Finding # 2022-002 Type: Immaterial Noncompliance over Procurement Assistance Listing Number: U.S. Department of Agriculture - Rural Development 10.755 Rural Innovation Stronger Economy U.S. Department of the Treasury 21.027 Coronavirus State and Local Fiscal Recovery Funds Criteria/Requirement: The Organization should follow the procurement standards set out at 2 CFR sections 200.318 through 200.326 including documentation to justify when a competitive process was not used. The Organization?s procurement policies also should be expanded to incorporate the provisions of the standards referenced. Condition: The procurement process was not properly documented and executed. For two out of two samples selected for testing, there was no documentation of the procurement process performed or reviewed. Cause: The Organization?s procurement policy does not meet the required federal standards, and application of the policy was not consistently applied. Effect: The Organization?s contracts could be from disbarred or disallowed vendors. Questioned Costs: None. Recommendation: The Organization's procurement policy must have 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 Organization should maintain records sufficient to detail the history of procurement. Management Response: Management will review the federal procurement guidelines and update its policies and procedures to be consistent with federal requirements.
Finding # 2022-002 Type: Immaterial Noncompliance over Procurement Assistance Listing Number: U.S. Department of Agriculture - Rural Development 10.755 Rural Innovation Stronger Economy U.S. Department of the Treasury 21.027 Coronavirus State and Local Fiscal Recovery Funds Criteria/Requirement: The Organization should follow the procurement standards set out at 2 CFR sections 200.318 through 200.326 including documentation to justify when a competitive process was not used. The Organization?s procurement policies also should be expanded to incorporate the provisions of the standards referenced. Condition: The procurement process was not properly documented and executed. For two out of two samples selected for testing, there was no documentation of the procurement process performed or reviewed. Cause: The Organization?s procurement policy does not meet the required federal standards, and application of the policy was not consistently applied. Effect: The Organization?s contracts could be from disbarred or disallowed vendors. Questioned Costs: None. Recommendation: The Organization's procurement policy must have 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 Organization should maintain records sufficient to detail the history of procurement. Management Response: Management will review the federal procurement guidelines and update its policies and procedures to be consistent with federal requirements.
Finding # 2022-002 Type: Immaterial Noncompliance over Procurement Assistance Listing Number: U.S. Department of Agriculture - Rural Development 10.755 Rural Innovation Stronger Economy U.S. Department of the Treasury 21.027 Coronavirus State and Local Fiscal Recovery Funds Criteria/Requirement: The Organization should follow the procurement standards set out at 2 CFR sections 200.318 through 200.326 including documentation to justify when a competitive process was not used. The Organization?s procurement policies also should be expanded to incorporate the provisions of the standards referenced. Condition: The procurement process was not properly documented and executed. For two out of two samples selected for testing, there was no documentation of the procurement process performed or reviewed. Cause: The Organization?s procurement policy does not meet the required federal standards, and application of the policy was not consistently applied. Effect: The Organization?s contracts could be from disbarred or disallowed vendors. Questioned Costs: None. Recommendation: The Organization's procurement policy must have 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 Organization should maintain records sufficient to detail the history of procurement. Management Response: Management will review the federal procurement guidelines and update its policies and procedures to be consistent with federal requirements.
Federal Agency: Federal Communications Commission FAL No. and Name : 32.006 COVID-19 Telehealth Program Award number: Unknown 2022-101: Procurement and Record Retention Criteria: In accordance with 2 CFR 200.318 (i), the Organization must maintain records sufficient to detail the history of procurement. Condition: For one of the purchases tested with a value of approximately $686,000, the Organization was unable to provide supporting documentation that the procurement process was performed in accordance with competitive bidding requirements, including the approval from the grantor to utilize a sole-source. Cause: The Organization did not consistently employ adequate record retention procedures that enabled them to provide documentation to support the use of a sole-source in its bidding process. Effect: We were unable to verify the Organization's compliance with federal procurement requirements. Recommendation: The Organization should maintain proper documentation to help ensure that all the required documentation is retained in order to confirm its compliance with federal procurement requirements. The Organization's responsible officials' views and planned corrective action are included in its corrective action plan located at the end of this report.
2022-001 ? Procurement Suspension & Debarment Program: AL# 97.024 ? Emergency Food and Shelter National Board Program Sponsor Award Number: Phase 39; ARPAR Sponsor Agency: U.S. Department of Homeland Security Criteria: Non-federal entities that are operating federal programs must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. This includes utilizing appropriate procurement methods and following requirements for each method selected. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR section 200.320(b)). Citation: 2 CFR section 200.320(b) Condition: The Organization did not obtain price or rate quotes from an adequate number of qualified sources. Cause: Although the Organization?s procurement policies and procedures are updated to comply with the Uniform Guidance, they were not consistently followed. Effect: Failure to obtain price or quotes from an adequate number of qualified sources may result in ineffective use of government funds. Questioned Costs: None. Context: During our testing of the Organization?s procurement requirements, we noted a lack of documentation supporting the Organization?s review of an adequate number of qualified sources before the procurement decision was made. Repeat Finding: No Recommendation: We recommend that the Organization implement monitoring procedures to ensure internally established procurement policies are followed. Documentation should include the rationale for the method of procurement used, the basis for contractor selection, and the basis for the contract price. Views of Responsible Officials: See Corrective Action Plan.
2022-003: Procurement/Full and open competition Cluster Name: Research and development Award Name: 2019 Fire Prevention and Safety (FP&S) Assistance Listing Number: 97.044 Award Number: EMW-2019-FP-00770 Agency: Department of Homeland Security Award Year: 2019 Criteria: Underwriters Laboratories Inc. has a policy whereby purchases shall comply with Uniform Guidance for Grants and Cooperative agreements, as established in 2 CFR 200.320 Methods of Procurement and they have adopted $10,000 as their micro-purchase threshold. 2 CFR 200.318 requires that documentation of the history of the procurement, the procurement method and rationale for the method selected, selection of contract type, basis for contractor selection, and basis for the contract price to be included in the procurement file. Condition: There were two transactions over the $10,000 threshold and both were selected for testing. For one transaction in August 2022 totaling $69,239 out of the two transactions tested totaling $123,408, excluding transactions with subrecipients, management provided us with the Underwriters Laboratories, Inc. Vendor Selection Form noting multiple vendors were identified for the project at hand. However, management received two responses (one being a decline of services), of four vendors identified, and did not provide rationale for why the selected vendor was sufficient (both from a capabilities and cost side) within the Vendor Selection Form section ?Why did you choose the selected vendor?? prior to the purchase being made. Note, as of September 2022 a corrective action plan around procurement/full and open competition was created by management related to finding 2021-002 from FY21. As such, this had not been implemented at the time of vendor selection in August 2022. There were no exceptions noted for the other selection. Cause: At this point in time (August 2022) there was no formal review to ensure all federal documentation requirements related to purchases above the micro-purchase threshold had been included in the procurement files (i.e., Vendor Selection Form). Effect: The lack of a formal process for review of the Vendor Selection Form could result in inadequate bids and competition. Questioned Costs: There are no questioned costs associated with this finding. Recommendation: We recommend Underwriters Laboratories Inc. formalize the documentation and review required for procurements over the micro-purchase threshold, including instances where requests for bids from multiple vendors are not received to ensure the vendor selection process is adequately communicated prior to the purchase being made. Management?s View and Corrective Action Plan: Management?s views and corrective action plan are included at the end of this report after the summary of status of prior audit finding.
2022 ? 002 Federal agency: U.S. Department of Health and Human Services Federal program title: Health Centers Cluster Assistance Listing Number: 93.224/93.527 Award Period: Varying project and budget periods: 1/1/21 ? 12/31/21, 4/1/20 ? 3/31/21, 5/1/20 ? 4/30/21, 3/15/20 ? 3/14/21, 4/1/21 ? 3/31/23 Type of Finding: ? Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: The Code of Federal Regulations (CFR) section 200.320 states the non-Federal entity must have and use documented procurement procedures following specific requirements for different methods of procurement depending on size and type of purchase. Thresholds for these categories (micro-purchase, simplified acquisition threshold) refer to using the Federal Acquisition Regulations (FAR), unless a different threshold has been specifically approved. Specifically, under FAR multiple quotes are generally required for purchases over the micro-purchase threshold, or documentation should be maintained explaining why multiple quotes were not obtained. CFR 200.318 also states specific requirements for conflict of interest policies and procedures non-federal entities must maintain, including specifically addressing conflicts related to contracts supported by federal awards. Condition: During our testing, we noted the Health Center did not have properly documented procurement policy that met the federal requirements. In addition, there were specific transactions tested in our sample that were above the micro-purchase threshold, but multiple quotes were not obtained, and documentation was not available or appropriate to support why noncompetitive procurement was followed. We also noted the Health Center's conflict of interest policy did not meet all the requirements under Uniform Guidance. Questioned costs: None Context: During our testing, it was noted that the Health Center had documented procurement procedures, which described individuals and parties responsible throughout the procurement process; however, it did not contain all of the necessary elements, as required by federal regulations. Based on our testing, the Health Center followed the policy in place, but the micro purchase threshold requiring multiple quotes or documentation of sole source procurement under the policy is set at $50,000, where the requirement is $10,000 unless specific steps have been taken to certify a higher threshold. Similarly, the Health Center has a conflict of interest policy and procedures in place, but the language does not meet the specific requirements of Uniform Guidance. Noted both policies to be updated to be in compliance with Uniform Guidance compliance near year-end in response to the prior year audit finding, but due to the timing policies in place for majority of year were not in compliance. Cause: The Health Center had not yet updated their procurement and conflict of interest policies to meet Uniform Guidance requirements. Effect: Without updates to procurement and conflict of interest policies over these compliance requirements the Health Center is not fully compliant with Uniform Guidance requirements. Repeat finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number 2021-002 was a significant deficiency. Recommendation: We recommend the Health Center update the procurement and conflict of interest policies to meet Uniform Guidance requirements, and ensure proper documentation is retained for transactions, particularly in cases where single source procurement is utilized over the micro purchase threshold. Views of responsible officials: There is no disagreement with the audit finding. Policies were updated near the end of 2022 to be in compliance with requirements.
2022 ? 002 Federal agency: U.S. Department of Health and Human Services Federal program title: Health Centers Cluster Assistance Listing Number: 93.224/93.527 Award Period: Varying project and budget periods: 1/1/21 ? 12/31/21, 4/1/20 ? 3/31/21, 5/1/20 ? 4/30/21, 3/15/20 ? 3/14/21, 4/1/21 ? 3/31/23 Type of Finding: ? Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: The Code of Federal Regulations (CFR) section 200.320 states the non-Federal entity must have and use documented procurement procedures following specific requirements for different methods of procurement depending on size and type of purchase. Thresholds for these categories (micro-purchase, simplified acquisition threshold) refer to using the Federal Acquisition Regulations (FAR), unless a different threshold has been specifically approved. Specifically, under FAR multiple quotes are generally required for purchases over the micro-purchase threshold, or documentation should be maintained explaining why multiple quotes were not obtained. CFR 200.318 also states specific requirements for conflict of interest policies and procedures non-federal entities must maintain, including specifically addressing conflicts related to contracts supported by federal awards. Condition: During our testing, we noted the Health Center did not have properly documented procurement policy that met the federal requirements. In addition, there were specific transactions tested in our sample that were above the micro-purchase threshold, but multiple quotes were not obtained, and documentation was not available or appropriate to support why noncompetitive procurement was followed. We also noted the Health Center's conflict of interest policy did not meet all the requirements under Uniform Guidance. Questioned costs: None Context: During our testing, it was noted that the Health Center had documented procurement procedures, which described individuals and parties responsible throughout the procurement process; however, it did not contain all of the necessary elements, as required by federal regulations. Based on our testing, the Health Center followed the policy in place, but the micro purchase threshold requiring multiple quotes or documentation of sole source procurement under the policy is set at $50,000, where the requirement is $10,000 unless specific steps have been taken to certify a higher threshold. Similarly, the Health Center has a conflict of interest policy and procedures in place, but the language does not meet the specific requirements of Uniform Guidance. Noted both policies to be updated to be in compliance with Uniform Guidance compliance near year-end in response to the prior year audit finding, but due to the timing policies in place for majority of year were not in compliance. Cause: The Health Center had not yet updated their procurement and conflict of interest policies to meet Uniform Guidance requirements. Effect: Without updates to procurement and conflict of interest policies over these compliance requirements the Health Center is not fully compliant with Uniform Guidance requirements. Repeat finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number 2021-002 was a significant deficiency. Recommendation: We recommend the Health Center update the procurement and conflict of interest policies to meet Uniform Guidance requirements, and ensure proper documentation is retained for transactions, particularly in cases where single source procurement is utilized over the micro purchase threshold. Views of responsible officials: There is no disagreement with the audit finding. Policies were updated near the end of 2022 to be in compliance with requirements.
2022 ? 002 Federal agency: U.S. Department of Health and Human Services Federal program title: Health Centers Cluster Assistance Listing Number: 93.224/93.527 Award Period: Varying project and budget periods: 1/1/21 ? 12/31/21, 4/1/20 ? 3/31/21, 5/1/20 ? 4/30/21, 3/15/20 ? 3/14/21, 4/1/21 ? 3/31/23 Type of Finding: ? Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: The Code of Federal Regulations (CFR) section 200.320 states the non-Federal entity must have and use documented procurement procedures following specific requirements for different methods of procurement depending on size and type of purchase. Thresholds for these categories (micro-purchase, simplified acquisition threshold) refer to using the Federal Acquisition Regulations (FAR), unless a different threshold has been specifically approved. Specifically, under FAR multiple quotes are generally required for purchases over the micro-purchase threshold, or documentation should be maintained explaining why multiple quotes were not obtained. CFR 200.318 also states specific requirements for conflict of interest policies and procedures non-federal entities must maintain, including specifically addressing conflicts related to contracts supported by federal awards. Condition: During our testing, we noted the Health Center did not have properly documented procurement policy that met the federal requirements. In addition, there were specific transactions tested in our sample that were above the micro-purchase threshold, but multiple quotes were not obtained, and documentation was not available or appropriate to support why noncompetitive procurement was followed. We also noted the Health Center's conflict of interest policy did not meet all the requirements under Uniform Guidance. Questioned costs: None Context: During our testing, it was noted that the Health Center had documented procurement procedures, which described individuals and parties responsible throughout the procurement process; however, it did not contain all of the necessary elements, as required by federal regulations. Based on our testing, the Health Center followed the policy in place, but the micro purchase threshold requiring multiple quotes or documentation of sole source procurement under the policy is set at $50,000, where the requirement is $10,000 unless specific steps have been taken to certify a higher threshold. Similarly, the Health Center has a conflict of interest policy and procedures in place, but the language does not meet the specific requirements of Uniform Guidance. Noted both policies to be updated to be in compliance with Uniform Guidance compliance near year-end in response to the prior year audit finding, but due to the timing policies in place for majority of year were not in compliance. Cause: The Health Center had not yet updated their procurement and conflict of interest policies to meet Uniform Guidance requirements. Effect: Without updates to procurement and conflict of interest policies over these compliance requirements the Health Center is not fully compliant with Uniform Guidance requirements. Repeat finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number 2021-002 was a significant deficiency. Recommendation: We recommend the Health Center update the procurement and conflict of interest policies to meet Uniform Guidance requirements, and ensure proper documentation is retained for transactions, particularly in cases where single source procurement is utilized over the micro purchase threshold. Views of responsible officials: There is no disagreement with the audit finding. Policies were updated near the end of 2022 to be in compliance with requirements.
2022-002 Federal Agency: Department of Agriculture (USDA) Pass-Through Entity: State of New York Executive Department of General Services Assistance Listing Numbers: 10.568 , 10.569 Pass-through Grant Numbers: 4NY810809, 4NY100105, 4NY430803, 8NY200100 Program Name: The Emergency Food Assistance Program (TEFAP), Food Distribution Cluster Criteria: : 2 CFR Section 200.318 stipulates that a non-Federal entity must use its own documented procurement procedures which reflect applicable state, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in Part 200 Subpart D. Additionally, 2 CFR Section 200.213 stipulates that no awards, subawards, or contracts be awarded to parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Condition: During our testing, we noted the following: - The contractors utilized by the Food Bank in 2022 were not properly checked for compliance requirements regarding debarment. They did not have a control in place to ensure the contractors used for their covered transactions were not made with a debarred or suspended party. Cause: The Food Bank did not review compliance requirements related to procurement outlined in 2 CFR Section 200.318 and Section 200.213. Effect: The Food Bank is not in compliance with 2 CFR Section 200.213. The Food Bank is not performing required procedures, as a result, vendors that are not eligible for participation in Federal assistance programs or activities could be selected or the Food Bank could be overpaying for goods and services. Questioned Costs: None Context/Sampling: The Food Bank performed a subsequent review of all vendors paid with federal dollars under the major program, noting none of the vendors used were precluded from being paid with federal dollars. Repeat Finding: No Recommendation: We recommend that the Food Bank review the requirements of 2 CFR Section 200.213 and ensure that a review of the eligibility of potential vendors to participate in Federal assistance programs or activities is performed prior to disbursing funds to the vendor. View of Responsible Officials: Management agrees with the finding and will implement the recommendations.
2022-002 Federal Agency: Department of Agriculture (USDA) Pass-Through Entity: State of New York Executive Department of General Services Assistance Listing Numbers: 10.568 , 10.569 Pass-through Grant Numbers: 4NY810809, 4NY100105, 4NY430803, 8NY200100 Program Name: The Emergency Food Assistance Program (TEFAP), Food Distribution Cluster Criteria: : 2 CFR Section 200.318 stipulates that a non-Federal entity must use its own documented procurement procedures which reflect applicable state, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in Part 200 Subpart D. Additionally, 2 CFR Section 200.213 stipulates that no awards, subawards, or contracts be awarded to parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Condition: During our testing, we noted the following: - The contractors utilized by the Food Bank in 2022 were not properly checked for compliance requirements regarding debarment. They did not have a control in place to ensure the contractors used for their covered transactions were not made with a debarred or suspended party. Cause: The Food Bank did not review compliance requirements related to procurement outlined in 2 CFR Section 200.318 and Section 200.213. Effect: The Food Bank is not in compliance with 2 CFR Section 200.213. The Food Bank is not performing required procedures, as a result, vendors that are not eligible for participation in Federal assistance programs or activities could be selected or the Food Bank could be overpaying for goods and services. Questioned Costs: None Context/Sampling: The Food Bank performed a subsequent review of all vendors paid with federal dollars under the major program, noting none of the vendors used were precluded from being paid with federal dollars. Repeat Finding: No Recommendation: We recommend that the Food Bank review the requirements of 2 CFR Section 200.213 and ensure that a review of the eligibility of potential vendors to participate in Federal assistance programs or activities is performed prior to disbursing funds to the vendor. View of Responsible Officials: Management agrees with the finding and will implement the recommendations.
2022-002 Federal Agency: Department of Agriculture (USDA) Pass-Through Entity: State of New York Executive Department of General Services Assistance Listing Numbers: 10.568 , 10.569 Pass-through Grant Numbers: 4NY810809, 4NY100105, 4NY430803, 8NY200100 Program Name: The Emergency Food Assistance Program (TEFAP), Food Distribution Cluster Criteria: : 2 CFR Section 200.318 stipulates that a non-Federal entity must use its own documented procurement procedures which reflect applicable state, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in Part 200 Subpart D. Additionally, 2 CFR Section 200.213 stipulates that no awards, subawards, or contracts be awarded to parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Condition: During our testing, we noted the following: - The contractors utilized by the Food Bank in 2022 were not properly checked for compliance requirements regarding debarment. They did not have a control in place to ensure the contractors used for their covered transactions were not made with a debarred or suspended party. Cause: The Food Bank did not review compliance requirements related to procurement outlined in 2 CFR Section 200.318 and Section 200.213. Effect: The Food Bank is not in compliance with 2 CFR Section 200.213. The Food Bank is not performing required procedures, as a result, vendors that are not eligible for participation in Federal assistance programs or activities could be selected or the Food Bank could be overpaying for goods and services. Questioned Costs: None Context/Sampling: The Food Bank performed a subsequent review of all vendors paid with federal dollars under the major program, noting none of the vendors used were precluded from being paid with federal dollars. Repeat Finding: No Recommendation: We recommend that the Food Bank review the requirements of 2 CFR Section 200.213 and ensure that a review of the eligibility of potential vendors to participate in Federal assistance programs or activities is performed prior to disbursing funds to the vendor. View of Responsible Officials: Management agrees with the finding and will implement the recommendations.
2022-002 Federal Agency: Department of Agriculture (USDA) Pass-Through Entity: State of New York Executive Department of General Services Assistance Listing Numbers: 10.568 , 10.569 Pass-through Grant Numbers: 4NY810809, 4NY100105, 4NY430803, 8NY200100 Program Name: The Emergency Food Assistance Program (TEFAP), Food Distribution Cluster Criteria: : 2 CFR Section 200.318 stipulates that a non-Federal entity must use its own documented procurement procedures which reflect applicable state, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in Part 200 Subpart D. Additionally, 2 CFR Section 200.213 stipulates that no awards, subawards, or contracts be awarded to parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Condition: During our testing, we noted the following: - The contractors utilized by the Food Bank in 2022 were not properly checked for compliance requirements regarding debarment. They did not have a control in place to ensure the contractors used for their covered transactions were not made with a debarred or suspended party. Cause: The Food Bank did not review compliance requirements related to procurement outlined in 2 CFR Section 200.318 and Section 200.213. Effect: The Food Bank is not in compliance with 2 CFR Section 200.213. The Food Bank is not performing required procedures, as a result, vendors that are not eligible for participation in Federal assistance programs or activities could be selected or the Food Bank could be overpaying for goods and services. Questioned Costs: None Context/Sampling: The Food Bank performed a subsequent review of all vendors paid with federal dollars under the major program, noting none of the vendors used were precluded from being paid with federal dollars. Repeat Finding: No Recommendation: We recommend that the Food Bank review the requirements of 2 CFR Section 200.213 and ensure that a review of the eligibility of potential vendors to participate in Federal assistance programs or activities is performed prior to disbursing funds to the vendor. View of Responsible Officials: Management agrees with the finding and will implement the recommendations.
2022-002 Federal Agency: Department of Agriculture (USDA) Pass-Through Entity: State of New York Executive Department of General Services Assistance Listing Numbers: 10.568 , 10.569 Pass-through Grant Numbers: 4NY810809, 4NY100105, 4NY430803, 8NY200100 Program Name: The Emergency Food Assistance Program (TEFAP), Food Distribution Cluster Criteria: : 2 CFR Section 200.318 stipulates that a non-Federal entity must use its own documented procurement procedures which reflect applicable state, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in Part 200 Subpart D. Additionally, 2 CFR Section 200.213 stipulates that no awards, subawards, or contracts be awarded to parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Condition: During our testing, we noted the following: - The contractors utilized by the Food Bank in 2022 were not properly checked for compliance requirements regarding debarment. They did not have a control in place to ensure the contractors used for their covered transactions were not made with a debarred or suspended party. Cause: The Food Bank did not review compliance requirements related to procurement outlined in 2 CFR Section 200.318 and Section 200.213. Effect: The Food Bank is not in compliance with 2 CFR Section 200.213. The Food Bank is not performing required procedures, as a result, vendors that are not eligible for participation in Federal assistance programs or activities could be selected or the Food Bank could be overpaying for goods and services. Questioned Costs: None Context/Sampling: The Food Bank performed a subsequent review of all vendors paid with federal dollars under the major program, noting none of the vendors used were precluded from being paid with federal dollars. Repeat Finding: No Recommendation: We recommend that the Food Bank review the requirements of 2 CFR Section 200.213 and ensure that a review of the eligibility of potential vendors to participate in Federal assistance programs or activities is performed prior to disbursing funds to the vendor. View of Responsible Officials: Management agrees with the finding and will implement the recommendations.
Type of Finding: Significant Deficiency in Internal Control over Compliance Program Name/ALN Title: Emergency Rental Assistance Program Federal Assistance Listing Number: 21.027 Federal Agency: Department of Treasury Award Period: 1/1/2022 ? 12/31/2022 Federal Award Number: 21-4619C-130 Criteria or specific requirement: 2 CFR 200.318(i) states that "the non-Federal entity must maintain record sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price". In addition, 2 CFR 200.320(a)(2)(i) states that "... If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity". Per the Organization's written procurement policy, the adequate number of sources is determined to be three. Condition: For the entire population (two disbursements from one procurement), documentation was not retained for the adequate number of price comparisons prior to exercising the procurement, as required and stated in the Organization's written procurement policy. Context: A sample of two disbursements from a population of one procurement transaction charged to the major program that exceeded the Organization's established micro purchase threshold of $10,000. The transaction was found to be out of compliance with the Procurement requirements, as documentation was not retained for the adequate number of price comparisons. Cause: An employee charged with the procurement process for these transactions misinterpreted the aggregation rules between capitalization and procurement thresholds, and therefore did not obtain nor retain three contemporaneous quotes. Effect: Without adequate records retained, the Organization is at risk of noncompliance with the standards of Procurement. Questioned Costs: Unknown Recommendation: Opportunity Council has already taken steps to communicate the error with the applicable employee and is currently implementing an additional level of fiscal review earlier in the procurement process to ensure that documentation exists prior to procurement and that it is retained with the accounting record. We recommend moving forward with the additional layer of review and emphasizing the importance of the procurement standards and established policy to all authorized purchasers within the Organization. Views of responsible officials and planned corrective actions: Management accepts the finding and has provided its corrective action plan.
Finding 2022-001: Reportable Finding Considered a Significant Deficiency ? Procurement Assistance Listing Number: 10.181 Agency: U.S. Department of Agriculture Program: Agricultural Worker Pandemic Relief and Protection Program Award Number: AM22FFWDC0002-00 Grant Years: 2022 Criteria: Nonfederal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR part 200. Section 200.318 General procurement standards, states that the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Furthermore, Section 200.320 Methods of procurement to be followed, states that for acquisitions exceeding the simplified acquisition threshold, the nonfederal entity must use one of the following procurement methods: (a) the sealed bid method if the acquisition meets the criteria in 2 CFR section 200.320(b); (b) the competitive proposals method under the conditions specified in 2 CFR section 200.320(b)(2); or (c) the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR section 200.320(c). Condition: During our 2022 audit, we noted three consultant contractors which were charged to the Federal program under the competitive proposals method but did not comply with the criteria in 2 CFR section 200.320(b) and one noncompetitive proposals method but did not comply with the criteria in 2 CFR section 200.320(c). We noted that the Foundation did not have records sufficient to detail the history and the rationale of the method of procurement at the time the contracts were executed. Cause: The Foundation did not document the history or the justification for the method of procurement selected for various consultants charged to the Federal program at the time the contracts were executed. Effect: The Foundation may have inadvertently selected noncompetitive proposals by not following the requirements noted in section 200.320 Methods of procurement to be followed, and thereby failing to full and open competition as required by the regulations. Context: There were four consultants during the audit period for which 2 CFR section 200.320 applied. Questioned Costs: There are no questioned costs associated with this finding. Repeat Finding: This is not a repeat finding. Recommendation: The Foundation should adopt and enforce a procurement policy that follows the procurement standards set out at 2 CFR sections 200.318 through 200.326. We also recommend that documentation is maintained to substantiate adherence to this policy and ensure that all instances are adequately documented according to the regulations, including for contacts already in place.
Finding No. 2022-004: Procurement Policy ? Material Weakness in Internal Control Over Financial Reporting; U.S. Department of Health and Human Services, Rare Disorders: Research, Surveillance, Health Promotion, and Education; Assistance Listing Number 93.315 Condition There is no evidence of a documented formal procurement policy with regards to federal grant awards and expenditures, no documented support that a competitive price analysis for vendors and organizations funded with federal grant funds were performed and no evidence that suspension and debarment verifications were performed for certain vendors and organizations, as required by the general procurement standards of the Uniform Guidance. Context We selected four samples which were deemed sole sourced by management and noted no written documentation for this conclusion or evidence of suspension or debarment verification being performed was maintained in the file. Based on our discussions with management, they were not aware of the Uniform Guidance requirements with regards to procurement. Criteria Under the Uniform Guidance Section 200.318, General Procurement Standards, a non-Federal entity must have and use documented procurement procedures 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 Sections 200.317 through 200.327. These sections include policies and procedures related to competition, informal and formal procurement methods and noncompetitive procurement also known as sole source. Under Uniform Guidance Section 200.214, Suspension and Debarment, and 2 CFR Part 180, non-federal entities are required to verify that vendors are not suspended or debarred from participating in federal funds. Cause Management stated it was not aware of the Uniform Guidance requirements with regards to procurement and, therefore, did not develop a procurement policy that includes the provisions of the general procurement standards required under the Uniform Guidance. Effect Charges relating to vendor services and sub-awards that were charged to the federal award may not be in accordance with the specific compliance requirements of the Uniform Guidance. Questioned Costs $97,078, representing total sub-awards and consulting expenses paid during the year. Repeat Finding No. Recommendation We recommend that the Association establish a written procurement policy governing contracts with vendors that will be reimbursed by federal grants to incorporate all of the provisions included in the general procurement standards of the Uniform Guidance Section 200.318 and the debarment and suspension regulations of Uniform Guidance Section 200.214. We also recommend that a review of all existing vendor or sub-awardee contract files be performed to ensure that the documentation as required under the Uniform Guidance is maintained in the files. Views of Responsible Officials and Planned Corrective Action See corrective action plan.
2022-003 Procurement Federal Agency: U.S. Department of Agriculture Federal Program Name: State Administrative Matching Grants for the Supplemental Nutrition Assistance Program Assistance Listing Number: 10.561 Federal Award Identification Number and Year: 22MN101S2514 - 202 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 22MN101S2514, 22MN127Q7503, 22MN101S2520 Award Period: January 1, 2022 through December 31, 2022 Type of Finding: ? Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: Title 2 U.S. Code of Federal Regulations ? 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Non-federal entities other than states must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. Condition/Context: For 1 of 2 vendors tested, no documentation was maintained to support the method of procurement, selection of contract type, contractor selection or rejection, or the basis for the contract price. The sample was a statistically valid sample. Questioned costs: $111,837 was paid to the vendor during 2022. Cause: County federal procurement policies were not followed. Effect: The failure to establish an effective internal control system enabled noncompliance to go undetected. Noncompliance with the grant agreement or the compliance requirement could result in the loss of federal funds to the County. Repeat Finding: No Recommendation: We recommend County management establish a system of internal controls to ensure compliance with federal procurement requirements. Views of responsible officials: There is no disagreement with the audit finding.
2022-003 Procurement Federal Agency: U.S. Department of Agriculture Federal Program Name: State Administrative Matching Grants for the Supplemental Nutrition Assistance Program Assistance Listing Number: 10.561 Federal Award Identification Number and Year: 22MN101S2514 - 202 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 22MN101S2514, 22MN127Q7503, 22MN101S2520 Award Period: January 1, 2022 through December 31, 2022 Type of Finding: ? Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: Title 2 U.S. Code of Federal Regulations ? 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Non-federal entities other than states must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. Condition/Context: For 1 of 2 vendors tested, no documentation was maintained to support the method of procurement, selection of contract type, contractor selection or rejection, or the basis for the contract price. The sample was a statistically valid sample. Questioned costs: $111,837 was paid to the vendor during 2022. Cause: County federal procurement policies were not followed. Effect: The failure to establish an effective internal control system enabled noncompliance to go undetected. Noncompliance with the grant agreement or the compliance requirement could result in the loss of federal funds to the County. Repeat Finding: No Recommendation: We recommend County management establish a system of internal controls to ensure compliance with federal procurement requirements. Views of responsible officials: There is no disagreement with the audit finding.
2022-003 Procurement Federal Agency: U.S. Department of Agriculture Federal Program Name: State Administrative Matching Grants for the Supplemental Nutrition Assistance Program Assistance Listing Number: 10.561 Federal Award Identification Number and Year: 22MN101S2514 - 202 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 22MN101S2514, 22MN127Q7503, 22MN101S2520 Award Period: January 1, 2022 through December 31, 2022 Type of Finding: ? Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: Title 2 U.S. Code of Federal Regulations ? 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Non-federal entities other than states must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. Condition/Context: For 1 of 2 vendors tested, no documentation was maintained to support the method of procurement, selection of contract type, contractor selection or rejection, or the basis for the contract price. The sample was a statistically valid sample. Questioned costs: $111,837 was paid to the vendor during 2022. Cause: County federal procurement policies were not followed. Effect: The failure to establish an effective internal control system enabled noncompliance to go undetected. Noncompliance with the grant agreement or the compliance requirement could result in the loss of federal funds to the County. Repeat Finding: No Recommendation: We recommend County management establish a system of internal controls to ensure compliance with federal procurement requirements. Views of responsible officials: There is no disagreement with the audit finding.
U.S Department of Treasury Finding 2022.001 CFDA# 21.027 - Coronavirus State and Local Fiscal Recovery Fund Compliance Requirement - Procurement Condition: NCHC did not have adequate procurement policies in effect that meet the minimum federal requirements for procurement standards. Criteria: Under Uniform Guidance, NCHC is required to implement certain written procurement policies that adhere to the minimum federal requirements as outlined at 2 CFR 200.318 through 200.327. Context: During the audit, it was determined that NCHC's procurement policies did not meet minimum federal requirements. Cause: NCHC did not have adequate procurement policies in effect that meet the minimum federal requirements. Effect: NCHC was not in compliance with 2 CFR 200.318 through 200.327 and as a result did not perform proper procurement procedures over all transactions. Recommendations: We recommend NCHC implement policies and procedures that adhere to the minimum procurement requirements as outlined in federal procurement standards 2 CFR 200.318 through 200.327. View of Responsible NCHC will implement policies and procedures to ensure compliance with the Officials: requirements as outlined in 2 CFR 200.318 through 200.327.
Finding number: 2022-001 Repeat finding: No Assistance Listing Number: 93.224 / 93.527 Assistance Listing Title: Health Center Program Cluster Federal Agency: U.S. Department of Health and Human Services Type of Finding: Noncompliance, Significant Deficiency Description: Procurement and Suspension and Debarment Criteria: Under 2 CFR ?215.43 the Organization is required to implement certain procurement policies that adhere to the minimum Federal requirements as outlined in 2 CFR ?215.44. Non-Federal entities other than States, including those operating Federal programs as subrecipients of States, must follow the procurement standards set out at 2 CFR Sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR Part 200. Condition: The procurement method the Organization used did not meet procurement standards as set forth in 2 CFR sections 200.320. A sole source procurement method was used when the vendor did not meet the sole source definition. Cause: The Organization was not fully aware of the federal procurement compliance requirements. Effect: The Organization was not in compliance with their own policies or with federal regulations. Recommendation: The Organization should ensure procurement policies are being followed for all procurement levels. The Organozation should also seek out additonal training for procurment to ensure federal rules and requirements are being met. View of responsible officials: Management acknowledges this condition related to lack of adequate controls over procurement and is creating controls that will assure compliance with requirements.
Finding number: 2022-001 Repeat finding: No Assistance Listing Number: 93.224 / 93.527 Assistance Listing Title: Health Center Program Cluster Federal Agency: U.S. Department of Health and Human Services Type of Finding: Noncompliance, Significant Deficiency Description: Procurement and Suspension and Debarment Criteria: Under 2 CFR ?215.43 the Organization is required to implement certain procurement policies that adhere to the minimum Federal requirements as outlined in 2 CFR ?215.44. Non-Federal entities other than States, including those operating Federal programs as subrecipients of States, must follow the procurement standards set out at 2 CFR Sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR Part 200. Condition: The procurement method the Organization used did not meet procurement standards as set forth in 2 CFR sections 200.320. A sole source procurement method was used when the vendor did not meet the sole source definition. Cause: The Organization was not fully aware of the federal procurement compliance requirements. Effect: The Organization was not in compliance with their own policies or with federal regulations. Recommendation: The Organization should ensure procurement policies are being followed for all procurement levels. The Organozation should also seek out additonal training for procurment to ensure federal rules and requirements are being met. View of responsible officials: Management acknowledges this condition related to lack of adequate controls over procurement and is creating controls that will assure compliance with requirements.
Finding number: 2022-001 Repeat finding: No Assistance Listing Number: 93.224 / 93.527 Assistance Listing Title: Health Center Program Cluster Federal Agency: U.S. Department of Health and Human Services Type of Finding: Noncompliance, Significant Deficiency Description: Procurement and Suspension and Debarment Criteria: Under 2 CFR ?215.43 the Organization is required to implement certain procurement policies that adhere to the minimum Federal requirements as outlined in 2 CFR ?215.44. Non-Federal entities other than States, including those operating Federal programs as subrecipients of States, must follow the procurement standards set out at 2 CFR Sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR Part 200. Condition: The procurement method the Organization used did not meet procurement standards as set forth in 2 CFR sections 200.320. A sole source procurement method was used when the vendor did not meet the sole source definition. Cause: The Organization was not fully aware of the federal procurement compliance requirements. Effect: The Organization was not in compliance with their own policies or with federal regulations. Recommendation: The Organization should ensure procurement policies are being followed for all procurement levels. The Organozation should also seek out additonal training for procurment to ensure federal rules and requirements are being met. View of responsible officials: Management acknowledges this condition related to lack of adequate controls over procurement and is creating controls that will assure compliance with requirements.
Kittitas Reclamation District January 1, 2022 through December 31, 2022 2022-001 The District?s internal controls were inadequate for ensuring it complied with federal procurement requirements. Assistance Listing Number and Title: 15.517 Fish and Wildlife Coordination Act Federal Grantor Name: U.S. Department of the Interior, Bureau of Reclamation Federal Award/Contract Number: R22AP00447-00, R21AP10328-03, R18AP00036-02, R21AP10329-01 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The purpose of the Fish and Wildlife Coordination Act program is to provide financial assistance, through grants or cooperative agreements, to public or private organizations for the improvement of fish and wildlife habitat associated with water systems or water supplies affected by Bureau of Reclamation projects. During fiscal year 2022, the District spent $7,097,974 in federal Fish and Wildlife Coordination Act funds, which were awarded by the Bureau of Reclamation at the U.S. Department of the Interior. The District used program funding on four projects in Kittitas County. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Federal regulations require grant recipients to follow their own written procurement procedures, which must conform to the Uniform Guidance procurement standards Page 6 Office of the Washington State Auditor sao.wa.gov found in 2 CFR 200.318-327. These procedures must reflect the most restrictive of applicable federal requirements, state law or local policies. When procuring architectural and engineering services, federal regulations require the District to advertise for each project, identify all evaluation factors and their relative importance, have a written method for conducting technical evaluations, and document the evaluation supporting its decision to go with the best engineer for each separate award. Description of Condition The District has a written policy that conforms to federal regulations that require a qualifications-based selection of architectural and engineering services. However, when it procured its engineer for the four projects, the District selected from an engineering roster, which is not in compliance with its own policy and the Uniform Guidance (2 CFR 200.320(b)(2)). We consider this control deficiency to be a significant deficiency. Cause of Condition The District followed guidance from the U.S. Army Corps of Engineers when creating its architectural and engineering roster, which allowed for a base contract to be awarded to a pool of firms. District officials thought this was an acceptable method to follow and were not aware the District cannot select architects and engineers from a roster when using federal funds to pay for projects. Effect of Condition The District paid one engineer $462,617 with federal funds during the audit period. Without effective internal controls, the District cannot ensure it allowed for full and open competition, selected the most qualified engineer, and complied with federal procurement requirements. Recommendation We recommend the District strengthen internal controls over its procurement of architectural and engineering services to ensure compliance with federal requirements. District?s Response The Kittitas Reclamation District (District) has made a considerable effort to obtain critical climate resiliency and water conservation grant funding over the last 7 years. In that period, the District has been awarded several state and federal awards for infrastructure projects requiring engineering services. These projects were audited and found compliant. Internally, the District?s processes and procedures have been scrutinized and revised after receiving constructive input from prior auditors. It is the District's priority to continue to set a standard of excellence as the District proceeds into the future enhancing the irrigation system and works towards essential water conservation efforts while improving the ecosystem to allow the system to benefit future generations. As the funding opportunities grew, there was a collaborative effort made with the District consultants to utilize the funding opportunities as they arose. Keeping site on the fact that work had to be accomplished within the limited construction window during the winter months when the irrigation system was not running water and being used by the landowners. There was extensive work done to draft and create a Multi-Year Multiple Award Task Order (IDIQ) for Professional Services which allows the District to acquire an indefinite quantity, within stated limits, of supplies or services during a fixed period, with deliveries to be scheduled by placing orders with a contractor. The Federal Acquisition Streamlining Act (FASA) allows agencies to use IDIQ contracts to benefit from an ongoing competitive environment throughout the duration of the contract while minimizing the delay of conducting a separate procurement for each project. The process included developing a scope of work, advertising in multiple newspapers for solicitation of services, establishing a list of qualified applicants, scoring the applicants and utilizing the awardees for prospective funding opportunities as they were granted. The length of the IDIQ has changed from the initial one-year term to the current 5-year term but beyond the term of the contract the process has been unchanged. This process was reviewed in prior audits and the District was not asked to make any changes to the process in past audits. When the current engineering services contracts were procured, the District understood it had met all the uniform guidance and after the appropriate advertising and with only two engineering firms responding, both responding firms were awarded an Indefinite Delivery Contracts (IDICs) in accordance with our interpretation of FAR 16.5 and FAR 36.602-1. These IDCs comprise the District?s roster for engineer firms based on their qualifications relative to the criteria established for Category 1 under the Notice to Consultants, 2022 Kittitas Reclamation District (KRD) On-Call Rosters advertised and evaluated in Page 8 Office of the Washington State Auditor sao.wa.gov February 2022. Specifically, the District Request for Qualifications solicitation evaluated firms on four criteria, qualifications of firm (up to 20points), qualifications of proposed Project Manager(s) (up to 30 points), firm?s technical expertise (up to 50 points), and references/past performances (up to 50 points). The competitive, qualifications-based roster selection is not the same roster or process utilized for the District Vendor List for Limited Public Works and Small Works Roster. The District has since learned that it should have kept documentation as to how the Engineering Firm was chosen for each task order project awarded within the IDC scope. There was no formal documentation to provide on the selection process for each individual project. It should also be noted that, particularly with an irrigation canal, it is imperative to have continuity of engineering on the same project that continues from one winter construction window and funding cycle to the next to ensure the integrity of the canal system and the most efficient use of funds for each project. Upon receiving the guidance on the current audit, the District would like to move forward by reviewing the procurement policy and making any necessary changes while working under the guidance of the SAO Procurement Specialist to ensure that an updated procurement policy continues to meet the needs of the District and the federal guidelines for federal funding. Auditor?s Remarks We appreciate the steps the District?s commitment to resolving this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our 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. Page 9 Office of the Washington State Auditor sao.wa.gov 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 320, Methods of procurement to be followed, establishes requirements for procuring with federal funds by nonfederal entities.
Kittitas Reclamation District January 1, 2022 through December 31, 2022 2022-001 The District?s internal controls were inadequate for ensuring it complied with federal procurement requirements. Assistance Listing Number and Title: 15.517 Fish and Wildlife Coordination Act Federal Grantor Name: U.S. Department of the Interior, Bureau of Reclamation Federal Award/Contract Number: R22AP00447-00, R21AP10328-03, R18AP00036-02, R21AP10329-01 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The purpose of the Fish and Wildlife Coordination Act program is to provide financial assistance, through grants or cooperative agreements, to public or private organizations for the improvement of fish and wildlife habitat associated with water systems or water supplies affected by Bureau of Reclamation projects. During fiscal year 2022, the District spent $7,097,974 in federal Fish and Wildlife Coordination Act funds, which were awarded by the Bureau of Reclamation at the U.S. Department of the Interior. The District used program funding on four projects in Kittitas County. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Federal regulations require grant recipients to follow their own written procurement procedures, which must conform to the Uniform Guidance procurement standards Page 6 Office of the Washington State Auditor sao.wa.gov found in 2 CFR 200.318-327. These procedures must reflect the most restrictive of applicable federal requirements, state law or local policies. When procuring architectural and engineering services, federal regulations require the District to advertise for each project, identify all evaluation factors and their relative importance, have a written method for conducting technical evaluations, and document the evaluation supporting its decision to go with the best engineer for each separate award. Description of Condition The District has a written policy that conforms to federal regulations that require a qualifications-based selection of architectural and engineering services. However, when it procured its engineer for the four projects, the District selected from an engineering roster, which is not in compliance with its own policy and the Uniform Guidance (2 CFR 200.320(b)(2)). We consider this control deficiency to be a significant deficiency. Cause of Condition The District followed guidance from the U.S. Army Corps of Engineers when creating its architectural and engineering roster, which allowed for a base contract to be awarded to a pool of firms. District officials thought this was an acceptable method to follow and were not aware the District cannot select architects and engineers from a roster when using federal funds to pay for projects. Effect of Condition The District paid one engineer $462,617 with federal funds during the audit period. Without effective internal controls, the District cannot ensure it allowed for full and open competition, selected the most qualified engineer, and complied with federal procurement requirements. Recommendation We recommend the District strengthen internal controls over its procurement of architectural and engineering services to ensure compliance with federal requirements. District?s Response The Kittitas Reclamation District (District) has made a considerable effort to obtain critical climate resiliency and water conservation grant funding over the last 7 years. In that period, the District has been awarded several state and federal awards for infrastructure projects requiring engineering services. These projects were audited and found compliant. Internally, the District?s processes and procedures have been scrutinized and revised after receiving constructive input from prior auditors. It is the District's priority to continue to set a standard of excellence as the District proceeds into the future enhancing the irrigation system and works towards essential water conservation efforts while improving the ecosystem to allow the system to benefit future generations. As the funding opportunities grew, there was a collaborative effort made with the District consultants to utilize the funding opportunities as they arose. Keeping site on the fact that work had to be accomplished within the limited construction window during the winter months when the irrigation system was not running water and being used by the landowners. There was extensive work done to draft and create a Multi-Year Multiple Award Task Order (IDIQ) for Professional Services which allows the District to acquire an indefinite quantity, within stated limits, of supplies or services during a fixed period, with deliveries to be scheduled by placing orders with a contractor. The Federal Acquisition Streamlining Act (FASA) allows agencies to use IDIQ contracts to benefit from an ongoing competitive environment throughout the duration of the contract while minimizing the delay of conducting a separate procurement for each project. The process included developing a scope of work, advertising in multiple newspapers for solicitation of services, establishing a list of qualified applicants, scoring the applicants and utilizing the awardees for prospective funding opportunities as they were granted. The length of the IDIQ has changed from the initial one-year term to the current 5-year term but beyond the term of the contract the process has been unchanged. This process was reviewed in prior audits and the District was not asked to make any changes to the process in past audits. When the current engineering services contracts were procured, the District understood it had met all the uniform guidance and after the appropriate advertising and with only two engineering firms responding, both responding firms were awarded an Indefinite Delivery Contracts (IDICs) in accordance with our interpretation of FAR 16.5 and FAR 36.602-1. These IDCs comprise the District?s roster for engineer firms based on their qualifications relative to the criteria established for Category 1 under the Notice to Consultants, 2022 Kittitas Reclamation District (KRD) On-Call Rosters advertised and evaluated in Page 8 Office of the Washington State Auditor sao.wa.gov February 2022. Specifically, the District Request for Qualifications solicitation evaluated firms on four criteria, qualifications of firm (up to 20points), qualifications of proposed Project Manager(s) (up to 30 points), firm?s technical expertise (up to 50 points), and references/past performances (up to 50 points). The competitive, qualifications-based roster selection is not the same roster or process utilized for the District Vendor List for Limited Public Works and Small Works Roster. The District has since learned that it should have kept documentation as to how the Engineering Firm was chosen for each task order project awarded within the IDC scope. There was no formal documentation to provide on the selection process for each individual project. It should also be noted that, particularly with an irrigation canal, it is imperative to have continuity of engineering on the same project that continues from one winter construction window and funding cycle to the next to ensure the integrity of the canal system and the most efficient use of funds for each project. Upon receiving the guidance on the current audit, the District would like to move forward by reviewing the procurement policy and making any necessary changes while working under the guidance of the SAO Procurement Specialist to ensure that an updated procurement policy continues to meet the needs of the District and the federal guidelines for federal funding. Auditor?s Remarks We appreciate the steps the District?s commitment to resolving this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our 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. Page 9 Office of the Washington State Auditor sao.wa.gov 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 320, Methods of procurement to be followed, establishes requirements for procuring with federal funds by nonfederal entities.
Kittitas Reclamation District January 1, 2022 through December 31, 2022 2022-001 The District?s internal controls were inadequate for ensuring it complied with federal procurement requirements. Assistance Listing Number and Title: 15.517 Fish and Wildlife Coordination Act Federal Grantor Name: U.S. Department of the Interior, Bureau of Reclamation Federal Award/Contract Number: R22AP00447-00, R21AP10328-03, R18AP00036-02, R21AP10329-01 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The purpose of the Fish and Wildlife Coordination Act program is to provide financial assistance, through grants or cooperative agreements, to public or private organizations for the improvement of fish and wildlife habitat associated with water systems or water supplies affected by Bureau of Reclamation projects. During fiscal year 2022, the District spent $7,097,974 in federal Fish and Wildlife Coordination Act funds, which were awarded by the Bureau of Reclamation at the U.S. Department of the Interior. The District used program funding on four projects in Kittitas County. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Federal regulations require grant recipients to follow their own written procurement procedures, which must conform to the Uniform Guidance procurement standards Page 6 Office of the Washington State Auditor sao.wa.gov found in 2 CFR 200.318-327. These procedures must reflect the most restrictive of applicable federal requirements, state law or local policies. When procuring architectural and engineering services, federal regulations require the District to advertise for each project, identify all evaluation factors and their relative importance, have a written method for conducting technical evaluations, and document the evaluation supporting its decision to go with the best engineer for each separate award. Description of Condition The District has a written policy that conforms to federal regulations that require a qualifications-based selection of architectural and engineering services. However, when it procured its engineer for the four projects, the District selected from an engineering roster, which is not in compliance with its own policy and the Uniform Guidance (2 CFR 200.320(b)(2)). We consider this control deficiency to be a significant deficiency. Cause of Condition The District followed guidance from the U.S. Army Corps of Engineers when creating its architectural and engineering roster, which allowed for a base contract to be awarded to a pool of firms. District officials thought this was an acceptable method to follow and were not aware the District cannot select architects and engineers from a roster when using federal funds to pay for projects. Effect of Condition The District paid one engineer $462,617 with federal funds during the audit period. Without effective internal controls, the District cannot ensure it allowed for full and open competition, selected the most qualified engineer, and complied with federal procurement requirements. Recommendation We recommend the District strengthen internal controls over its procurement of architectural and engineering services to ensure compliance with federal requirements. District?s Response The Kittitas Reclamation District (District) has made a considerable effort to obtain critical climate resiliency and water conservation grant funding over the last 7 years. In that period, the District has been awarded several state and federal awards for infrastructure projects requiring engineering services. These projects were audited and found compliant. Internally, the District?s processes and procedures have been scrutinized and revised after receiving constructive input from prior auditors. It is the District's priority to continue to set a standard of excellence as the District proceeds into the future enhancing the irrigation system and works towards essential water conservation efforts while improving the ecosystem to allow the system to benefit future generations. As the funding opportunities grew, there was a collaborative effort made with the District consultants to utilize the funding opportunities as they arose. Keeping site on the fact that work had to be accomplished within the limited construction window during the winter months when the irrigation system was not running water and being used by the landowners. There was extensive work done to draft and create a Multi-Year Multiple Award Task Order (IDIQ) for Professional Services which allows the District to acquire an indefinite quantity, within stated limits, of supplies or services during a fixed period, with deliveries to be scheduled by placing orders with a contractor. The Federal Acquisition Streamlining Act (FASA) allows agencies to use IDIQ contracts to benefit from an ongoing competitive environment throughout the duration of the contract while minimizing the delay of conducting a separate procurement for each project. The process included developing a scope of work, advertising in multiple newspapers for solicitation of services, establishing a list of qualified applicants, scoring the applicants and utilizing the awardees for prospective funding opportunities as they were granted. The length of the IDIQ has changed from the initial one-year term to the current 5-year term but beyond the term of the contract the process has been unchanged. This process was reviewed in prior audits and the District was not asked to make any changes to the process in past audits. When the current engineering services contracts were procured, the District understood it had met all the uniform guidance and after the appropriate advertising and with only two engineering firms responding, both responding firms were awarded an Indefinite Delivery Contracts (IDICs) in accordance with our interpretation of FAR 16.5 and FAR 36.602-1. These IDCs comprise the District?s roster for engineer firms based on their qualifications relative to the criteria established for Category 1 under the Notice to Consultants, 2022 Kittitas Reclamation District (KRD) On-Call Rosters advertised and evaluated in Page 8 Office of the Washington State Auditor sao.wa.gov February 2022. Specifically, the District Request for Qualifications solicitation evaluated firms on four criteria, qualifications of firm (up to 20points), qualifications of proposed Project Manager(s) (up to 30 points), firm?s technical expertise (up to 50 points), and references/past performances (up to 50 points). The competitive, qualifications-based roster selection is not the same roster or process utilized for the District Vendor List for Limited Public Works and Small Works Roster. The District has since learned that it should have kept documentation as to how the Engineering Firm was chosen for each task order project awarded within the IDC scope. There was no formal documentation to provide on the selection process for each individual project. It should also be noted that, particularly with an irrigation canal, it is imperative to have continuity of engineering on the same project that continues from one winter construction window and funding cycle to the next to ensure the integrity of the canal system and the most efficient use of funds for each project. Upon receiving the guidance on the current audit, the District would like to move forward by reviewing the procurement policy and making any necessary changes while working under the guidance of the SAO Procurement Specialist to ensure that an updated procurement policy continues to meet the needs of the District and the federal guidelines for federal funding. Auditor?s Remarks We appreciate the steps the District?s commitment to resolving this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our 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. Page 9 Office of the Washington State Auditor sao.wa.gov 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 320, Methods of procurement to be followed, establishes requirements for procuring with federal funds by nonfederal entities.
Kittitas Reclamation District January 1, 2022 through December 31, 2022 2022-001 The District?s internal controls were inadequate for ensuring it complied with federal procurement requirements. Assistance Listing Number and Title: 15.517 Fish and Wildlife Coordination Act Federal Grantor Name: U.S. Department of the Interior, Bureau of Reclamation Federal Award/Contract Number: R22AP00447-00, R21AP10328-03, R18AP00036-02, R21AP10329-01 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The purpose of the Fish and Wildlife Coordination Act program is to provide financial assistance, through grants or cooperative agreements, to public or private organizations for the improvement of fish and wildlife habitat associated with water systems or water supplies affected by Bureau of Reclamation projects. During fiscal year 2022, the District spent $7,097,974 in federal Fish and Wildlife Coordination Act funds, which were awarded by the Bureau of Reclamation at the U.S. Department of the Interior. The District used program funding on four projects in Kittitas County. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Federal regulations require grant recipients to follow their own written procurement procedures, which must conform to the Uniform Guidance procurement standards Page 6 Office of the Washington State Auditor sao.wa.gov found in 2 CFR 200.318-327. These procedures must reflect the most restrictive of applicable federal requirements, state law or local policies. When procuring architectural and engineering services, federal regulations require the District to advertise for each project, identify all evaluation factors and their relative importance, have a written method for conducting technical evaluations, and document the evaluation supporting its decision to go with the best engineer for each separate award. Description of Condition The District has a written policy that conforms to federal regulations that require a qualifications-based selection of architectural and engineering services. However, when it procured its engineer for the four projects, the District selected from an engineering roster, which is not in compliance with its own policy and the Uniform Guidance (2 CFR 200.320(b)(2)). We consider this control deficiency to be a significant deficiency. Cause of Condition The District followed guidance from the U.S. Army Corps of Engineers when creating its architectural and engineering roster, which allowed for a base contract to be awarded to a pool of firms. District officials thought this was an acceptable method to follow and were not aware the District cannot select architects and engineers from a roster when using federal funds to pay for projects. Effect of Condition The District paid one engineer $462,617 with federal funds during the audit period. Without effective internal controls, the District cannot ensure it allowed for full and open competition, selected the most qualified engineer, and complied with federal procurement requirements. Recommendation We recommend the District strengthen internal controls over its procurement of architectural and engineering services to ensure compliance with federal requirements. District?s Response The Kittitas Reclamation District (District) has made a considerable effort to obtain critical climate resiliency and water conservation grant funding over the last 7 years. In that period, the District has been awarded several state and federal awards for infrastructure projects requiring engineering services. These projects were audited and found compliant. Internally, the District?s processes and procedures have been scrutinized and revised after receiving constructive input from prior auditors. It is the District's priority to continue to set a standard of excellence as the District proceeds into the future enhancing the irrigation system and works towards essential water conservation efforts while improving the ecosystem to allow the system to benefit future generations. As the funding opportunities grew, there was a collaborative effort made with the District consultants to utilize the funding opportunities as they arose. Keeping site on the fact that work had to be accomplished within the limited construction window during the winter months when the irrigation system was not running water and being used by the landowners. There was extensive work done to draft and create a Multi-Year Multiple Award Task Order (IDIQ) for Professional Services which allows the District to acquire an indefinite quantity, within stated limits, of supplies or services during a fixed period, with deliveries to be scheduled by placing orders with a contractor. The Federal Acquisition Streamlining Act (FASA) allows agencies to use IDIQ contracts to benefit from an ongoing competitive environment throughout the duration of the contract while minimizing the delay of conducting a separate procurement for each project. The process included developing a scope of work, advertising in multiple newspapers for solicitation of services, establishing a list of qualified applicants, scoring the applicants and utilizing the awardees for prospective funding opportunities as they were granted. The length of the IDIQ has changed from the initial one-year term to the current 5-year term but beyond the term of the contract the process has been unchanged. This process was reviewed in prior audits and the District was not asked to make any changes to the process in past audits. When the current engineering services contracts were procured, the District understood it had met all the uniform guidance and after the appropriate advertising and with only two engineering firms responding, both responding firms were awarded an Indefinite Delivery Contracts (IDICs) in accordance with our interpretation of FAR 16.5 and FAR 36.602-1. These IDCs comprise the District?s roster for engineer firms based on their qualifications relative to the criteria established for Category 1 under the Notice to Consultants, 2022 Kittitas Reclamation District (KRD) On-Call Rosters advertised and evaluated in Page 8 Office of the Washington State Auditor sao.wa.gov February 2022. Specifically, the District Request for Qualifications solicitation evaluated firms on four criteria, qualifications of firm (up to 20points), qualifications of proposed Project Manager(s) (up to 30 points), firm?s technical expertise (up to 50 points), and references/past performances (up to 50 points). The competitive, qualifications-based roster selection is not the same roster or process utilized for the District Vendor List for Limited Public Works and Small Works Roster. The District has since learned that it should have kept documentation as to how the Engineering Firm was chosen for each task order project awarded within the IDC scope. There was no formal documentation to provide on the selection process for each individual project. It should also be noted that, particularly with an irrigation canal, it is imperative to have continuity of engineering on the same project that continues from one winter construction window and funding cycle to the next to ensure the integrity of the canal system and the most efficient use of funds for each project. Upon receiving the guidance on the current audit, the District would like to move forward by reviewing the procurement policy and making any necessary changes while working under the guidance of the SAO Procurement Specialist to ensure that an updated procurement policy continues to meet the needs of the District and the federal guidelines for federal funding. Auditor?s Remarks We appreciate the steps the District?s commitment to resolving this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our 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. Page 9 Office of the Washington State Auditor sao.wa.gov 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 320, Methods of procurement to be followed, establishes requirements for procuring with federal funds by nonfederal entities.
2022-002 Federal Agency: U.S. Department of Agriculture Federal Program Title: Supplemental Nutrition Assistance Program CFDA Number: 10.561 Award Period: December 1, 2019 through September 30, 2023 Type of Finding: ? Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: The Code of Federal Regulations 2 CFR 200.318(a) states, ?the non-Federal entity must have and use document 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.? In addition, per the Code of Federal Regulations 2 CFR 200.214, non-Federal entities are subject to the non-procurement debarment and suspension regulations. The regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Condition: During our testing, we noted the Organization had not adopted a procurement policy and no procurement procedures were performed in selecting contractors. Questioned Costs: None Cause: Procurement policies and procedures were not adopted by the Organization. Effect: The Organization may not have received a competitive bid for services, and may have engaged a suspended or debarred contractor. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Organization implement necessary internal controls to ensure a competitive bid process is performed, and all vendors are reviewed for suspension and debarment, prior to entering into contracts utilizing federal awards. These internal controls should also include a conflict-of-interest clause with all vendors within contract language. Views of responsible officials: Management agrees with the finding.
2022-003 Federal Agency: U.S. Department of the Treasury Federal Program Title: Coronavirus State and Local Fiscal Recovery Funds CFDA Number: 21.027 Award Period: June 23, 2022 through June 22, 2023 Type of Finding: ? Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: The Code of Federal Regulations 2 CFR 200.318(a) states, ?the non-Federal entity must have and use document 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.? In addition, per the Code of Federal Regulations 2 CFR 200.214, non-Federal entities are subject to the non-procurement debarment and suspension regulations. The regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Condition: During our testing, we noted the Organization had not adopted a procurement policy and no procurement procedures were performed in selecting contractors. Questioned Costs: None Cause: Procurement policies and procedures were not adopted by the Organization. Effect: The Organization may not have received a competitive bid for services, and may have engaged a suspended or debarred contractor. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Organization implement necessary internal controls to ensure a competitive bid process is performed, and all vendors are reviewed for suspension and debarment, prior to entering into contracts utilizing federal awards. These internal controls should also include a conflict-of-interest clause with all vendors within contract language. Views of responsible officials: Management agrees with the finding.
Information on the Federal Program Federal Program Name: Health Center Program Cluster Federal Agency: U.S. Department of Health and Human Services Federal Assistance Listing Title and Number: Consolidated Health Centers (Community Health Centers), 93.224; Affordable Care Act (ACA) Grants for New and Expanded Services Under the Health Center Program, 93.527 Criteria or Specific Requirement: Under Uniform Guidance compliance requirements for Procurement (2 CFR 200.318(i)), contract files must be sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. In cases where competition was limited, such as scenarios where specific qualifications and competence are required, the files should provide evidence that the limitation on competition was justified. Also, the Uniform Guidance compliance requirements for Procurement (Appendix II to Part 200), require that Federal agency or non-Federal entity, all contracts made by the non-Federal entity under the Federal award must contain provisions enumerated in Appendix II to Part 200 (A) to (L). Condition: The Organization entered to a purchase contract with a vendor that is considered a sole source purchase agreement. The Organization did not maintain and retain appropriate documentation to justify the limitation on competition related to the vendor selection and why the purchase is a sole source purchase agreement. The sole source purchase agreement entered also did not include the contract provision required by Appendix II to Part 200. Questioned Costs: $0 Context: During our testing of procurement requirements, the sole vendor purchase charged to the grant did not have appropriate documentation to evidence the basis of vendor selection or documentation to justify the limitation on competition vendor selection and why the purchase is a sole source purchase agreement. Also, the sole source purchase agreement does not contain the provisions enumerated in Appendix II to Part 200 (A) to (L). Effect: Vendor purchase was made without appropriate documentation to comply with Uniform Guidance requirements. Also, contracts were entered into and approved without the require provision of Appendix II to Part 200 of the Uniform Guidance. Cause: Adequate supporting documentation on the procurement was not obtained or maintained within vendor files including the justification on the limitation on competition on vendor selection. The vendor contract does not contain the necessary contract provision and language required by the Uniform Guidance. Repeat Finding: No Recommendation: We recommend the Organization revisit controls over this compliance requirement to ensure that appropriate documentation is gathered and retained within its procurement files to support all Federally funded purchasing decisions including the justification on the limitation on competition on vendor selection for sole source contract arrangement. We also recommend the Organization to include the contract provision required by Appendix II to Part 200 CFR on all its contracts. Views of responsible officials and planned corrective actions: See corrective action plan prepared by management attached.
Information on the Federal Program Federal Program Name: Health Center Program Cluster Federal Agency: U.S. Department of Health and Human Services Federal Assistance Listing Title and Number: Consolidated Health Centers (Community Health Centers), 93.224; Affordable Care Act (ACA) Grants for New and Expanded Services Under the Health Center Program, 93.527 Criteria or Specific Requirement: Under Uniform Guidance compliance requirements for Procurement (2 CFR 200.318(i)), contract files must be sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. In cases where competition was limited, such as scenarios where specific qualifications and competence are required, the files should provide evidence that the limitation on competition was justified. Also, the Uniform Guidance compliance requirements for Procurement (Appendix II to Part 200), require that Federal agency or non-Federal entity, all contracts made by the non-Federal entity under the Federal award must contain provisions enumerated in Appendix II to Part 200 (A) to (L). Condition: The Organization entered to a purchase contract with a vendor that is considered a sole source purchase agreement. The Organization did not maintain and retain appropriate documentation to justify the limitation on competition related to the vendor selection and why the purchase is a sole source purchase agreement. The sole source purchase agreement entered also did not include the contract provision required by Appendix II to Part 200. Questioned Costs: $0 Context: During our testing of procurement requirements, the sole vendor purchase charged to the grant did not have appropriate documentation to evidence the basis of vendor selection or documentation to justify the limitation on competition vendor selection and why the purchase is a sole source purchase agreement. Also, the sole source purchase agreement does not contain the provisions enumerated in Appendix II to Part 200 (A) to (L). Effect: Vendor purchase was made without appropriate documentation to comply with Uniform Guidance requirements. Also, contracts were entered into and approved without the require provision of Appendix II to Part 200 of the Uniform Guidance. Cause: Adequate supporting documentation on the procurement was not obtained or maintained within vendor files including the justification on the limitation on competition on vendor selection. The vendor contract does not contain the necessary contract provision and language required by the Uniform Guidance. Repeat Finding: No Recommendation: We recommend the Organization revisit controls over this compliance requirement to ensure that appropriate documentation is gathered and retained within its procurement files to support all Federally funded purchasing decisions including the justification on the limitation on competition on vendor selection for sole source contract arrangement. We also recommend the Organization to include the contract provision required by Appendix II to Part 200 CFR on all its contracts. Views of responsible officials and planned corrective actions: See corrective action plan prepared by management attached.
Federal Agency: U.S. Department of Agriculture Federal Program Title: State Administrative Matching Grants for Supplemental Nutrition Assistance Program (SNAP Cluster) Assistance Listing Number: 10.561 Federal Award Identification and Year: 232MN101S2514, 2022 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 232MN101S2514 Compliance Requirement Affected: Procurement Award Period: Year Ended December 31, 2022 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or Specific Requirement: According to Uniform Guidance 2 CFR 180.300, the County must comply with procurement requirements in accordance with Uniform Guidance 2 CFR 200.318. Condition: Support for the procurement method used by the County was not retained. Questioned Costs: None. Context: For one of one procurement transactions tested, support for the use of noncompetitive proposals method was not retained. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Cause: The County policy was not followed before entering into a new contract in 2022 with the vendor since it was done during the previous contract. Effect: The County could be overpaying for the transaction if not properly procured. Repeat Finding: No. Recommendation: We recommend the County ensure they follow their countywide policies regarding federal procurement and retain documentation. Views of responsible officials: There is no disagreement with the audit finding
Federal Agency: Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Listing Number: 21.027 Federal Award Identification Number and Year: Pass-Through Agency: Connecticut Bar Foundation Pass-Through Number: CT-RTC Award Period: 2022 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or Specific Requirement: The Organization must comply with procurement standards set out at 2 CFR sections 200.318 through 200.326 within Uniform Guidance. Condition: The procurement policy and conflict of interest policy of the Organization do not include the essential elements as outlined in 2 CFR sections 200.318 through 200.326. Questioned costs: None Context: We reviewed the procurement policy and conflict of interest policy of the Organization and noted that the policies do not include the essential compliance elements as outlined in 2 CFR sections 200.318 through 200.326. Cause: Management was unaware of the restrictive requirements of the new procurement standards. Effect: With the absence of a compliant policy, the Organization is at risk for noncompliance as it relates to federal procurement. Repeat Finding: No Recommendation: We recommend that the Organization review its procurement policy and conflict of interest policy and make necessary changes to comply with the criteria as set out in 2 CFR sections 200.318 and 200.326. Views of Responsible Officials: There is no disagreement with the audit finding.
Finding 2022-001: Procurement policy and related contract This finding is a repeat finding of 2021-001 Criteria: 2 CFR section 200.318 ? General Procurement Standards, requires non-Federal entity to 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. Condition: We reviewed the water utility's procurement policy and service contracts with costs reimbursed during 2022, noting they did not contain necessary federal language related to conflicts of interest and debarment and suspension. Cause: The water utility has not received federal funding in the past and did not update their procurement policy when they sought federal funding for the Great Lakes Water Supply project. Additionally, service contracts were entered into prior to receiving federal funds. Effect: Without adequate control of contract language the water utility could enter into contracts related to the Great Lakes Water Supply project that do not qualify for federal reimbursement. Questioned Costs: None noted. Recommendation: We recommend the water utility review its procurement policy and make necessary updates to be in compliance with federal standards. Additionally, we recommend the utility enter into contract addendums related to contracts previously executed without required federal language. Management Response: Waukesha Water utility management has worked closely with WIFIA to craft contracts that include all necessary language prior to releasing RFPs for construction contracts. WIFIA was presented all service contracts to review prior to reimbursements received in fiscal year 2022. The finance department is working to update the procurement policy to ensure necessary federal language is included. The finance department will also work with service contractors to execute contract addendums.
2022-002 Department of Treasury, State of South Dakota Governor?s Office of Economic Development Federal Financial Assistance Listing 21.027, ConnectSD 2021-03, 2021-05 and 2021-07 Coronavirus State and Local Fiscal Recovery Funds 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 the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. 2 CFR 200.318(c)(1) provides that the auditee must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. 2 CFR 200.319(c) establishes that the auditee must have written procedures for procurement transactions that follow the procurement standards in 2 CFR sections 200.318 through 200.327 ensuring that the procurement method used for the contracts are appropriate based on the dollar amount and conditions specified in sections therein. As outlined in 2 CFR 180, recipients must not utilize any vendor which is suspended or debarred or is otherwise excluded from the central contractor registry. Condition: The Company has not documented their internal controls for compliance with the procurement, suspension and debarment compliance requirement of Uniform Guidance as outlined above. The Company does not have a written policy related to procurement or written standards of conduct for employees involved in contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurement, as well as, established procedures in place related to suspension and debarment. The Company did not follow the procurement method required based on the dollar amount and conditions specified in 2 CFR 200.320. For contracted vendors with expenditures in excess of $25,000, the Company did not verify vendors were not suspended or debarred prior to entering into transaction with the vendor. Cause: The Company relied on the previous work history with vendors frequently used and did not have a process in place to monitor compliance with suspension and debarment requirements. Effect: Inadequate controls over this area of compliance result in a reasonable possibility that the Company would not have the required documentation in place and would not be able to detect and correct noncompliance in a timely manner. Questioned Costs: We were unable to determine known questioned costs. There were three vendor transactions above the $4,000 micro purchase threshold without adequate procurement documentation which had cumulative draws in 2022 of $1,993,222. Context/Sampling: Procurement requirements were applicable to three vendors. Two vendors had expenditures in excess of $250,000. Suspension and debarment requirements were applicable to 3 vendors. Repeat Finding from Prior Year: No Recommendation: We recommend management implement formal procedures over procurement, suspension and debarment in accordance with requirements noted above. Views of Responsible Officials: Management agrees with the finding.
2022-002 Department of Treasury, State of South Dakota Governor?s Office of Economic Development Federal Financial Assistance Listing 21.027, ConnectSD 2021-03, 2021-05 and 2021-07 Coronavirus State and Local Fiscal Recovery Funds 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 the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. 2 CFR 200.318(c)(1) provides that the auditee must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. 2 CFR 200.319(c) establishes that the auditee must have written procedures for procurement transactions that follow the procurement standards in 2 CFR sections 200.318 through 200.327 ensuring that the procurement method used for the contracts are appropriate based on the dollar amount and conditions specified in sections therein. As outlined in 2 CFR 180, recipients must not utilize any vendor which is suspended or debarred or is otherwise excluded from the central contractor registry. Condition: The Company has not documented their internal controls for compliance with the procurement, suspension and debarment compliance requirement of Uniform Guidance as outlined above. The Company does not have a written policy related to procurement or written standards of conduct for employees involved in contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurement, as well as, established procedures in place related to suspension and debarment. The Company did not follow the procurement method required based on the dollar amount and conditions specified in 2 CFR 200.320. For contracted vendors with expenditures in excess of $25,000, the Company did not verify vendors were not suspended or debarred prior to entering into transaction with the vendor. Cause: The Company relied on the previous work history with vendors frequently used and did not have a process in place to monitor compliance with suspension and debarment requirements. Effect: Inadequate controls over this area of compliance result in a reasonable possibility that the Company would not have the required documentation in place and would not be able to detect and correct noncompliance in a timely manner. Questioned Costs: We were unable to determine known questioned costs. There were three vendor transactions above the $4,000 micro purchase threshold without adequate procurement documentation which had cumulative draws in 2022 of $1,993,222. Context/Sampling: Procurement requirements were applicable to three vendors. Two vendors had expenditures in excess of $250,000. Suspension and debarment requirements were applicable to 3 vendors. Repeat Finding from Prior Year: No Recommendation: We recommend management implement formal procedures over procurement, suspension and debarment in accordance with requirements noted above. Views of Responsible Officials: Management agrees with the finding.
2022-002 Department of Treasury, State of South Dakota Governor?s Office of Economic Development Federal Financial Assistance Listing 21.027, ConnectSD 2021-03, 2021-05 and 2021-07 Coronavirus State and Local Fiscal Recovery Funds 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 the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. 2 CFR 200.318(c)(1) provides that the auditee must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. 2 CFR 200.319(c) establishes that the auditee must have written procedures for procurement transactions that follow the procurement standards in 2 CFR sections 200.318 through 200.327 ensuring that the procurement method used for the contracts are appropriate based on the dollar amount and conditions specified in sections therein. As outlined in 2 CFR 180, recipients must not utilize any vendor which is suspended or debarred or is otherwise excluded from the central contractor registry. Condition: The Company has not documented their internal controls for compliance with the procurement, suspension and debarment compliance requirement of Uniform Guidance as outlined above. The Company does not have a written policy related to procurement or written standards of conduct for employees involved in contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurement, as well as, established procedures in place related to suspension and debarment. The Company did not follow the procurement method required based on the dollar amount and conditions specified in 2 CFR 200.320. For contracted vendors with expenditures in excess of $25,000, the Company did not verify vendors were not suspended or debarred prior to entering into transaction with the vendor. Cause: The Company relied on the previous work history with vendors frequently used and did not have a process in place to monitor compliance with suspension and debarment requirements. Effect: Inadequate controls over this area of compliance result in a reasonable possibility that the Company would not have the required documentation in place and would not be able to detect and correct noncompliance in a timely manner. Questioned Costs: We were unable to determine known questioned costs. There were three vendor transactions above the $4,000 micro purchase threshold without adequate procurement documentation which had cumulative draws in 2022 of $1,993,222. Context/Sampling: Procurement requirements were applicable to three vendors. Two vendors had expenditures in excess of $250,000. Suspension and debarment requirements were applicable to 3 vendors. Repeat Finding from Prior Year: No Recommendation: We recommend management implement formal procedures over procurement, suspension and debarment in accordance with requirements noted above. Views of Responsible Officials: Management agrees with the finding.
2022-005 Assistance Listing Number 21.027 Coronavirus State and Local Fiscal Recovery Funds Department of Treasury North Dakota State Water Commission Procurement Suspension & Debarment 2 CFR Part 200.318 Criteria 2 CFR Part 200.318 states that a non-Federal entity must have and use documented procedures, consistent with state, local, and tribal laws and regulations and the standards of 2 CFR part 200.317 through 200.327. Condition District does not have a written procurement policy in place. Cause The District has not approved a written procurement policy. Effect Non-compliance with Procurement Suspension & Debarment compliance requirements. Questioned Costs Not Applicable Repeat Finding This is not a repeat finding. Recommendation We recommend for the board of the District to create and implement a procurement policy that adheres to state and local regulations as well as 2 CFR Part 200.317 through 200.327. Views of Responsible Officials and Planned Corrective Actions The District will create and approve a procurement policy that adheres to state and local regulations as well as 2 CFR Part 200.317 through 200.327.
Finding 2022-001 Assistance Listing Number: 93.870 Federal Program: Maternal, Infant, and Early Childhood Home Visiting Grant Name of Federal Agency: Department of Health and Human Services Name of Pass-Through Entity: Wisconsin Department of Children and Families Criteria or Specific Requirement: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at Title 2 U.S. Code of Federal Regulations (CFR) SECTIONS 200.318 THROUGH 200.236. 2 CFR section 200.318(a) indicates the non-federal entity's documented procurement procedures must conform to the procurement standards identified in these sections. Condition: The Organization's documented procurement policies and procedures do not include certain procedures required by the procurement standards. Cause: The Organization does not have a process for reviewing its accounting policies and procedures manual on a regular basis to ensure documented procedures conform to the procurement standards. Effect or potential effect: Costs for purchases subject to the procurement standards could be disallowed if appropriate procedures are not followed. Repeat finding: No Recommendation: The Organization's procurement procedures should be reviewed and updated as needed to confirm to the procurement standards. The Organization's policies and procedures should also be reviewed and approved annually by the board of directors and management to incorporate changes to laws and regulations and internal procedures. Views of responsible officials: Easterseals Southeast Wisconsin has a policy which clearly outlines approval authorities. While we follow that policy properly, we understand that the policy lacks some elements required by the Uniform Guidance. None of our purchases made during the year under audit would have violated Uniform Guidance, but we are committed to compliance and therefore have already started to draft policies which will adhere to Uniform Guidance. We will finalize, communicate, and follow our updated Policies and Procedures to ensure that Uniform Guidance is followed and to resolve the finding from this audit.
SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS City of Clarkston January 1, 2022 through December 31, 2022 2022-002 The City did not have adequate internal controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 20.205 – Highway Planning and Construction Federal Grantor Name: U.S. Department of Transportation, Federal Highway Administration Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Transportation Pass-through Award/Contract Number: LA-10124, LA-10129, LA-9593 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2020-001 Description of Condition During fiscal year 2022, the City spent $1,725,908 in federal Highway Planning and Construction program funds awarded from the Federal Highway Administration and passed through the Washington State Department of Transportation. During 2022, the City used program funding on three projects. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance federal procurement standards found in 2 CFR 200.318-327. The procedures must reflect the most restrictive of federal, state or local procurement thresholds and methods when using federal funds. Additionally, federal regulations require recipients to maintain written standards of conduct that cover conflicts of interest and govern the actions of employees involved in selecting, awarding or administrating contracts procured with federal funds. Although the City has a written procurement policy, it does not conform to federal procurement standards and does not include all methods for procurement, such as architectural and engineering services and specific steps to follow for formally bidding public works projects. Additionally, the City’s policy does not include other required procedures for procuring transactions, such as contract cost or price analysis, bonding requirements, domestic preferences for procurement, contracting provisions, and more. Additionally, the City’s written conflict of interest policy does not conform to federal regulations because it does not include the following elements: • Officers, employees, and agents may not participate in selecting, awarding, or administrating a contract supported by a federal award if they have a real or apparent conflict of interest. • Officers, employees, and agents may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. We consider this internal control deficiency to be a significant deficiency. Cause of Condition Management did not dedicate the time and resources necessary to update the City’s procurement and standards of conduct procedures to ensure they conformed to Uniform Guidance before procuring transactions that it charged to the program. Effect of Condition Although the City’s policies did not conform to Uniform Guidance, our testing found the City complied with federal requirements for competitive solicitation of a public works contractor and architectural and engineering services. However, without updated written procurement and standards of conduct procedures, the City is at greater risk of noncompliance with the most restrictive procurement procedures and standards of conduct requirements when procuring contractors paid all or in part with federal funds. Recommendation We recommend the City strengthen internal controls by updating and maintaining its written procurement and standards of conduct policies to conform to Uniform Guidance for all procurement transactions. City’s Response The City updated the policy regarding federal procurement to ensure compliance with usage of federal funds in November 2022. This audit determined that additional levels of internal control needed to be implemented to comply with Uniform Guidance and federal regulations. The City plans to update the procurement policy and standards of conduct policy to ensure that federal standards are being maintained. The City will strengthen internal controls to ensure that procurement of goods and services will comply with Uniform Guidance, the federal regulations and the City’s procurement policy. Auditor’s Remarks We appreciate the City’s commitment to resolving this finding and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during our 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.
SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS City of Clarkston January 1, 2022 through December 31, 2022 2022-002 The City did not have adequate internal controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 20.205 – Highway Planning and Construction Federal Grantor Name: U.S. Department of Transportation, Federal Highway Administration Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Transportation Pass-through Award/Contract Number: LA-10124, LA-10129, LA-9593 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2020-001 Description of Condition During fiscal year 2022, the City spent $1,725,908 in federal Highway Planning and Construction program funds awarded from the Federal Highway Administration and passed through the Washington State Department of Transportation. During 2022, the City used program funding on three projects. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance federal procurement standards found in 2 CFR 200.318-327. The procedures must reflect the most restrictive of federal, state or local procurement thresholds and methods when using federal funds. Additionally, federal regulations require recipients to maintain written standards of conduct that cover conflicts of interest and govern the actions of employees involved in selecting, awarding or administrating contracts procured with federal funds. Although the City has a written procurement policy, it does not conform to federal procurement standards and does not include all methods for procurement, such as architectural and engineering services and specific steps to follow for formally bidding public works projects. Additionally, the City’s policy does not include other required procedures for procuring transactions, such as contract cost or price analysis, bonding requirements, domestic preferences for procurement, contracting provisions, and more. Additionally, the City’s written conflict of interest policy does not conform to federal regulations because it does not include the following elements: • Officers, employees, and agents may not participate in selecting, awarding, or administrating a contract supported by a federal award if they have a real or apparent conflict of interest. • Officers, employees, and agents may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. We consider this internal control deficiency to be a significant deficiency. Cause of Condition Management did not dedicate the time and resources necessary to update the City’s procurement and standards of conduct procedures to ensure they conformed to Uniform Guidance before procuring transactions that it charged to the program. Effect of Condition Although the City’s policies did not conform to Uniform Guidance, our testing found the City complied with federal requirements for competitive solicitation of a public works contractor and architectural and engineering services. However, without updated written procurement and standards of conduct procedures, the City is at greater risk of noncompliance with the most restrictive procurement procedures and standards of conduct requirements when procuring contractors paid all or in part with federal funds. Recommendation We recommend the City strengthen internal controls by updating and maintaining its written procurement and standards of conduct policies to conform to Uniform Guidance for all procurement transactions. City’s Response The City updated the policy regarding federal procurement to ensure compliance with usage of federal funds in November 2022. This audit determined that additional levels of internal control needed to be implemented to comply with Uniform Guidance and federal regulations. The City plans to update the procurement policy and standards of conduct policy to ensure that federal standards are being maintained. The City will strengthen internal controls to ensure that procurement of goods and services will comply with Uniform Guidance, the federal regulations and the City’s procurement policy. Auditor’s Remarks We appreciate the City’s commitment to resolving this finding and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during our 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.
SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS City of Clarkston January 1, 2022 through December 31, 2022 2022-002 The City did not have adequate internal controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 20.205 – Highway Planning and Construction Federal Grantor Name: U.S. Department of Transportation, Federal Highway Administration Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Transportation Pass-through Award/Contract Number: LA-10124, LA-10129, LA-9593 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2020-001 Description of Condition During fiscal year 2022, the City spent $1,725,908 in federal Highway Planning and Construction program funds awarded from the Federal Highway Administration and passed through the Washington State Department of Transportation. During 2022, the City used program funding on three projects. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance federal procurement standards found in 2 CFR 200.318-327. The procedures must reflect the most restrictive of federal, state or local procurement thresholds and methods when using federal funds. Additionally, federal regulations require recipients to maintain written standards of conduct that cover conflicts of interest and govern the actions of employees involved in selecting, awarding or administrating contracts procured with federal funds. Although the City has a written procurement policy, it does not conform to federal procurement standards and does not include all methods for procurement, such as architectural and engineering services and specific steps to follow for formally bidding public works projects. Additionally, the City’s policy does not include other required procedures for procuring transactions, such as contract cost or price analysis, bonding requirements, domestic preferences for procurement, contracting provisions, and more. Additionally, the City’s written conflict of interest policy does not conform to federal regulations because it does not include the following elements: • Officers, employees, and agents may not participate in selecting, awarding, or administrating a contract supported by a federal award if they have a real or apparent conflict of interest. • Officers, employees, and agents may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. We consider this internal control deficiency to be a significant deficiency. Cause of Condition Management did not dedicate the time and resources necessary to update the City’s procurement and standards of conduct procedures to ensure they conformed to Uniform Guidance before procuring transactions that it charged to the program. Effect of Condition Although the City’s policies did not conform to Uniform Guidance, our testing found the City complied with federal requirements for competitive solicitation of a public works contractor and architectural and engineering services. However, without updated written procurement and standards of conduct procedures, the City is at greater risk of noncompliance with the most restrictive procurement procedures and standards of conduct requirements when procuring contractors paid all or in part with federal funds. Recommendation We recommend the City strengthen internal controls by updating and maintaining its written procurement and standards of conduct policies to conform to Uniform Guidance for all procurement transactions. City’s Response The City updated the policy regarding federal procurement to ensure compliance with usage of federal funds in November 2022. This audit determined that additional levels of internal control needed to be implemented to comply with Uniform Guidance and federal regulations. The City plans to update the procurement policy and standards of conduct policy to ensure that federal standards are being maintained. The City will strengthen internal controls to ensure that procurement of goods and services will comply with Uniform Guidance, the federal regulations and the City’s procurement policy. Auditor’s Remarks We appreciate the City’s commitment to resolving this finding and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during our 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.
Finding 2022-006 Procurement, Suspension, and Debarment – Material Weakness. Criteria: In accordance with §200.318, the non-federal entity must use its own documented procurement procedures which reflect applicable laws and regulations, provided that the procurements conform to applicable federal law and the standards identified. Additionally, the nonfederal entity must maintain records sufficient to detail the history of the procurement. These records are required to include but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. All procurement transactions must be conducted in in accordance with §200.317 through §200.327. In accordance with §200.214 non-federal entities cannot enter into awards, subawards, or contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in federal assistance programs or activities. Non-federal entities must either check for exclusions in the System for Award Management (SAM); collect a certification from the entity or add a clause or condition to the covered transaction with the entity prior to entering into a covered transaction with a non-federal entity. Condition: The Organization also has standard procurement procedures in place guiding purchasing decisions. However, due to need for expediency in choosing a contract that is partially funded by the federal award, the board of directors approved waiving the normal bidding process. The Organization also did not perform or document suspension and debarment checks on prospective vendors and subrecipients. Cause: The Organization’s personnel did not ensure to follow documented policies and procedures for selecting a contractor that were in compliance with the CFR 200. Additionally, the Organization did not have adequate internal controls in place to identify the need to ensure a check for suspended or debarred vendors on contractors occurred and was documented prior to entering into those agreements. Effect: Failure to maintain policies for vendor selection process and failure to obtain vendor solicitation for procurements is noncompliance with federal regulations. This leads to the possibility that resources were purchased from vendors who were suspended and/or debarred. Questioned Costs: Unknown Repeat Finding: Not applicable as the Organization is a first time auditee. Recommendation: Standard forms should be updated to incorporate procurement and suspension and debarment criteria for both vendors and subrecipients. Controls should be implemented to ensure that the procurement decisions and suspension and debarment checks are reviewed by an appropriate member of management and are properly stored for future reference. Views of Responsible Official: See Corrective Action Plan.
The City did not have adequate controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 20.205 Highway Planning and Construction 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: STPUS-5924(005) / SRTS 5906(001) / SRTS 9909(004) / NHPP-5908(010) / NHPP- 5908(011) / NHFP-5908(013) Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-001 Description of Condition During fiscal year 2022, the City spent $1,601,328 in Highway Planning and Construction program funds. The program’s objective is to provide funds for the planning, design, construction, and rehabilitation of highways and bridge transportation systems. Federal regulations require recipients to establish and maintain 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 establish and 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, state or local procurement thresholds and methods when using federal funds to procure goods and services. Governments must apply the more restrictive requirements by obtaining quotes or following a competitive procurement process, depending on the estimated cost of the procurement activity. Our audit found the City’s internal controls were ineffective for ensuring compliance with federal procurement requirements. Specifically, the City did not establish its own written procurement procedures, as federal regulations require. We consider this deficiency in internal controls to be a significant deficiency. This issue was reported as a finding in the prior audit. Cause of Condition During the 2021 audit, management and staff said they did not know the City was required to have and use its own written procurement procedures. Our prior year audit report was released on December 22, 2022, so the City was unable to implement changes before or during the current audit period. Effect of Condition Although the City did not establish its own written policy before procuring with program funds, it did comply with federal requirements for soliciting and awarding public works contracts. However, without written policies and procedures, the City is at greater risk of noncompliance with the most restrictive of federal, state, or local procurement methods and requirements when using federal funds to procure contractors. Recommendation We recommend the City establish written procurement procedures that conform to federal procurement requirements. City’s Response This is a repeat finding from our 2021 federal audit that was completed in December 2022. The City adopted a robust procurement policy in early 2023 as quickly as we possibly could after receiving the 2021 audit finding. It was impossible for the City to establish the procurement policy in 2022 as the audit finished so late in the year. While the City did not have an internal policy, the City strictly follows the procurement policies outlined by the federal and/or state funding agencies partnered on our projects. Outside of the specific funding agency guidelines, the City follows the Washington State Department of Transportation Local Agency Guidelines. The City is not recognized in WSDOTs Certification Acceptance program, meaning all FHWA funded project development and construction administration activities must have WSDOT Local Program oversight. This stewardship ensures all money spent follows FHWA standards. Auditor’s Remarks We appreciate the City’s commitment to resolving this issue. We will review the condition during our 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, Section 318, General procurement standards, establishes requirements for written procedures.
The City did not have adequate controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 20.205 Highway Planning and Construction 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: STPUS-5924(005) / SRTS 5906(001) / SRTS 9909(004) / NHPP-5908(010) / NHPP- 5908(011) / NHFP-5908(013) Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-001 Description of Condition During fiscal year 2022, the City spent $1,601,328 in Highway Planning and Construction program funds. The program’s objective is to provide funds for the planning, design, construction, and rehabilitation of highways and bridge transportation systems. Federal regulations require recipients to establish and maintain 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 establish and 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, state or local procurement thresholds and methods when using federal funds to procure goods and services. Governments must apply the more restrictive requirements by obtaining quotes or following a competitive procurement process, depending on the estimated cost of the procurement activity. Our audit found the City’s internal controls were ineffective for ensuring compliance with federal procurement requirements. Specifically, the City did not establish its own written procurement procedures, as federal regulations require. We consider this deficiency in internal controls to be a significant deficiency. This issue was reported as a finding in the prior audit. Cause of Condition During the 2021 audit, management and staff said they did not know the City was required to have and use its own written procurement procedures. Our prior year audit report was released on December 22, 2022, so the City was unable to implement changes before or during the current audit period. Effect of Condition Although the City did not establish its own written policy before procuring with program funds, it did comply with federal requirements for soliciting and awarding public works contracts. However, without written policies and procedures, the City is at greater risk of noncompliance with the most restrictive of federal, state, or local procurement methods and requirements when using federal funds to procure contractors. Recommendation We recommend the City establish written procurement procedures that conform to federal procurement requirements. City’s Response This is a repeat finding from our 2021 federal audit that was completed in December 2022. The City adopted a robust procurement policy in early 2023 as quickly as we possibly could after receiving the 2021 audit finding. It was impossible for the City to establish the procurement policy in 2022 as the audit finished so late in the year. While the City did not have an internal policy, the City strictly follows the procurement policies outlined by the federal and/or state funding agencies partnered on our projects. Outside of the specific funding agency guidelines, the City follows the Washington State Department of Transportation Local Agency Guidelines. The City is not recognized in WSDOTs Certification Acceptance program, meaning all FHWA funded project development and construction administration activities must have WSDOT Local Program oversight. This stewardship ensures all money spent follows FHWA standards. Auditor’s Remarks We appreciate the City’s commitment to resolving this issue. We will review the condition during our 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, Section 318, General procurement standards, establishes requirements for written procedures.
The City did not have adequate controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 20.205 Highway Planning and Construction 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: STPUS-5924(005) / SRTS 5906(001) / SRTS 9909(004) / NHPP-5908(010) / NHPP- 5908(011) / NHFP-5908(013) Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-001 Description of Condition During fiscal year 2022, the City spent $1,601,328 in Highway Planning and Construction program funds. The program’s objective is to provide funds for the planning, design, construction, and rehabilitation of highways and bridge transportation systems. Federal regulations require recipients to establish and maintain 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 establish and 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, state or local procurement thresholds and methods when using federal funds to procure goods and services. Governments must apply the more restrictive requirements by obtaining quotes or following a competitive procurement process, depending on the estimated cost of the procurement activity. Our audit found the City’s internal controls were ineffective for ensuring compliance with federal procurement requirements. Specifically, the City did not establish its own written procurement procedures, as federal regulations require. We consider this deficiency in internal controls to be a significant deficiency. This issue was reported as a finding in the prior audit. Cause of Condition During the 2021 audit, management and staff said they did not know the City was required to have and use its own written procurement procedures. Our prior year audit report was released on December 22, 2022, so the City was unable to implement changes before or during the current audit period. Effect of Condition Although the City did not establish its own written policy before procuring with program funds, it did comply with federal requirements for soliciting and awarding public works contracts. However, without written policies and procedures, the City is at greater risk of noncompliance with the most restrictive of federal, state, or local procurement methods and requirements when using federal funds to procure contractors. Recommendation We recommend the City establish written procurement procedures that conform to federal procurement requirements. City’s Response This is a repeat finding from our 2021 federal audit that was completed in December 2022. The City adopted a robust procurement policy in early 2023 as quickly as we possibly could after receiving the 2021 audit finding. It was impossible for the City to establish the procurement policy in 2022 as the audit finished so late in the year. While the City did not have an internal policy, the City strictly follows the procurement policies outlined by the federal and/or state funding agencies partnered on our projects. Outside of the specific funding agency guidelines, the City follows the Washington State Department of Transportation Local Agency Guidelines. The City is not recognized in WSDOTs Certification Acceptance program, meaning all FHWA funded project development and construction administration activities must have WSDOT Local Program oversight. This stewardship ensures all money spent follows FHWA standards. Auditor’s Remarks We appreciate the City’s commitment to resolving this issue. We will review the condition during our 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, Section 318, General procurement standards, establishes requirements for written procedures.
The City did not have adequate controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 20.205 Highway Planning and Construction 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: STPUS-5924(005) / SRTS 5906(001) / SRTS 9909(004) / NHPP-5908(010) / NHPP- 5908(011) / NHFP-5908(013) Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-001 Description of Condition During fiscal year 2022, the City spent $1,601,328 in Highway Planning and Construction program funds. The program’s objective is to provide funds for the planning, design, construction, and rehabilitation of highways and bridge transportation systems. Federal regulations require recipients to establish and maintain 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 establish and 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, state or local procurement thresholds and methods when using federal funds to procure goods and services. Governments must apply the more restrictive requirements by obtaining quotes or following a competitive procurement process, depending on the estimated cost of the procurement activity. Our audit found the City’s internal controls were ineffective for ensuring compliance with federal procurement requirements. Specifically, the City did not establish its own written procurement procedures, as federal regulations require. We consider this deficiency in internal controls to be a significant deficiency. This issue was reported as a finding in the prior audit. Cause of Condition During the 2021 audit, management and staff said they did not know the City was required to have and use its own written procurement procedures. Our prior year audit report was released on December 22, 2022, so the City was unable to implement changes before or during the current audit period. Effect of Condition Although the City did not establish its own written policy before procuring with program funds, it did comply with federal requirements for soliciting and awarding public works contracts. However, without written policies and procedures, the City is at greater risk of noncompliance with the most restrictive of federal, state, or local procurement methods and requirements when using federal funds to procure contractors. Recommendation We recommend the City establish written procurement procedures that conform to federal procurement requirements. City’s Response This is a repeat finding from our 2021 federal audit that was completed in December 2022. The City adopted a robust procurement policy in early 2023 as quickly as we possibly could after receiving the 2021 audit finding. It was impossible for the City to establish the procurement policy in 2022 as the audit finished so late in the year. While the City did not have an internal policy, the City strictly follows the procurement policies outlined by the federal and/or state funding agencies partnered on our projects. Outside of the specific funding agency guidelines, the City follows the Washington State Department of Transportation Local Agency Guidelines. The City is not recognized in WSDOTs Certification Acceptance program, meaning all FHWA funded project development and construction administration activities must have WSDOT Local Program oversight. This stewardship ensures all money spent follows FHWA standards. Auditor’s Remarks We appreciate the City’s commitment to resolving this issue. We will review the condition during our 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, Section 318, General procurement standards, establishes requirements for written procedures.
The City did not have adequate controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 20.205 Highway Planning and Construction 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: STPUS-5924(005) / SRTS 5906(001) / SRTS 9909(004) / NHPP-5908(010) / NHPP- 5908(011) / NHFP-5908(013) Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-001 Description of Condition During fiscal year 2022, the City spent $1,601,328 in Highway Planning and Construction program funds. The program’s objective is to provide funds for the planning, design, construction, and rehabilitation of highways and bridge transportation systems. Federal regulations require recipients to establish and maintain 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 establish and 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, state or local procurement thresholds and methods when using federal funds to procure goods and services. Governments must apply the more restrictive requirements by obtaining quotes or following a competitive procurement process, depending on the estimated cost of the procurement activity. Our audit found the City’s internal controls were ineffective for ensuring compliance with federal procurement requirements. Specifically, the City did not establish its own written procurement procedures, as federal regulations require. We consider this deficiency in internal controls to be a significant deficiency. This issue was reported as a finding in the prior audit. Cause of Condition During the 2021 audit, management and staff said they did not know the City was required to have and use its own written procurement procedures. Our prior year audit report was released on December 22, 2022, so the City was unable to implement changes before or during the current audit period. Effect of Condition Although the City did not establish its own written policy before procuring with program funds, it did comply with federal requirements for soliciting and awarding public works contracts. However, without written policies and procedures, the City is at greater risk of noncompliance with the most restrictive of federal, state, or local procurement methods and requirements when using federal funds to procure contractors. Recommendation We recommend the City establish written procurement procedures that conform to federal procurement requirements. City’s Response This is a repeat finding from our 2021 federal audit that was completed in December 2022. The City adopted a robust procurement policy in early 2023 as quickly as we possibly could after receiving the 2021 audit finding. It was impossible for the City to establish the procurement policy in 2022 as the audit finished so late in the year. While the City did not have an internal policy, the City strictly follows the procurement policies outlined by the federal and/or state funding agencies partnered on our projects. Outside of the specific funding agency guidelines, the City follows the Washington State Department of Transportation Local Agency Guidelines. The City is not recognized in WSDOTs Certification Acceptance program, meaning all FHWA funded project development and construction administration activities must have WSDOT Local Program oversight. This stewardship ensures all money spent follows FHWA standards. Auditor’s Remarks We appreciate the City’s commitment to resolving this issue. We will review the condition during our 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, Section 318, General procurement standards, establishes requirements for written procedures.
The City did not have adequate controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 20.205 Highway Planning and Construction 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: STPUS-5924(005) / SRTS 5906(001) / SRTS 9909(004) / NHPP-5908(010) / NHPP- 5908(011) / NHFP-5908(013) Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-001 Description of Condition During fiscal year 2022, the City spent $1,601,328 in Highway Planning and Construction program funds. The program’s objective is to provide funds for the planning, design, construction, and rehabilitation of highways and bridge transportation systems. Federal regulations require recipients to establish and maintain 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 establish and 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, state or local procurement thresholds and methods when using federal funds to procure goods and services. Governments must apply the more restrictive requirements by obtaining quotes or following a competitive procurement process, depending on the estimated cost of the procurement activity. Our audit found the City’s internal controls were ineffective for ensuring compliance with federal procurement requirements. Specifically, the City did not establish its own written procurement procedures, as federal regulations require. We consider this deficiency in internal controls to be a significant deficiency. This issue was reported as a finding in the prior audit. Cause of Condition During the 2021 audit, management and staff said they did not know the City was required to have and use its own written procurement procedures. Our prior year audit report was released on December 22, 2022, so the City was unable to implement changes before or during the current audit period. Effect of Condition Although the City did not establish its own written policy before procuring with program funds, it did comply with federal requirements for soliciting and awarding public works contracts. However, without written policies and procedures, the City is at greater risk of noncompliance with the most restrictive of federal, state, or local procurement methods and requirements when using federal funds to procure contractors. Recommendation We recommend the City establish written procurement procedures that conform to federal procurement requirements. City’s Response This is a repeat finding from our 2021 federal audit that was completed in December 2022. The City adopted a robust procurement policy in early 2023 as quickly as we possibly could after receiving the 2021 audit finding. It was impossible for the City to establish the procurement policy in 2022 as the audit finished so late in the year. While the City did not have an internal policy, the City strictly follows the procurement policies outlined by the federal and/or state funding agencies partnered on our projects. Outside of the specific funding agency guidelines, the City follows the Washington State Department of Transportation Local Agency Guidelines. The City is not recognized in WSDOTs Certification Acceptance program, meaning all FHWA funded project development and construction administration activities must have WSDOT Local Program oversight. This stewardship ensures all money spent follows FHWA standards. Auditor’s Remarks We appreciate the City’s commitment to resolving this issue. We will review the condition during our 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, Section 318, General procurement standards, establishes requirements for written procedures.