financing Section (EGLE) Type: Material weakness in internal control and material noncompliance with laws and regulations Repeat Finding: No Criteria: Per 2 CFR 200.318 (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. In addition, per 2 CFR 200.318 (i), the non-Federal entity must maintain records sufficient to detail the history of procurement. Condition: The Township did not utilize federal procurement requirements cited above for the engineering services for the State Clean Water Revolving Fund project. Identification of How Likely Questioned Costs Were Computed: The questioned costs were determined from actual engineering design and construction cost billed (federal portion) during the June 18, 2022 through March 31, 2023 period as summarized from the request for disbursement of funds submitted to EGLE. Known Questioned Costs: $295,854 Context: We tested the procurement of four contracts, 100% of the contracts, and identified one contract that did not follow federal procurement requirements. Cause/Effect: A number of years ago the Township bid engineering services and selected an engineer firm however there were issues with that firm therefore the Township replaced the original engineer with a local engineering firm that they have utilized on other Township projects. Therefore, they did not belief they need to bid engineering services for this project. The Township did not utilize federal procurement requirements to ensure fair and open competition and reasonable cost for engineering services for the State Clean Water Revolving Fund project. Recommendation: We recommend the Township follow federal procurement as required in 2 CFR 200.319 (d) for all contracts reimbursed with federal funds. View of responsible officials and planned corrective action plan: See attached corrective action plan.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 66.458, Environmental Protection Agency. Capitalization Grants for Clean Water State Revolving Funds Federal Award Identification Number and Year: 5749-01, Loan Period 06/18/2022-11/15/2024 Pass-through Entity: Michigan Department of Environment, Great Lakes, and Energy Finance Division - Water Infrastructure Financing Section Type: Material weakness in internal control and material noncompliance with laws and regulations Repeat Finding: No Criteria: As a precondition to receive federal awards, prospective recipients must have effective internal controls over the federal award. As described in 2 CFR, Part 200.303, nonfederal entities must have certain written policies and procedures surrounding the management of their federal awards. Such policies should include procedures for collecting payments of federal funds per 2 CRF 200.305, cash management (i.e., minimizing the time between draws and actual disbursing of federal awards) per 2 CFR 200.302(b)(6), allowable cost per 2 CFR 200.403, and conflict of interest per 2 CFR 200.318. Per 2 CFR 200.319 (d), the non-Federal entity must have written procedures for procurement transactions. Condition: The Township did not have written procedures for cash management, allowable cost or conflict of interest. In addition, the Township procurement policy did not include all necessary items specified in the Uniform Guidance. Identification of How Likely Questioned Costs Were Computed: N/A Known Questioned Costs: None Context: N/A Cause/Effect: The Township was not aware that they were required to have written policies and procedures for the items noted above and was using the grant agreement requirements for guidelines. The Township's controls were not adequate to ensure it followed the federal requirement over these processes. Recommendation: We recommend the Township adopt written policies and procedures over cash management, allowable costs, and conflicts of interest. In addition, we recommend that management review and modify the procedure policy to include all the necessary items outline in the Uniform Guidance. View of responsible officials and planned corrective action plan: See attached corrective action plan.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 66.458, Environmental Protection Agency. Capitalization Grants for Clean Water State Revolving Funds Federal Award Identification Number and Year: 5749-01, Loan Period 06/18/2022-11/15/2024 Pass-through Entity: Michigan Department of Environment, Great Lakes, and Energy Finance Division - Water Infrastructure Financing Section Type: Material weakness in internal control and material noncompliance with laws and regulations Repeat Finding: No Criteria: A nonfederal entity must have adequate procedures in place to verify that an entity with which it plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded (2 CFR sections 200.212 and 200.318(h); 2 CRF section 180.300; 48 CFR section 52.209-6). Condition: During procurement testing of the Capitalization Grants for Clean Water Revolving Funds, we noted that the Township did not have documentation that sam.gov was reviewed to ensure the contractors were not suspended or debarred. The only consideration of debarment or suspension appears to be requirement to have contractors provide a signed certification to the effect of not being debarred or suspended from participation in federally funded projects. Identification of How Likely Questioned Costs Were Computed: N/A Known Questioned Costs: None. Subsequently, the sam.gov was reviewed to ensure that the contractors were not suspended or debarred. Context: None of the four contractors utilized for the Capitalization Grants for Clean Water Revolving Funds project were evaluated. Cause/Effect: The lead engineer left the employment of the engineering company, and they believe that he would have tested for suspension or debarment at the time of initiating the contracts, however no documentation could be located. The Township did not have controls in place to comply with suspension and debarment evaluation requirements. Recommendation: We recommend the Township implement adequate controls to ensure verification of debarment, suspension, or exclusion takes place before entering into covered transactions. View of responsible officials and planned corrective action plan: See attached corrective action plan.
Finding Type: Significant Deficiency Condition: Our audit found that JTCHS did not have adequate internal controls to ensure compliance with the federal procurement requirements. Specifically, JTCHS's procurement policies did not set a simplified acquisition threshold that was compliant with federal requirements. Criteria: Per 2 CFR 200.318(a), General Procurement Standards, “The non-Federal entity must have and use documented procurement procedures consistent with State, local, and tribal laws and regulations 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. Cause: JTCHS was not aware that its formal written procurement policy was not in compliance with the federal guidelines. Effect: JTCHS was not in compliance with Federal requirements relating to procurement policy. Recommendation: JTCHS should review federal procurement guidelines and revise its procurement policy to be in compliance with the federal procurement guidelines. Responsible Official’s Response: Management will review adopt a procurement policy in accordance with the Uniform Guidance. Planned Implementation Date of Corrective Action Plan: Management has started revising its policy and expects to have a revised procurement policy during fiscal year ending January 31, 2024.
Finding Type: Significant Deficiency Condition: Our audit found that JTCHS did not have adequate internal controls to ensure compliance with the federal procurement requirements. Specifically, JTCHS's procurement policies did not set a simplified acquisition threshold that was compliant with federal requirements. Criteria: Per 2 CFR 200.318(a), General Procurement Standards, “The non-Federal entity must have and use documented procurement procedures consistent with State, local, and tribal laws and regulations 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. Cause: JTCHS was not aware that its formal written procurement policy was not in compliance with the federal guidelines. Effect: JTCHS was not in compliance with Federal requirements relating to procurement policy. Recommendation: JTCHS should review federal procurement guidelines and revise its procurement policy to be in compliance with the federal procurement guidelines. Responsible Official’s Response: Management will review adopt a procurement policy in accordance with the Uniform Guidance. Planned Implementation Date of Corrective Action Plan: Management has started revising its policy and expects to have a revised procurement policy during fiscal year ending January 31, 2024.
Procurement – Suspension and Debarment Information on Federal Program: U.S. Department of Health COVID-19 Detection and Mitigation of COVID-19 in Confinement Facilities, federal assistance listing number 93.323. Criteria: 2 CFR Sections 200.212, 200.318(h), and 180.300 and 48 CFR Section 52.209-6 state that a non-Federal entity must review that an entity with which it plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded from participation in federal award programs. Statement of Condition: During our testing for procurement compliance, it was determined that the New York State Sheriffs’ Association, Inc. did not verify that vendors charged to the major program are not debarred, suspended, or otherwise excluded from participation in federal award programs. Questioned Cost: None Statement of Cause: Management was not aware of the requirement to review an entity’s status. Statement of Effect: The New York State Sheriffs’ Association, Inc. is not in compliance with 2 CFR Sections 200.212, 200.318(h), and 180.300 and 48 CFR Section 52.209-6. As a result, the Association could enter into covered transactions with entities that are debarred, suspended, or otherwise excluded from participation in federal award programs. Repeat Finding: No Recommendation: We recommend management review and document the verification that vendors are not debarred, suspended, or otherwise excluded from participation in federal award programs. Views of the Responsible Officials and Planned Corrective Actions: Vendors will be reviewed and documented that they are not debarred, suspended, or otherwise excluded from participation in federal award programs by use of the System for Award Management (SAM), the Official U.S. Government system. [New procedure implemented] Perspective Information: There was one vendor in excess of the $25,000 threshold which was reviewed to determine eligibility for participation noting they are not debarred, suspended, or otherwise excluded from participation in federal award programs.
City of Renton January 1, 2022 through December 31, 2022 2022-001 The City’s internal controls were inadequate for ensuring compliance with procurement and suspension and debarment requirements. Assistance Listing Number and Title: 20.205 Highway Planning andConstruction Grant Federal Grantor Name: Federal Highway Administration U.S. Department of Transportation Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Transportation Pass-through Award/Contract Number: STPUL-1615(005) and HIPULSTP-9917(037) Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Description of Condition During fiscal year 2022, the City spent $3,658,423 in federal grant funds awarded by the Federal Highway Administration and passed through by the Washington State Department of Transportation. This program gives funding to help state and local government agencies plan and develop an integrated, interconnected transportation system. The City used program funding on seven projects during fiscal year 2022. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Our audit found the City’s internal controls were inadequate for ensuring compliance with the following federal requirements. Procurement Federal regulations require recipients to follow their own written procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR 200.318-327. The procedures must conform to federal procurement thresholds and procedures to ensure recipients follow the most restrictive of federal, state or local procurement methods when using federal funds. Although the City implemented a procurement policy, it does not conform to the most restrictive methods and thresholds for procuring personal services. Additionally, the City’s internal controls were ineffective for ensuring its compliance with federal procurement requirements for personal services. Suspension and debarment Federal regulations prohibit recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the City contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify that contractors are not been suspended, debarred or otherwise excluded from participating in federal programs. The City may accomplish this verification by obtaining a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at SAM.gov. The City must perform this verification before entering into the contract, and it must maintain documentation demonstrating compliance with this federal requirement. The City’s internal controls were inadequate for ensuring staff verified the suspension and debarment status for all covered transactions. Specifically, the City was unable to provide documentation demonstrating one personal services contractor was not suspended or debarred from participating in federal programs before entering into the agreement. We consider these control deficiencies to be material weaknesses. Cause of Condition Procurement City staff did not know the federal requirement for procuring personal services was more restrictive than local and state requirements. Further, staff mistakenly thought that legal services were not subject to federal procurement requirements. Suspension and debarment City staff were aware of the requirement, but they could not locate documentation to show that one contractor’s suspension and debarment status was verified. Effect of Condition Procurement Without updated written procedures, the City is at greater risk of noncompliance with following the most restrictive procurement methods when procuring contractors paid all or in part with federal funds. In 2021, the City awarded two personal services contracts for legal services, totaling $365,000, without competitively procuring them. Without effective internal controls, the City cannot ensure it allowed for full and open competition, received the best price, and complied with federal procurement requirements. Suspension and debarment The City was unable to demonstrate it had obtained a written certification, inserted a clause into the agreement, or maintained support of checking SAM.gov to verify one contractor it paid $268,846 in 2022 was not suspended or debarred. Without verification, the City increases it risk of awarding federal funds to contractors that are excluded from participating in federal programs. Any program funds the City made to an ineligible party would be unallowable, and the federal grantor could potentially recover them. The City subsequently verified the contractor was not suspended or debarred, so we are not questioning costs. Recommendation We recommend the City establish internal controls to ensure it meets federal procurement and suspension and debarment requirements by: • Updating its written policies and procedures to conform to Uniform Guidance (2 CFR 200.318-327) • Procuring goods and services in accordance with federal regulations, state law, and its own procurement policies and procedures • Verifying that all contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred before entering into contracts with them or charging costs to a federal award, and maintain documentation demonstrating compliance with this requirement City’s Response Auditor’s Remarks We appreciate the City’s commitment to resolving the finding, and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during the next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring with Federal funds by non-federal entities. Title 2 CFR Part 180, OMB Guidelines to Agencies on Government wide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.
City of Renton January 1, 2022 through December 31, 2022 2022-001 The City’s internal controls were inadequate for ensuring compliance with procurement and suspension and debarment requirements. Assistance Listing Number and Title: 20.205 Highway Planning andConstruction Grant Federal Grantor Name: Federal Highway Administration U.S. Department of Transportation Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Transportation Pass-through Award/Contract Number: STPUL-1615(005) and HIPULSTP-9917(037) Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Description of Condition During fiscal year 2022, the City spent $3,658,423 in federal grant funds awarded by the Federal Highway Administration and passed through by the Washington State Department of Transportation. This program gives funding to help state and local government agencies plan and develop an integrated, interconnected transportation system. The City used program funding on seven projects during fiscal year 2022. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Our audit found the City’s internal controls were inadequate for ensuring compliance with the following federal requirements. Procurement Federal regulations require recipients to follow their own written procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR 200.318-327. The procedures must conform to federal procurement thresholds and procedures to ensure recipients follow the most restrictive of federal, state or local procurement methods when using federal funds. Although the City implemented a procurement policy, it does not conform to the most restrictive methods and thresholds for procuring personal services. Additionally, the City’s internal controls were ineffective for ensuring its compliance with federal procurement requirements for personal services. Suspension and debarment Federal regulations prohibit recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the City contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify that contractors are not been suspended, debarred or otherwise excluded from participating in federal programs. The City may accomplish this verification by obtaining a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at SAM.gov. The City must perform this verification before entering into the contract, and it must maintain documentation demonstrating compliance with this federal requirement. The City’s internal controls were inadequate for ensuring staff verified the suspension and debarment status for all covered transactions. Specifically, the City was unable to provide documentation demonstrating one personal services contractor was not suspended or debarred from participating in federal programs before entering into the agreement. We consider these control deficiencies to be material weaknesses. Cause of Condition Procurement City staff did not know the federal requirement for procuring personal services was more restrictive than local and state requirements. Further, staff mistakenly thought that legal services were not subject to federal procurement requirements. Suspension and debarment City staff were aware of the requirement, but they could not locate documentation to show that one contractor’s suspension and debarment status was verified. Effect of Condition Procurement Without updated written procedures, the City is at greater risk of noncompliance with following the most restrictive procurement methods when procuring contractors paid all or in part with federal funds. In 2021, the City awarded two personal services contracts for legal services, totaling $365,000, without competitively procuring them. Without effective internal controls, the City cannot ensure it allowed for full and open competition, received the best price, and complied with federal procurement requirements. Suspension and debarment The City was unable to demonstrate it had obtained a written certification, inserted a clause into the agreement, or maintained support of checking SAM.gov to verify one contractor it paid $268,846 in 2022 was not suspended or debarred. Without verification, the City increases it risk of awarding federal funds to contractors that are excluded from participating in federal programs. Any program funds the City made to an ineligible party would be unallowable, and the federal grantor could potentially recover them. The City subsequently verified the contractor was not suspended or debarred, so we are not questioning costs. Recommendation We recommend the City establish internal controls to ensure it meets federal procurement and suspension and debarment requirements by: • Updating its written policies and procedures to conform to Uniform Guidance (2 CFR 200.318-327) • Procuring goods and services in accordance with federal regulations, state law, and its own procurement policies and procedures • Verifying that all contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred before entering into contracts with them or charging costs to a federal award, and maintain documentation demonstrating compliance with this requirement City’s Response Auditor’s Remarks We appreciate the City’s commitment to resolving the finding, and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during the next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring with Federal funds by non-federal entities. Title 2 CFR Part 180, OMB Guidelines to Agencies on Government wide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.
City of Renton January 1, 2022 through December 31, 2022 2022-001 The City’s internal controls were inadequate for ensuring compliance with procurement and suspension and debarment requirements. Assistance Listing Number and Title: 20.205 Highway Planning andConstruction Grant Federal Grantor Name: Federal Highway Administration U.S. Department of Transportation Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Transportation Pass-through Award/Contract Number: STPUL-1615(005) and HIPULSTP-9917(037) Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Description of Condition During fiscal year 2022, the City spent $3,658,423 in federal grant funds awarded by the Federal Highway Administration and passed through by the Washington State Department of Transportation. This program gives funding to help state and local government agencies plan and develop an integrated, interconnected transportation system. The City used program funding on seven projects during fiscal year 2022. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Our audit found the City’s internal controls were inadequate for ensuring compliance with the following federal requirements. Procurement Federal regulations require recipients to follow their own written procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR 200.318-327. The procedures must conform to federal procurement thresholds and procedures to ensure recipients follow the most restrictive of federal, state or local procurement methods when using federal funds. Although the City implemented a procurement policy, it does not conform to the most restrictive methods and thresholds for procuring personal services. Additionally, the City’s internal controls were ineffective for ensuring its compliance with federal procurement requirements for personal services. Suspension and debarment Federal regulations prohibit recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the City contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify that contractors are not been suspended, debarred or otherwise excluded from participating in federal programs. The City may accomplish this verification by obtaining a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at SAM.gov. The City must perform this verification before entering into the contract, and it must maintain documentation demonstrating compliance with this federal requirement. The City’s internal controls were inadequate for ensuring staff verified the suspension and debarment status for all covered transactions. Specifically, the City was unable to provide documentation demonstrating one personal services contractor was not suspended or debarred from participating in federal programs before entering into the agreement. We consider these control deficiencies to be material weaknesses. Cause of Condition Procurement City staff did not know the federal requirement for procuring personal services was more restrictive than local and state requirements. Further, staff mistakenly thought that legal services were not subject to federal procurement requirements. Suspension and debarment City staff were aware of the requirement, but they could not locate documentation to show that one contractor’s suspension and debarment status was verified. Effect of Condition Procurement Without updated written procedures, the City is at greater risk of noncompliance with following the most restrictive procurement methods when procuring contractors paid all or in part with federal funds. In 2021, the City awarded two personal services contracts for legal services, totaling $365,000, without competitively procuring them. Without effective internal controls, the City cannot ensure it allowed for full and open competition, received the best price, and complied with federal procurement requirements. Suspension and debarment The City was unable to demonstrate it had obtained a written certification, inserted a clause into the agreement, or maintained support of checking SAM.gov to verify one contractor it paid $268,846 in 2022 was not suspended or debarred. Without verification, the City increases it risk of awarding federal funds to contractors that are excluded from participating in federal programs. Any program funds the City made to an ineligible party would be unallowable, and the federal grantor could potentially recover them. The City subsequently verified the contractor was not suspended or debarred, so we are not questioning costs. Recommendation We recommend the City establish internal controls to ensure it meets federal procurement and suspension and debarment requirements by: • Updating its written policies and procedures to conform to Uniform Guidance (2 CFR 200.318-327) • Procuring goods and services in accordance with federal regulations, state law, and its own procurement policies and procedures • Verifying that all contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred before entering into contracts with them or charging costs to a federal award, and maintain documentation demonstrating compliance with this requirement City’s Response Auditor’s Remarks We appreciate the City’s commitment to resolving the finding, and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during the next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring with Federal funds by non-federal entities. Title 2 CFR Part 180, OMB Guidelines to Agencies on Government wide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.
City of Renton January 1, 2022 through December 31, 2022 2022-001 The City’s internal controls were inadequate for ensuring compliance with procurement and suspension and debarment requirements. Assistance Listing Number and Title: 20.205 Highway Planning andConstruction Grant Federal Grantor Name: Federal Highway Administration U.S. Department of Transportation Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Transportation Pass-through Award/Contract Number: STPUL-1615(005) and HIPULSTP-9917(037) Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Description of Condition During fiscal year 2022, the City spent $3,658,423 in federal grant funds awarded by the Federal Highway Administration and passed through by the Washington State Department of Transportation. This program gives funding to help state and local government agencies plan and develop an integrated, interconnected transportation system. The City used program funding on seven projects during fiscal year 2022. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Our audit found the City’s internal controls were inadequate for ensuring compliance with the following federal requirements. Procurement Federal regulations require recipients to follow their own written procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR 200.318-327. The procedures must conform to federal procurement thresholds and procedures to ensure recipients follow the most restrictive of federal, state or local procurement methods when using federal funds. Although the City implemented a procurement policy, it does not conform to the most restrictive methods and thresholds for procuring personal services. Additionally, the City’s internal controls were ineffective for ensuring its compliance with federal procurement requirements for personal services. Suspension and debarment Federal regulations prohibit recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the City contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify that contractors are not been suspended, debarred or otherwise excluded from participating in federal programs. The City may accomplish this verification by obtaining a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at SAM.gov. The City must perform this verification before entering into the contract, and it must maintain documentation demonstrating compliance with this federal requirement. The City’s internal controls were inadequate for ensuring staff verified the suspension and debarment status for all covered transactions. Specifically, the City was unable to provide documentation demonstrating one personal services contractor was not suspended or debarred from participating in federal programs before entering into the agreement. We consider these control deficiencies to be material weaknesses. Cause of Condition Procurement City staff did not know the federal requirement for procuring personal services was more restrictive than local and state requirements. Further, staff mistakenly thought that legal services were not subject to federal procurement requirements. Suspension and debarment City staff were aware of the requirement, but they could not locate documentation to show that one contractor’s suspension and debarment status was verified. Effect of Condition Procurement Without updated written procedures, the City is at greater risk of noncompliance with following the most restrictive procurement methods when procuring contractors paid all or in part with federal funds. In 2021, the City awarded two personal services contracts for legal services, totaling $365,000, without competitively procuring them. Without effective internal controls, the City cannot ensure it allowed for full and open competition, received the best price, and complied with federal procurement requirements. Suspension and debarment The City was unable to demonstrate it had obtained a written certification, inserted a clause into the agreement, or maintained support of checking SAM.gov to verify one contractor it paid $268,846 in 2022 was not suspended or debarred. Without verification, the City increases it risk of awarding federal funds to contractors that are excluded from participating in federal programs. Any program funds the City made to an ineligible party would be unallowable, and the federal grantor could potentially recover them. The City subsequently verified the contractor was not suspended or debarred, so we are not questioning costs. Recommendation We recommend the City establish internal controls to ensure it meets federal procurement and suspension and debarment requirements by: • Updating its written policies and procedures to conform to Uniform Guidance (2 CFR 200.318-327) • Procuring goods and services in accordance with federal regulations, state law, and its own procurement policies and procedures • Verifying that all contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred before entering into contracts with them or charging costs to a federal award, and maintain documentation demonstrating compliance with this requirement City’s Response Auditor’s Remarks We appreciate the City’s commitment to resolving the finding, and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during the next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring with Federal funds by non-federal entities. Title 2 CFR Part 180, OMB Guidelines to Agencies on Government wide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.
City of Renton January 1, 2022 through December 31, 2022 2022-001 The City’s internal controls were inadequate for ensuring compliance with procurement and suspension and debarment requirements. Assistance Listing Number and Title: 20.205 Highway Planning andConstruction Grant Federal Grantor Name: Federal Highway Administration U.S. Department of Transportation Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Transportation Pass-through Award/Contract Number: STPUL-1615(005) and HIPULSTP-9917(037) Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Description of Condition During fiscal year 2022, the City spent $3,658,423 in federal grant funds awarded by the Federal Highway Administration and passed through by the Washington State Department of Transportation. This program gives funding to help state and local government agencies plan and develop an integrated, interconnected transportation system. The City used program funding on seven projects during fiscal year 2022. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Our audit found the City’s internal controls were inadequate for ensuring compliance with the following federal requirements. Procurement Federal regulations require recipients to follow their own written procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR 200.318-327. The procedures must conform to federal procurement thresholds and procedures to ensure recipients follow the most restrictive of federal, state or local procurement methods when using federal funds. Although the City implemented a procurement policy, it does not conform to the most restrictive methods and thresholds for procuring personal services. Additionally, the City’s internal controls were ineffective for ensuring its compliance with federal procurement requirements for personal services. Suspension and debarment Federal regulations prohibit recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the City contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify that contractors are not been suspended, debarred or otherwise excluded from participating in federal programs. The City may accomplish this verification by obtaining a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at SAM.gov. The City must perform this verification before entering into the contract, and it must maintain documentation demonstrating compliance with this federal requirement. The City’s internal controls were inadequate for ensuring staff verified the suspension and debarment status for all covered transactions. Specifically, the City was unable to provide documentation demonstrating one personal services contractor was not suspended or debarred from participating in federal programs before entering into the agreement. We consider these control deficiencies to be material weaknesses. Cause of Condition Procurement City staff did not know the federal requirement for procuring personal services was more restrictive than local and state requirements. Further, staff mistakenly thought that legal services were not subject to federal procurement requirements. Suspension and debarment City staff were aware of the requirement, but they could not locate documentation to show that one contractor’s suspension and debarment status was verified. Effect of Condition Procurement Without updated written procedures, the City is at greater risk of noncompliance with following the most restrictive procurement methods when procuring contractors paid all or in part with federal funds. In 2021, the City awarded two personal services contracts for legal services, totaling $365,000, without competitively procuring them. Without effective internal controls, the City cannot ensure it allowed for full and open competition, received the best price, and complied with federal procurement requirements. Suspension and debarment The City was unable to demonstrate it had obtained a written certification, inserted a clause into the agreement, or maintained support of checking SAM.gov to verify one contractor it paid $268,846 in 2022 was not suspended or debarred. Without verification, the City increases it risk of awarding federal funds to contractors that are excluded from participating in federal programs. Any program funds the City made to an ineligible party would be unallowable, and the federal grantor could potentially recover them. The City subsequently verified the contractor was not suspended or debarred, so we are not questioning costs. Recommendation We recommend the City establish internal controls to ensure it meets federal procurement and suspension and debarment requirements by: • Updating its written policies and procedures to conform to Uniform Guidance (2 CFR 200.318-327) • Procuring goods and services in accordance with federal regulations, state law, and its own procurement policies and procedures • Verifying that all contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred before entering into contracts with them or charging costs to a federal award, and maintain documentation demonstrating compliance with this requirement City’s Response Auditor’s Remarks We appreciate the City’s commitment to resolving the finding, and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during the next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring with Federal funds by non-federal entities. Title 2 CFR Part 180, OMB Guidelines to Agencies on Government wide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.
City of Renton January 1, 2022 through December 31, 2022 2022-001 The City’s internal controls were inadequate for ensuring compliance with procurement and suspension and debarment requirements. Assistance Listing Number and Title: 20.205 Highway Planning andConstruction Grant Federal Grantor Name: Federal Highway Administration U.S. Department of Transportation Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Transportation Pass-through Award/Contract Number: STPUL-1615(005) and HIPULSTP-9917(037) Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Description of Condition During fiscal year 2022, the City spent $3,658,423 in federal grant funds awarded by the Federal Highway Administration and passed through by the Washington State Department of Transportation. This program gives funding to help state and local government agencies plan and develop an integrated, interconnected transportation system. The City used program funding on seven projects during fiscal year 2022. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Our audit found the City’s internal controls were inadequate for ensuring compliance with the following federal requirements. Procurement Federal regulations require recipients to follow their own written procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR 200.318-327. The procedures must conform to federal procurement thresholds and procedures to ensure recipients follow the most restrictive of federal, state or local procurement methods when using federal funds. Although the City implemented a procurement policy, it does not conform to the most restrictive methods and thresholds for procuring personal services. Additionally, the City’s internal controls were ineffective for ensuring its compliance with federal procurement requirements for personal services. Suspension and debarment Federal regulations prohibit recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the City contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify that contractors are not been suspended, debarred or otherwise excluded from participating in federal programs. The City may accomplish this verification by obtaining a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at SAM.gov. The City must perform this verification before entering into the contract, and it must maintain documentation demonstrating compliance with this federal requirement. The City’s internal controls were inadequate for ensuring staff verified the suspension and debarment status for all covered transactions. Specifically, the City was unable to provide documentation demonstrating one personal services contractor was not suspended or debarred from participating in federal programs before entering into the agreement. We consider these control deficiencies to be material weaknesses. Cause of Condition Procurement City staff did not know the federal requirement for procuring personal services was more restrictive than local and state requirements. Further, staff mistakenly thought that legal services were not subject to federal procurement requirements. Suspension and debarment City staff were aware of the requirement, but they could not locate documentation to show that one contractor’s suspension and debarment status was verified. Effect of Condition Procurement Without updated written procedures, the City is at greater risk of noncompliance with following the most restrictive procurement methods when procuring contractors paid all or in part with federal funds. In 2021, the City awarded two personal services contracts for legal services, totaling $365,000, without competitively procuring them. Without effective internal controls, the City cannot ensure it allowed for full and open competition, received the best price, and complied with federal procurement requirements. Suspension and debarment The City was unable to demonstrate it had obtained a written certification, inserted a clause into the agreement, or maintained support of checking SAM.gov to verify one contractor it paid $268,846 in 2022 was not suspended or debarred. Without verification, the City increases it risk of awarding federal funds to contractors that are excluded from participating in federal programs. Any program funds the City made to an ineligible party would be unallowable, and the federal grantor could potentially recover them. The City subsequently verified the contractor was not suspended or debarred, so we are not questioning costs. Recommendation We recommend the City establish internal controls to ensure it meets federal procurement and suspension and debarment requirements by: • Updating its written policies and procedures to conform to Uniform Guidance (2 CFR 200.318-327) • Procuring goods and services in accordance with federal regulations, state law, and its own procurement policies and procedures • Verifying that all contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred before entering into contracts with them or charging costs to a federal award, and maintain documentation demonstrating compliance with this requirement City’s Response Auditor’s Remarks We appreciate the City’s commitment to resolving the finding, and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during the next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring with Federal funds by non-federal entities. Title 2 CFR Part 180, OMB Guidelines to Agencies on Government wide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.
City of Renton January 1, 2022 through December 31, 2022 2022-001 The City’s internal controls were inadequate for ensuring compliance with procurement and suspension and debarment requirements. Assistance Listing Number and Title: 20.205 Highway Planning andConstruction Grant Federal Grantor Name: Federal Highway Administration U.S. Department of Transportation Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Transportation Pass-through Award/Contract Number: STPUL-1615(005) and HIPULSTP-9917(037) Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Description of Condition During fiscal year 2022, the City spent $3,658,423 in federal grant funds awarded by the Federal Highway Administration and passed through by the Washington State Department of Transportation. This program gives funding to help state and local government agencies plan and develop an integrated, interconnected transportation system. The City used program funding on seven projects during fiscal year 2022. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Our audit found the City’s internal controls were inadequate for ensuring compliance with the following federal requirements. Procurement Federal regulations require recipients to follow their own written procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR 200.318-327. The procedures must conform to federal procurement thresholds and procedures to ensure recipients follow the most restrictive of federal, state or local procurement methods when using federal funds. Although the City implemented a procurement policy, it does not conform to the most restrictive methods and thresholds for procuring personal services. Additionally, the City’s internal controls were ineffective for ensuring its compliance with federal procurement requirements for personal services. Suspension and debarment Federal regulations prohibit recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the City contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify that contractors are not been suspended, debarred or otherwise excluded from participating in federal programs. The City may accomplish this verification by obtaining a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at SAM.gov. The City must perform this verification before entering into the contract, and it must maintain documentation demonstrating compliance with this federal requirement. The City’s internal controls were inadequate for ensuring staff verified the suspension and debarment status for all covered transactions. Specifically, the City was unable to provide documentation demonstrating one personal services contractor was not suspended or debarred from participating in federal programs before entering into the agreement. We consider these control deficiencies to be material weaknesses. Cause of Condition Procurement City staff did not know the federal requirement for procuring personal services was more restrictive than local and state requirements. Further, staff mistakenly thought that legal services were not subject to federal procurement requirements. Suspension and debarment City staff were aware of the requirement, but they could not locate documentation to show that one contractor’s suspension and debarment status was verified. Effect of Condition Procurement Without updated written procedures, the City is at greater risk of noncompliance with following the most restrictive procurement methods when procuring contractors paid all or in part with federal funds. In 2021, the City awarded two personal services contracts for legal services, totaling $365,000, without competitively procuring them. Without effective internal controls, the City cannot ensure it allowed for full and open competition, received the best price, and complied with federal procurement requirements. Suspension and debarment The City was unable to demonstrate it had obtained a written certification, inserted a clause into the agreement, or maintained support of checking SAM.gov to verify one contractor it paid $268,846 in 2022 was not suspended or debarred. Without verification, the City increases it risk of awarding federal funds to contractors that are excluded from participating in federal programs. Any program funds the City made to an ineligible party would be unallowable, and the federal grantor could potentially recover them. The City subsequently verified the contractor was not suspended or debarred, so we are not questioning costs. Recommendation We recommend the City establish internal controls to ensure it meets federal procurement and suspension and debarment requirements by: • Updating its written policies and procedures to conform to Uniform Guidance (2 CFR 200.318-327) • Procuring goods and services in accordance with federal regulations, state law, and its own procurement policies and procedures • Verifying that all contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred before entering into contracts with them or charging costs to a federal award, and maintain documentation demonstrating compliance with this requirement City’s Response Auditor’s Remarks We appreciate the City’s commitment to resolving the finding, and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during the next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring with Federal funds by non-federal entities. Title 2 CFR Part 180, OMB Guidelines to Agencies on Government wide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.
The District did not have adequate internal controls to ensure compliance with federal procurement requirements. Description of Condition The purpose of the Health Center Program is to improve the health of underserved communities and vulnerable populations in the United States by ensuring continued access to comprehensive, culturally competent and quality primary health care services. The District spent $1,468,524 through this program to provide primary and preventive health care services to underserved communities. Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations also require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR 200.318-327. The procedures must reflect the most restrictive of applicable federal requirements, state laws or local policies. When using federal funds to purchase goods or services, governments must apply the most restrictive of federal requirements, state law or local policies by obtaining quotes or following a competitive bidding process, depending on the estimated cost of the purchase or project. The District’s adopted policy includes procedures for the purchase of supplies, materials, equipment and services. However, the thresholds do not conform to the most restrictive of $75,000 for public works contracts, and the policy does not include required elements to conform with Uniform Guidance requirements. In addition, the District entered into two contracts for public work projects during the audit period. One contract was for the installation of a modular building for $745,172, and the other was for a clinic renovation for $247,250. Both projects were partially paid with federal funds, and they required competitive bidding. Our audit found the District did not follow proper procurement procedures for these projects to ensure compliance with Uniform Guidance requirements. We consider these deficiencies in internal controls to be a material weakness. Cause of Condition District employees did not know about the policy requirements. Additionally, District officials said that obtaining quotes for these projects was the most economical process because the District has previously experienced difficulties with obtaining contractors within its remote location. Effect of Condition Without written procedures in place, the District is at greater risk of noncompliance with the most restrictive of federal, state, or local procurement methods when procuring contractors paid all or in part with federal funds. Since the District did not comply with federal procurement requirements to formally bid two public work projects, it cannot demonstrate it received the best price for the services provided. Recommendation We recommend the District ensure its written procurement procedures comply with the most restrictive of federal, state or local requirements, as required by Uniform Guidance. We also recommend the District strengthen its internal controls over procuring public work projects to ensure compliance with federal procurement requirements. District’s Response During the planning phase of each project, the District, working closely with its architectural firm, conducted extensive research on available contractors within the region with specific experience in construction for health care practice. It was determined that while there are an adequate number of contractors in the area; there is a robust housing construction trend occurring at present. As a result, contractors with specific experience health care construction conveyed they were not interested in the size of the District project to consider submitting a bid. The project then became a single source with only one vendor interested in submitting a bid for the work proposed. It was not feasible or economical to publicize the solicitation through appropriate periodicals of general circulation and trade press to solicit bids to maximize competition. The procurement for the prefabricated modular building was a unique circumstance where there are a limited number of vendors that can supply the product needed by the District within a reasonable geographic vicinity. The product needed by the District within a reasonable geographic vicinity. The District obtained written proposals from three known supplies of the specialty item for procurement. The request included specifications that defines the item of service needed that allowed for the vendor to properly respond. A cost and price analysis was conducted based on the response from the bids solicited. The final award was based on price as well as the lack of competition due to limited specialty suppliers. For this project, competition was determined inadequate due to the limited number of specialty vendors with the ability to fulfill the District requirements of a prefabricated structure. Therefore, it was not deemed feasible or economical to publicize the solicitation through appropriate periodicals of general circulation and trade presses. Auditor’s Remarks We thank the District for its cooperation and assistance during the audit and will review the status of this issue during the next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, describes general procurement standard requirements for auditees to follow. All procurement transactions for the acquisition of property or services required under a federal award must be conducted in a manner providing full and open competition consistent with the standards of this section.