Findings 2022-056, 2022-057, and 2022-058 Higher Education Emergency Relief Fund (HEERF) Procurement Compliance The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 and appropriated federal funds to provide economic aid to the American people negatively impacted by the COVID-19 pandemic. As part of the CARES Act, funds were given to the System under the Higher Education Emergency Relief Fund (HEERF) Program. The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), was signed into law on December 27, 2020, and authorized additional funding under the HEERF program (HEERF II). Finally, the American Rescue Plan Act of 2021 (ARP), enacted on March 11, 2021, authorized a third round of funding (HEERF III) in order for higher education institutions to serve students and ensure learning continues during the COVID-19 pandemic. The HEERF Program is one of the subprograms of the federal Education Stabilization Fund [ALN 84.425]. The HEERF program contains two portions: The Student Aid portion [ALN 84.425E] and the Institutional portion, which is made up of the following: ? HEERF Institutional Aid Portion (ALN 84.425F); ? HEERF Minority Serving Institutions (ALN 84.425L); ? HEERF Strengthening Institutions Program (ALN 84.425M); ? Institutional Resilience and Expanded Postsecondary Opportunity (ALN 84.425P); ? HEERF Supplemental Assistance to Institutions of Higher Education program (ALN 84.425S). Since April 2020, the System has been awarded a total of approximately $255.6 million in HEERF funding. From inception through June 30, 2022, the System spent a total of approximately $97.8 million for the HEERF program Student Aid portion and $113.9 million for the HEERF Institutional Portion. During Fiscal Year 2022, the System spent $71.9 million for the Student Aid portion and $45.1 million for the Institutional Portion; of this amount, $28.7 million represented the System?s procurement for goods and services. The System reports that it will spend the remaining amount of funding during Fiscal Year 2023 and beyond. Each of the System?s 13 campuses separately signed an agreement titled the ?Certification and Agreement? with the U.S. Department of Education (ED) to indicate each campus? acceptance of the HEERF funding and the applicable terms and requirements. Under the requirements, each campus is required to follow the State?s procurement policies and procedures. Federal procurement regulations also require that each campus include any clauses required by federal regulations in every HEERF-related purchase order or other contract. In addition, non-federal entities, including the System and its campuses, are prohibited from contracting with or making subawards under ?covered transactions? to parties that are suspended or debarred from doing business with the federal government. ?Covered transactions? include those procurement contracts for goods and services awarded under a grant or cooperative agreement. In order to comply with federal suspension and debarment requirements, the campuses can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. What was the purpose of our audit work and what work was performed? The purpose of the audit work was to determine whether the System?s campuses had effective internal controls in place over, and complied with, federal procurement and suspension and debarment requirements for the HEERF grant during Fiscal Year 2022. As part of our audit work, we reviewed the campuses? internal controls over the HEERF grant procurement requirements. In addition, we tested a sample of 60 of the campuses? HEERF-related 435 procurement transactions, totaling $18.8 million, to determine if the campuses were in compliance with federal procurement requirements, and whether the campuses? contractors were suspended, debarred, or otherwise excluded from participating in the contract by the federal government, through verification on the SAM website exclusions listing. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulation [2 CFR 180.220] states that a contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. Also, federal regulation [2 CFR 180.300] requires that when a non-federal entity enters into a covered transaction with another entity, the non-federal entity must verify that the person or entity they intend to do business with is not excluded or disqualified from receiving federal funds. This can be done by: (1) checking the SAM exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity. ? Federal regulation [2 CFR 200.303] states that the System and its campuses, as recipients of federal funds, must establish and maintain effective internal control over their federal awards that provides reasonable assurance that the System?s campuses are managing the federal awards in compliance with federal statutes, regulations, and the award terms and conditions. ? Federal regulation [2 CFR 200.318] states that the System must document procurement procedures. The System and its campuses utilize Colorado Revised Statute Section 24, Government -State, Procurement Code; Articles 101- 112, as their procurement policy. Relevant sections of the policy include: o R-24-103-201-01 Purchasing Thresholds - (b) Small purchases are goods and services purchases costing less than $150,000. Goods and services between $25,000 and $150,000 may be purchased using a documented quote process, described in rule R-24-103-204-01. o R-24-103-201-01 Purchasing Thresholds - (c) Invitation for bids, described in rule R-24-103-202-01, request for proposals, described in rule R-24-103-203, and invitations to negotiate, described in rule R-24-103-208-03, may be used for goods or services estimated to exceed the small purchase threshold of $150,000. o R-24-103-205 Sole Source Procurements -Contracts may be awarded by use of a sole source procurement only if the following conditions are met: (a) A sole source procurement is justified when there is only one good or service that can reasonably meet the need and there is only one vendor who can provide the good or service. A requirement for a particular proprietary item (i.e., a brand name specification) does not justify a sole source procurement if there is more than one potential bidder or offeror for that item; (b) The procurement official or his or her designee shall make a written determination that a procurement is sole source, setting forth the reasons. In cases of reasonable doubt, competition should be solicited. Any request by a using agency that a procurement be restricted to one potential contractor shall be accompanied by an explanation as to why no other contractors will be suitable or acceptable to meet the need. What problems did the audit work identify? We identified at least one issue with 34 of the 60 transactions tested (57 percent), which resulted in a total of $3,254,216 in known federal questioned costs. In total, we identified 43 errors within the 34 transactions tested. Specifically, we identified the following: ? Community College of Aurora (CCA) and Pueblo Community College (PCC) could not provide documentation to support that suspension and debarment verification procedures were performed for nine transactions we reviewed for CCA and for 21 transactions we reviewed for PCC. We confirmed through additional audit work that none of the vendors were suspended or debarred; as a result, we determined that these errors did not result in questioned costs. ? Otero College (OC) did not complete the required Sole Source justification for four transactions. These errors resulted in $1,535,455 of questioned costs. ? PCC did not perform a request for proposals for two transactions which exceeded $150,000 and did not obtain documented quotes for seven transactions which were between $25,000 and $150,000, as required. These errors resulted in questioned costs of $1,718,761. Why did these problems occur? OC and PCC did not have adequate internal controls in place to ensure they complied with HEERF procurement requirements. In addition, CCA and PCC did not have adequate internal controls in place to ensure they complied with HEERF suspension and debarment requirements. Specifically, at OC and PCC, the secondary reviewer did not require staff follow procedures in place for procurement. At PCC the secondary reviewer also did not ensure that staff searched the federal System of Award Management to verify that entities it contracted with were not suspended, debarred, or otherwise excluded from participating in a contract for federal funds. In addition, they did not provide training over grant processes related to state procurement rules, such as training on requirements for staff to maintain appropriate supporting documentation for procurement-related verifications and procurement decisions. Further, CCA and OC experienced staff turnover in key positions, and existing employees could not locate the supporting documentation. Why do these problems matter? It is important for CCA, OC, and PCC to ensure that they obtain and maintain appropriate documentation to support procurement decisions, especially when they are the basis for determining CCA, OC, and PCC?s compliance with specific HEERF program requirements. In addition, CCA and PCC?s failure to perform procedures to ensure an entity is not suspended or debarred could result in the System paying funds to an entity that is disallowed from receiving such funds, thereby exposing the State to increased business risk and potential federal disallowances. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-057 Otero College should strengthen their internal controls over procurement and ensure they comply with the Higher Education Emergency Relief Fund (HEERF) requirements and State procurement policies by: A. Ensuring the secondary reviewer enforces compliance with the Colorado Community College System?s (System) procurement procedures. B. Ensuring staff maintain supporting documentation for procurements. C. Providing training and cross-training to existing employees over procurement requirements. Response Otero College A. Agree Implementation Date: August 2022 Otero College has adopted the system offices Sole Source justification form that will be posted to the State procurement site, requires supervisory approval, and has put that into place as of August 2022. B. Agree Implementation Date: August 2022 Otero College will ensure they maintain supporting documentation for procurements. C. Agree Implementation Date: August 2022 Otero College has a new procurement official that has attended various trainings regarding procurement rules.
Findings 2022-056, 2022-057, and 2022-058 Higher Education Emergency Relief Fund (HEERF) Procurement Compliance The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 and appropriated federal funds to provide economic aid to the American people negatively impacted by the COVID-19 pandemic. As part of the CARES Act, funds were given to the System under the Higher Education Emergency Relief Fund (HEERF) Program. The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), was signed into law on December 27, 2020, and authorized additional funding under the HEERF program (HEERF II). Finally, the American Rescue Plan Act of 2021 (ARP), enacted on March 11, 2021, authorized a third round of funding (HEERF III) in order for higher education institutions to serve students and ensure learning continues during the COVID-19 pandemic. The HEERF Program is one of the subprograms of the federal Education Stabilization Fund [ALN 84.425]. The HEERF program contains two portions: The Student Aid portion [ALN 84.425E] and the Institutional portion, which is made up of the following: ? HEERF Institutional Aid Portion (ALN 84.425F); ? HEERF Minority Serving Institutions (ALN 84.425L); ? HEERF Strengthening Institutions Program (ALN 84.425M); ? Institutional Resilience and Expanded Postsecondary Opportunity (ALN 84.425P); ? HEERF Supplemental Assistance to Institutions of Higher Education program (ALN 84.425S). Since April 2020, the System has been awarded a total of approximately $255.6 million in HEERF funding. From inception through June 30, 2022, the System spent a total of approximately $97.8 million for the HEERF program Student Aid portion and $113.9 million for the HEERF Institutional Portion. During Fiscal Year 2022, the System spent $71.9 million for the Student Aid portion and $45.1 million for the Institutional Portion; of this amount, $28.7 million represented the System?s procurement for goods and services. The System reports that it will spend the remaining amount of funding during Fiscal Year 2023 and beyond. Each of the System?s 13 campuses separately signed an agreement titled the ?Certification and Agreement? with the U.S. Department of Education (ED) to indicate each campus? acceptance of the HEERF funding and the applicable terms and requirements. Under the requirements, each campus is required to follow the State?s procurement policies and procedures. Federal procurement regulations also require that each campus include any clauses required by federal regulations in every HEERF-related purchase order or other contract. In addition, non-federal entities, including the System and its campuses, are prohibited from contracting with or making subawards under ?covered transactions? to parties that are suspended or debarred from doing business with the federal government. ?Covered transactions? include those procurement contracts for goods and services awarded under a grant or cooperative agreement. In order to comply with federal suspension and debarment requirements, the campuses can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. What was the purpose of our audit work and what work was performed? The purpose of the audit work was to determine whether the System?s campuses had effective internal controls in place over, and complied with, federal procurement and suspension and debarment requirements for the HEERF grant during Fiscal Year 2022. As part of our audit work, we reviewed the campuses? internal controls over the HEERF grant procurement requirements. In addition, we tested a sample of 60 of the campuses? HEERF-related 435 procurement transactions, totaling $18.8 million, to determine if the campuses were in compliance with federal procurement requirements, and whether the campuses? contractors were suspended, debarred, or otherwise excluded from participating in the contract by the federal government, through verification on the SAM website exclusions listing. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulation [2 CFR 180.220] states that a contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. Also, federal regulation [2 CFR 180.300] requires that when a non-federal entity enters into a covered transaction with another entity, the non-federal entity must verify that the person or entity they intend to do business with is not excluded or disqualified from receiving federal funds. This can be done by: (1) checking the SAM exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity. ? Federal regulation [2 CFR 200.303] states that the System and its campuses, as recipients of federal funds, must establish and maintain effective internal control over their federal awards that provides reasonable assurance that the System?s campuses are managing the federal awards in compliance with federal statutes, regulations, and the award terms and conditions. ? Federal regulation [2 CFR 200.318] states that the System must document procurement procedures. The System and its campuses utilize Colorado Revised Statute Section 24, Government -State, Procurement Code; Articles 101- 112, as their procurement policy. Relevant sections of the policy include: o R-24-103-201-01 Purchasing Thresholds - (b) Small purchases are goods and services purchases costing less than $150,000. Goods and services between $25,000 and $150,000 may be purchased using a documented quote process, described in rule R-24-103-204-01. o R-24-103-201-01 Purchasing Thresholds - (c) Invitation for bids, described in rule R-24-103-202-01, request for proposals, described in rule R-24-103-203, and invitations to negotiate, described in rule R-24-103-208-03, may be used for goods or services estimated to exceed the small purchase threshold of $150,000. o R-24-103-205 Sole Source Procurements -Contracts may be awarded by use of a sole source procurement only if the following conditions are met: (a) A sole source procurement is justified when there is only one good or service that can reasonably meet the need and there is only one vendor who can provide the good or service. A requirement for a particular proprietary item (i.e., a brand name specification) does not justify a sole source procurement if there is more than one potential bidder or offeror for that item; (b) The procurement official or his or her designee shall make a written determination that a procurement is sole source, setting forth the reasons. In cases of reasonable doubt, competition should be solicited. Any request by a using agency that a procurement be restricted to one potential contractor shall be accompanied by an explanation as to why no other contractors will be suitable or acceptable to meet the need. What problems did the audit work identify? We identified at least one issue with 34 of the 60 transactions tested (57 percent), which resulted in a total of $3,254,216 in known federal questioned costs. In total, we identified 43 errors within the 34 transactions tested. Specifically, we identified the following: ? Community College of Aurora (CCA) and Pueblo Community College (PCC) could not provide documentation to support that suspension and debarment verification procedures were performed for nine transactions we reviewed for CCA and for 21 transactions we reviewed for PCC. We confirmed through additional audit work that none of the vendors were suspended or debarred; as a result, we determined that these errors did not result in questioned costs. ? Otero College (OC) did not complete the required Sole Source justification for four transactions. These errors resulted in $1,535,455 of questioned costs. ? PCC did not perform a request for proposals for two transactions which exceeded $150,000 and did not obtain documented quotes for seven transactions which were between $25,000 and $150,000, as required. These errors resulted in questioned costs of $1,718,761. Why did these problems occur? OC and PCC did not have adequate internal controls in place to ensure they complied with HEERF procurement requirements. In addition, CCA and PCC did not have adequate internal controls in place to ensure they complied with HEERF suspension and debarment requirements. Specifically, at OC and PCC, the secondary reviewer did not require staff follow procedures in place for procurement. At PCC the secondary reviewer also did not ensure that staff searched the federal System of Award Management to verify that entities it contracted with were not suspended, debarred, or otherwise excluded from participating in a contract for federal funds. In addition, they did not provide training over grant processes related to state procurement rules, such as training on requirements for staff to maintain appropriate supporting documentation for procurement-related verifications and procurement decisions. Further, CCA and OC experienced staff turnover in key positions, and existing employees could not locate the supporting documentation. Why do these problems matter? It is important for CCA, OC, and PCC to ensure that they obtain and maintain appropriate documentation to support procurement decisions, especially when they are the basis for determining CCA, OC, and PCC?s compliance with specific HEERF program requirements. In addition, CCA and PCC?s failure to perform procedures to ensure an entity is not suspended or debarred could result in the System paying funds to an entity that is disallowed from receiving such funds, thereby exposing the State to increased business risk and potential federal disallowances. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-058 Pueblo Community College should strengthen their internal controls over procurement, suspension and debarment and ensure they comply with the Higher Education Emergency Relief Fund (HEERF) requirements and State procurement policies by: A. Ensuring the secondary reviewer enforces compliance with the Colorado Community College System?s (System) procurement procedures and that staff perform procedures to verify contracted entities are not excluded or disqualified from receiving federal funds. B. Ensuring staff maintain supporting documentation for procurements and suspension and debarment checks. C. Providing training and cross-training to existing employees over procurement, suspension and debarment requirements. Response Pueblo Community College A. Agree Implementation Date: September 2022 Going forward, the Director of Purchasing will perform all Sam.Gov searches. The secondary reviews to ensure compliance for the System's procurement and suspension and debarment procedures will be conducted by the Vice President of Administration and Finance. B. Agree Implementation Date: September 2022 The corresponding documents supporting procurement transactions and suspension and debarment checks will be scanned and filed along with the Purchase order. C. Agree Implementation Date: September 2022 Training will be provided to fiscal and grant staff for identifying when suspension and debarment must be checked for vendors of federal programs, processes and websites to access, and methodology for documenting with the purchase documentation.
Findings 2022-056, 2022-057, and 2022-058 Higher Education Emergency Relief Fund (HEERF) Procurement Compliance The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 and appropriated federal funds to provide economic aid to the American people negatively impacted by the COVID-19 pandemic. As part of the CARES Act, funds were given to the System under the Higher Education Emergency Relief Fund (HEERF) Program. The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), was signed into law on December 27, 2020, and authorized additional funding under the HEERF program (HEERF II). Finally, the American Rescue Plan Act of 2021 (ARP), enacted on March 11, 2021, authorized a third round of funding (HEERF III) in order for higher education institutions to serve students and ensure learning continues during the COVID-19 pandemic. The HEERF Program is one of the subprograms of the federal Education Stabilization Fund [ALN 84.425]. The HEERF program contains two portions: The Student Aid portion [ALN 84.425E] and the Institutional portion, which is made up of the following: ? HEERF Institutional Aid Portion (ALN 84.425F); ? HEERF Minority Serving Institutions (ALN 84.425L); ? HEERF Strengthening Institutions Program (ALN 84.425M); ? Institutional Resilience and Expanded Postsecondary Opportunity (ALN 84.425P); ? HEERF Supplemental Assistance to Institutions of Higher Education program (ALN 84.425S). Since April 2020, the System has been awarded a total of approximately $255.6 million in HEERF funding. From inception through June 30, 2022, the System spent a total of approximately $97.8 million for the HEERF program Student Aid portion and $113.9 million for the HEERF Institutional Portion. During Fiscal Year 2022, the System spent $71.9 million for the Student Aid portion and $45.1 million for the Institutional Portion; of this amount, $28.7 million represented the System?s procurement for goods and services. The System reports that it will spend the remaining amount of funding during Fiscal Year 2023 and beyond. Each of the System?s 13 campuses separately signed an agreement titled the ?Certification and Agreement? with the U.S. Department of Education (ED) to indicate each campus? acceptance of the HEERF funding and the applicable terms and requirements. Under the requirements, each campus is required to follow the State?s procurement policies and procedures. Federal procurement regulations also require that each campus include any clauses required by federal regulations in every HEERF-related purchase order or other contract. In addition, non-federal entities, including the System and its campuses, are prohibited from contracting with or making subawards under ?covered transactions? to parties that are suspended or debarred from doing business with the federal government. ?Covered transactions? include those procurement contracts for goods and services awarded under a grant or cooperative agreement. In order to comply with federal suspension and debarment requirements, the campuses can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. What was the purpose of our audit work and what work was performed? The purpose of the audit work was to determine whether the System?s campuses had effective internal controls in place over, and complied with, federal procurement and suspension and debarment requirements for the HEERF grant during Fiscal Year 2022. As part of our audit work, we reviewed the campuses? internal controls over the HEERF grant procurement requirements. In addition, we tested a sample of 60 of the campuses? HEERF-related 435 procurement transactions, totaling $18.8 million, to determine if the campuses were in compliance with federal procurement requirements, and whether the campuses? contractors were suspended, debarred, or otherwise excluded from participating in the contract by the federal government, through verification on the SAM website exclusions listing. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulation [2 CFR 180.220] states that a contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. Also, federal regulation [2 CFR 180.300] requires that when a non-federal entity enters into a covered transaction with another entity, the non-federal entity must verify that the person or entity they intend to do business with is not excluded or disqualified from receiving federal funds. This can be done by: (1) checking the SAM exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity. ? Federal regulation [2 CFR 200.303] states that the System and its campuses, as recipients of federal funds, must establish and maintain effective internal control over their federal awards that provides reasonable assurance that the System?s campuses are managing the federal awards in compliance with federal statutes, regulations, and the award terms and conditions. ? Federal regulation [2 CFR 200.318] states that the System must document procurement procedures. The System and its campuses utilize Colorado Revised Statute Section 24, Government -State, Procurement Code; Articles 101- 112, as their procurement policy. Relevant sections of the policy include: o R-24-103-201-01 Purchasing Thresholds - (b) Small purchases are goods and services purchases costing less than $150,000. Goods and services between $25,000 and $150,000 may be purchased using a documented quote process, described in rule R-24-103-204-01. o R-24-103-201-01 Purchasing Thresholds - (c) Invitation for bids, described in rule R-24-103-202-01, request for proposals, described in rule R-24-103-203, and invitations to negotiate, described in rule R-24-103-208-03, may be used for goods or services estimated to exceed the small purchase threshold of $150,000. o R-24-103-205 Sole Source Procurements -Contracts may be awarded by use of a sole source procurement only if the following conditions are met: (a) A sole source procurement is justified when there is only one good or service that can reasonably meet the need and there is only one vendor who can provide the good or service. A requirement for a particular proprietary item (i.e., a brand name specification) does not justify a sole source procurement if there is more than one potential bidder or offeror for that item; (b) The procurement official or his or her designee shall make a written determination that a procurement is sole source, setting forth the reasons. In cases of reasonable doubt, competition should be solicited. Any request by a using agency that a procurement be restricted to one potential contractor shall be accompanied by an explanation as to why no other contractors will be suitable or acceptable to meet the need. What problems did the audit work identify? We identified at least one issue with 34 of the 60 transactions tested (57 percent), which resulted in a total of $3,254,216 in known federal questioned costs. In total, we identified 43 errors within the 34 transactions tested. Specifically, we identified the following: ? Community College of Aurora (CCA) and Pueblo Community College (PCC) could not provide documentation to support that suspension and debarment verification procedures were performed for nine transactions we reviewed for CCA and for 21 transactions we reviewed for PCC. We confirmed through additional audit work that none of the vendors were suspended or debarred; as a result, we determined that these errors did not result in questioned costs. ? Otero College (OC) did not complete the required Sole Source justification for four transactions. These errors resulted in $1,535,455 of questioned costs. ? PCC did not perform a request for proposals for two transactions which exceeded $150,000 and did not obtain documented quotes for seven transactions which were between $25,000 and $150,000, as required. These errors resulted in questioned costs of $1,718,761. Why did these problems occur? OC and PCC did not have adequate internal controls in place to ensure they complied with HEERF procurement requirements. In addition, CCA and PCC did not have adequate internal controls in place to ensure they complied with HEERF suspension and debarment requirements. Specifically, at OC and PCC, the secondary reviewer did not require staff follow procedures in place for procurement. At PCC the secondary reviewer also did not ensure that staff searched the federal System of Award Management to verify that entities it contracted with were not suspended, debarred, or otherwise excluded from participating in a contract for federal funds. In addition, they did not provide training over grant processes related to state procurement rules, such as training on requirements for staff to maintain appropriate supporting documentation for procurement-related verifications and procurement decisions. Further, CCA and OC experienced staff turnover in key positions, and existing employees could not locate the supporting documentation. Why do these problems matter? It is important for CCA, OC, and PCC to ensure that they obtain and maintain appropriate documentation to support procurement decisions, especially when they are the basis for determining CCA, OC, and PCC?s compliance with specific HEERF program requirements. In addition, CCA and PCC?s failure to perform procedures to ensure an entity is not suspended or debarred could result in the System paying funds to an entity that is disallowed from receiving such funds, thereby exposing the State to increased business risk and potential federal disallowances. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-056 Community College of Aurora should strengthen their internal controls over suspension and debarment and ensure they comply with the Higher Education Emergency Relief Fund (HEERF) requirements by: A. Ensuring staff maintain supporting documentation of suspension and debarment checks. B. Providing training and cross-training to existing employees over suspension and debarment requirements. Response Community College of Aurora A. Agree Implementation Date: October 2022 Beginning in October 2022, the duty was moved from the Principal Investigator or instructional staff previously responsible for this step to the Director of Purchasing to ensure compliance for all grant transactions. B. Agree Implementation Date: October 2022 Training will be provided for identifying when suspension and debarment must be checked for vendors of federal programs, processes and websites to access, and methodology for documenting with the purchase, to fiscal and grant staff
Findings 2022-056, 2022-057, and 2022-058 Higher Education Emergency Relief Fund (HEERF) Procurement Compliance The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 and appropriated federal funds to provide economic aid to the American people negatively impacted by the COVID-19 pandemic. As part of the CARES Act, funds were given to the System under the Higher Education Emergency Relief Fund (HEERF) Program. The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), was signed into law on December 27, 2020, and authorized additional funding under the HEERF program (HEERF II). Finally, the American Rescue Plan Act of 2021 (ARP), enacted on March 11, 2021, authorized a third round of funding (HEERF III) in order for higher education institutions to serve students and ensure learning continues during the COVID-19 pandemic. The HEERF Program is one of the subprograms of the federal Education Stabilization Fund [ALN 84.425]. The HEERF program contains two portions: The Student Aid portion [ALN 84.425E] and the Institutional portion, which is made up of the following: ? HEERF Institutional Aid Portion (ALN 84.425F); ? HEERF Minority Serving Institutions (ALN 84.425L); ? HEERF Strengthening Institutions Program (ALN 84.425M); ? Institutional Resilience and Expanded Postsecondary Opportunity (ALN 84.425P); ? HEERF Supplemental Assistance to Institutions of Higher Education program (ALN 84.425S). Since April 2020, the System has been awarded a total of approximately $255.6 million in HEERF funding. From inception through June 30, 2022, the System spent a total of approximately $97.8 million for the HEERF program Student Aid portion and $113.9 million for the HEERF Institutional Portion. During Fiscal Year 2022, the System spent $71.9 million for the Student Aid portion and $45.1 million for the Institutional Portion; of this amount, $28.7 million represented the System?s procurement for goods and services. The System reports that it will spend the remaining amount of funding during Fiscal Year 2023 and beyond. Each of the System?s 13 campuses separately signed an agreement titled the ?Certification and Agreement? with the U.S. Department of Education (ED) to indicate each campus? acceptance of the HEERF funding and the applicable terms and requirements. Under the requirements, each campus is required to follow the State?s procurement policies and procedures. Federal procurement regulations also require that each campus include any clauses required by federal regulations in every HEERF-related purchase order or other contract. In addition, non-federal entities, including the System and its campuses, are prohibited from contracting with or making subawards under ?covered transactions? to parties that are suspended or debarred from doing business with the federal government. ?Covered transactions? include those procurement contracts for goods and services awarded under a grant or cooperative agreement. In order to comply with federal suspension and debarment requirements, the campuses can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. What was the purpose of our audit work and what work was performed? The purpose of the audit work was to determine whether the System?s campuses had effective internal controls in place over, and complied with, federal procurement and suspension and debarment requirements for the HEERF grant during Fiscal Year 2022. As part of our audit work, we reviewed the campuses? internal controls over the HEERF grant procurement requirements. In addition, we tested a sample of 60 of the campuses? HEERF-related 435 procurement transactions, totaling $18.8 million, to determine if the campuses were in compliance with federal procurement requirements, and whether the campuses? contractors were suspended, debarred, or otherwise excluded from participating in the contract by the federal government, through verification on the SAM website exclusions listing. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulation [2 CFR 180.220] states that a contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. Also, federal regulation [2 CFR 180.300] requires that when a non-federal entity enters into a covered transaction with another entity, the non-federal entity must verify that the person or entity they intend to do business with is not excluded or disqualified from receiving federal funds. This can be done by: (1) checking the SAM exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity. ? Federal regulation [2 CFR 200.303] states that the System and its campuses, as recipients of federal funds, must establish and maintain effective internal control over their federal awards that provides reasonable assurance that the System?s campuses are managing the federal awards in compliance with federal statutes, regulations, and the award terms and conditions. ? Federal regulation [2 CFR 200.318] states that the System must document procurement procedures. The System and its campuses utilize Colorado Revised Statute Section 24, Government -State, Procurement Code; Articles 101- 112, as their procurement policy. Relevant sections of the policy include: o R-24-103-201-01 Purchasing Thresholds - (b) Small purchases are goods and services purchases costing less than $150,000. Goods and services between $25,000 and $150,000 may be purchased using a documented quote process, described in rule R-24-103-204-01. o R-24-103-201-01 Purchasing Thresholds - (c) Invitation for bids, described in rule R-24-103-202-01, request for proposals, described in rule R-24-103-203, and invitations to negotiate, described in rule R-24-103-208-03, may be used for goods or services estimated to exceed the small purchase threshold of $150,000. o R-24-103-205 Sole Source Procurements -Contracts may be awarded by use of a sole source procurement only if the following conditions are met: (a) A sole source procurement is justified when there is only one good or service that can reasonably meet the need and there is only one vendor who can provide the good or service. A requirement for a particular proprietary item (i.e., a brand name specification) does not justify a sole source procurement if there is more than one potential bidder or offeror for that item; (b) The procurement official or his or her designee shall make a written determination that a procurement is sole source, setting forth the reasons. In cases of reasonable doubt, competition should be solicited. Any request by a using agency that a procurement be restricted to one potential contractor shall be accompanied by an explanation as to why no other contractors will be suitable or acceptable to meet the need. What problems did the audit work identify? We identified at least one issue with 34 of the 60 transactions tested (57 percent), which resulted in a total of $3,254,216 in known federal questioned costs. In total, we identified 43 errors within the 34 transactions tested. Specifically, we identified the following: ? Community College of Aurora (CCA) and Pueblo Community College (PCC) could not provide documentation to support that suspension and debarment verification procedures were performed for nine transactions we reviewed for CCA and for 21 transactions we reviewed for PCC. We confirmed through additional audit work that none of the vendors were suspended or debarred; as a result, we determined that these errors did not result in questioned costs. ? Otero College (OC) did not complete the required Sole Source justification for four transactions. These errors resulted in $1,535,455 of questioned costs. ? PCC did not perform a request for proposals for two transactions which exceeded $150,000 and did not obtain documented quotes for seven transactions which were between $25,000 and $150,000, as required. These errors resulted in questioned costs of $1,718,761. Why did these problems occur? OC and PCC did not have adequate internal controls in place to ensure they complied with HEERF procurement requirements. In addition, CCA and PCC did not have adequate internal controls in place to ensure they complied with HEERF suspension and debarment requirements. Specifically, at OC and PCC, the secondary reviewer did not require staff follow procedures in place for procurement. At PCC the secondary reviewer also did not ensure that staff searched the federal System of Award Management to verify that entities it contracted with were not suspended, debarred, or otherwise excluded from participating in a contract for federal funds. In addition, they did not provide training over grant processes related to state procurement rules, such as training on requirements for staff to maintain appropriate supporting documentation for procurement-related verifications and procurement decisions. Further, CCA and OC experienced staff turnover in key positions, and existing employees could not locate the supporting documentation. Why do these problems matter? It is important for CCA, OC, and PCC to ensure that they obtain and maintain appropriate documentation to support procurement decisions, especially when they are the basis for determining CCA, OC, and PCC?s compliance with specific HEERF program requirements. In addition, CCA and PCC?s failure to perform procedures to ensure an entity is not suspended or debarred could result in the System paying funds to an entity that is disallowed from receiving such funds, thereby exposing the State to increased business risk and potential federal disallowances. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-058 Pueblo Community College should strengthen their internal controls over procurement, suspension and debarment and ensure they comply with the Higher Education Emergency Relief Fund (HEERF) requirements and State procurement policies by: A. Ensuring the secondary reviewer enforces compliance with the Colorado Community College System?s (System) procurement procedures and that staff perform procedures to verify contracted entities are not excluded or disqualified from receiving federal funds. B. Ensuring staff maintain supporting documentation for procurements and suspension and debarment checks. C. Providing training and cross-training to existing employees over procurement, suspension and debarment requirements. Response Pueblo Community College A. Agree Implementation Date: September 2022 Going forward, the Director of Purchasing will perform all Sam.Gov searches. The secondary reviews to ensure compliance for the System's procurement and suspension and debarment procedures will be conducted by the Vice President of Administration and Finance. B. Agree Implementation Date: September 2022 The corresponding documents supporting procurement transactions and suspension and debarment checks will be scanned and filed along with the Purchase order. C. Agree Implementation Date: September 2022 Training will be provided to fiscal and grant staff for identifying when suspension and debarment must be checked for vendors of federal programs, processes and websites to access, and methodology for documenting with the purchase documentation.
Findings 2022-056, 2022-057, and 2022-058 Higher Education Emergency Relief Fund (HEERF) Procurement Compliance The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 and appropriated federal funds to provide economic aid to the American people negatively impacted by the COVID-19 pandemic. As part of the CARES Act, funds were given to the System under the Higher Education Emergency Relief Fund (HEERF) Program. The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), was signed into law on December 27, 2020, and authorized additional funding under the HEERF program (HEERF II). Finally, the American Rescue Plan Act of 2021 (ARP), enacted on March 11, 2021, authorized a third round of funding (HEERF III) in order for higher education institutions to serve students and ensure learning continues during the COVID-19 pandemic. The HEERF Program is one of the subprograms of the federal Education Stabilization Fund [ALN 84.425]. The HEERF program contains two portions: The Student Aid portion [ALN 84.425E] and the Institutional portion, which is made up of the following: ? HEERF Institutional Aid Portion (ALN 84.425F); ? HEERF Minority Serving Institutions (ALN 84.425L); ? HEERF Strengthening Institutions Program (ALN 84.425M); ? Institutional Resilience and Expanded Postsecondary Opportunity (ALN 84.425P); ? HEERF Supplemental Assistance to Institutions of Higher Education program (ALN 84.425S). Since April 2020, the System has been awarded a total of approximately $255.6 million in HEERF funding. From inception through June 30, 2022, the System spent a total of approximately $97.8 million for the HEERF program Student Aid portion and $113.9 million for the HEERF Institutional Portion. During Fiscal Year 2022, the System spent $71.9 million for the Student Aid portion and $45.1 million for the Institutional Portion; of this amount, $28.7 million represented the System?s procurement for goods and services. The System reports that it will spend the remaining amount of funding during Fiscal Year 2023 and beyond. Each of the System?s 13 campuses separately signed an agreement titled the ?Certification and Agreement? with the U.S. Department of Education (ED) to indicate each campus? acceptance of the HEERF funding and the applicable terms and requirements. Under the requirements, each campus is required to follow the State?s procurement policies and procedures. Federal procurement regulations also require that each campus include any clauses required by federal regulations in every HEERF-related purchase order or other contract. In addition, non-federal entities, including the System and its campuses, are prohibited from contracting with or making subawards under ?covered transactions? to parties that are suspended or debarred from doing business with the federal government. ?Covered transactions? include those procurement contracts for goods and services awarded under a grant or cooperative agreement. In order to comply with federal suspension and debarment requirements, the campuses can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. What was the purpose of our audit work and what work was performed? The purpose of the audit work was to determine whether the System?s campuses had effective internal controls in place over, and complied with, federal procurement and suspension and debarment requirements for the HEERF grant during Fiscal Year 2022. As part of our audit work, we reviewed the campuses? internal controls over the HEERF grant procurement requirements. In addition, we tested a sample of 60 of the campuses? HEERF-related 435 procurement transactions, totaling $18.8 million, to determine if the campuses were in compliance with federal procurement requirements, and whether the campuses? contractors were suspended, debarred, or otherwise excluded from participating in the contract by the federal government, through verification on the SAM website exclusions listing. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulation [2 CFR 180.220] states that a contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. Also, federal regulation [2 CFR 180.300] requires that when a non-federal entity enters into a covered transaction with another entity, the non-federal entity must verify that the person or entity they intend to do business with is not excluded or disqualified from receiving federal funds. This can be done by: (1) checking the SAM exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity. ? Federal regulation [2 CFR 200.303] states that the System and its campuses, as recipients of federal funds, must establish and maintain effective internal control over their federal awards that provides reasonable assurance that the System?s campuses are managing the federal awards in compliance with federal statutes, regulations, and the award terms and conditions. ? Federal regulation [2 CFR 200.318] states that the System must document procurement procedures. The System and its campuses utilize Colorado Revised Statute Section 24, Government -State, Procurement Code; Articles 101- 112, as their procurement policy. Relevant sections of the policy include: o R-24-103-201-01 Purchasing Thresholds - (b) Small purchases are goods and services purchases costing less than $150,000. Goods and services between $25,000 and $150,000 may be purchased using a documented quote process, described in rule R-24-103-204-01. o R-24-103-201-01 Purchasing Thresholds - (c) Invitation for bids, described in rule R-24-103-202-01, request for proposals, described in rule R-24-103-203, and invitations to negotiate, described in rule R-24-103-208-03, may be used for goods or services estimated to exceed the small purchase threshold of $150,000. o R-24-103-205 Sole Source Procurements -Contracts may be awarded by use of a sole source procurement only if the following conditions are met: (a) A sole source procurement is justified when there is only one good or service that can reasonably meet the need and there is only one vendor who can provide the good or service. A requirement for a particular proprietary item (i.e., a brand name specification) does not justify a sole source procurement if there is more than one potential bidder or offeror for that item; (b) The procurement official or his or her designee shall make a written determination that a procurement is sole source, setting forth the reasons. In cases of reasonable doubt, competition should be solicited. Any request by a using agency that a procurement be restricted to one potential contractor shall be accompanied by an explanation as to why no other contractors will be suitable or acceptable to meet the need. What problems did the audit work identify? We identified at least one issue with 34 of the 60 transactions tested (57 percent), which resulted in a total of $3,254,216 in known federal questioned costs. In total, we identified 43 errors within the 34 transactions tested. Specifically, we identified the following: ? Community College of Aurora (CCA) and Pueblo Community College (PCC) could not provide documentation to support that suspension and debarment verification procedures were performed for nine transactions we reviewed for CCA and for 21 transactions we reviewed for PCC. We confirmed through additional audit work that none of the vendors were suspended or debarred; as a result, we determined that these errors did not result in questioned costs. ? Otero College (OC) did not complete the required Sole Source justification for four transactions. These errors resulted in $1,535,455 of questioned costs. ? PCC did not perform a request for proposals for two transactions which exceeded $150,000 and did not obtain documented quotes for seven transactions which were between $25,000 and $150,000, as required. These errors resulted in questioned costs of $1,718,761. Why did these problems occur? OC and PCC did not have adequate internal controls in place to ensure they complied with HEERF procurement requirements. In addition, CCA and PCC did not have adequate internal controls in place to ensure they complied with HEERF suspension and debarment requirements. Specifically, at OC and PCC, the secondary reviewer did not require staff follow procedures in place for procurement. At PCC the secondary reviewer also did not ensure that staff searched the federal System of Award Management to verify that entities it contracted with were not suspended, debarred, or otherwise excluded from participating in a contract for federal funds. In addition, they did not provide training over grant processes related to state procurement rules, such as training on requirements for staff to maintain appropriate supporting documentation for procurement-related verifications and procurement decisions. Further, CCA and OC experienced staff turnover in key positions, and existing employees could not locate the supporting documentation. Why do these problems matter? It is important for CCA, OC, and PCC to ensure that they obtain and maintain appropriate documentation to support procurement decisions, especially when they are the basis for determining CCA, OC, and PCC?s compliance with specific HEERF program requirements. In addition, CCA and PCC?s failure to perform procedures to ensure an entity is not suspended or debarred could result in the System paying funds to an entity that is disallowed from receiving such funds, thereby exposing the State to increased business risk and potential federal disallowances. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-057 Otero College should strengthen their internal controls over procurement and ensure they comply with the Higher Education Emergency Relief Fund (HEERF) requirements and State procurement policies by: A. Ensuring the secondary reviewer enforces compliance with the Colorado Community College System?s (System) procurement procedures. B. Ensuring staff maintain supporting documentation for procurements. C. Providing training and cross-training to existing employees over procurement requirements. Response Otero College A. Agree Implementation Date: August 2022 Otero College has adopted the system offices Sole Source justification form that will be posted to the State procurement site, requires supervisory approval, and has put that into place as of August 2022. B. Agree Implementation Date: August 2022 Otero College will ensure they maintain supporting documentation for procurements. C. Agree Implementation Date: August 2022 Otero College has a new procurement official that has attended various trainings regarding procurement rules.
Findings 2022-056, 2022-057, and 2022-058 Higher Education Emergency Relief Fund (HEERF) Procurement Compliance The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 and appropriated federal funds to provide economic aid to the American people negatively impacted by the COVID-19 pandemic. As part of the CARES Act, funds were given to the System under the Higher Education Emergency Relief Fund (HEERF) Program. The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), was signed into law on December 27, 2020, and authorized additional funding under the HEERF program (HEERF II). Finally, the American Rescue Plan Act of 2021 (ARP), enacted on March 11, 2021, authorized a third round of funding (HEERF III) in order for higher education institutions to serve students and ensure learning continues during the COVID-19 pandemic. The HEERF Program is one of the subprograms of the federal Education Stabilization Fund [ALN 84.425]. The HEERF program contains two portions: The Student Aid portion [ALN 84.425E] and the Institutional portion, which is made up of the following: ? HEERF Institutional Aid Portion (ALN 84.425F); ? HEERF Minority Serving Institutions (ALN 84.425L); ? HEERF Strengthening Institutions Program (ALN 84.425M); ? Institutional Resilience and Expanded Postsecondary Opportunity (ALN 84.425P); ? HEERF Supplemental Assistance to Institutions of Higher Education program (ALN 84.425S). Since April 2020, the System has been awarded a total of approximately $255.6 million in HEERF funding. From inception through June 30, 2022, the System spent a total of approximately $97.8 million for the HEERF program Student Aid portion and $113.9 million for the HEERF Institutional Portion. During Fiscal Year 2022, the System spent $71.9 million for the Student Aid portion and $45.1 million for the Institutional Portion; of this amount, $28.7 million represented the System?s procurement for goods and services. The System reports that it will spend the remaining amount of funding during Fiscal Year 2023 and beyond. Each of the System?s 13 campuses separately signed an agreement titled the ?Certification and Agreement? with the U.S. Department of Education (ED) to indicate each campus? acceptance of the HEERF funding and the applicable terms and requirements. Under the requirements, each campus is required to follow the State?s procurement policies and procedures. Federal procurement regulations also require that each campus include any clauses required by federal regulations in every HEERF-related purchase order or other contract. In addition, non-federal entities, including the System and its campuses, are prohibited from contracting with or making subawards under ?covered transactions? to parties that are suspended or debarred from doing business with the federal government. ?Covered transactions? include those procurement contracts for goods and services awarded under a grant or cooperative agreement. In order to comply with federal suspension and debarment requirements, the campuses can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. What was the purpose of our audit work and what work was performed? The purpose of the audit work was to determine whether the System?s campuses had effective internal controls in place over, and complied with, federal procurement and suspension and debarment requirements for the HEERF grant during Fiscal Year 2022. As part of our audit work, we reviewed the campuses? internal controls over the HEERF grant procurement requirements. In addition, we tested a sample of 60 of the campuses? HEERF-related 435 procurement transactions, totaling $18.8 million, to determine if the campuses were in compliance with federal procurement requirements, and whether the campuses? contractors were suspended, debarred, or otherwise excluded from participating in the contract by the federal government, through verification on the SAM website exclusions listing. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulation [2 CFR 180.220] states that a contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. Also, federal regulation [2 CFR 180.300] requires that when a non-federal entity enters into a covered transaction with another entity, the non-federal entity must verify that the person or entity they intend to do business with is not excluded or disqualified from receiving federal funds. This can be done by: (1) checking the SAM exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity. ? Federal regulation [2 CFR 200.303] states that the System and its campuses, as recipients of federal funds, must establish and maintain effective internal control over their federal awards that provides reasonable assurance that the System?s campuses are managing the federal awards in compliance with federal statutes, regulations, and the award terms and conditions. ? Federal regulation [2 CFR 200.318] states that the System must document procurement procedures. The System and its campuses utilize Colorado Revised Statute Section 24, Government -State, Procurement Code; Articles 101- 112, as their procurement policy. Relevant sections of the policy include: o R-24-103-201-01 Purchasing Thresholds - (b) Small purchases are goods and services purchases costing less than $150,000. Goods and services between $25,000 and $150,000 may be purchased using a documented quote process, described in rule R-24-103-204-01. o R-24-103-201-01 Purchasing Thresholds - (c) Invitation for bids, described in rule R-24-103-202-01, request for proposals, described in rule R-24-103-203, and invitations to negotiate, described in rule R-24-103-208-03, may be used for goods or services estimated to exceed the small purchase threshold of $150,000. o R-24-103-205 Sole Source Procurements -Contracts may be awarded by use of a sole source procurement only if the following conditions are met: (a) A sole source procurement is justified when there is only one good or service that can reasonably meet the need and there is only one vendor who can provide the good or service. A requirement for a particular proprietary item (i.e., a brand name specification) does not justify a sole source procurement if there is more than one potential bidder or offeror for that item; (b) The procurement official or his or her designee shall make a written determination that a procurement is sole source, setting forth the reasons. In cases of reasonable doubt, competition should be solicited. Any request by a using agency that a procurement be restricted to one potential contractor shall be accompanied by an explanation as to why no other contractors will be suitable or acceptable to meet the need. What problems did the audit work identify? We identified at least one issue with 34 of the 60 transactions tested (57 percent), which resulted in a total of $3,254,216 in known federal questioned costs. In total, we identified 43 errors within the 34 transactions tested. Specifically, we identified the following: ? Community College of Aurora (CCA) and Pueblo Community College (PCC) could not provide documentation to support that suspension and debarment verification procedures were performed for nine transactions we reviewed for CCA and for 21 transactions we reviewed for PCC. We confirmed through additional audit work that none of the vendors were suspended or debarred; as a result, we determined that these errors did not result in questioned costs. ? Otero College (OC) did not complete the required Sole Source justification for four transactions. These errors resulted in $1,535,455 of questioned costs. ? PCC did not perform a request for proposals for two transactions which exceeded $150,000 and did not obtain documented quotes for seven transactions which were between $25,000 and $150,000, as required. These errors resulted in questioned costs of $1,718,761. Why did these problems occur? OC and PCC did not have adequate internal controls in place to ensure they complied with HEERF procurement requirements. In addition, CCA and PCC did not have adequate internal controls in place to ensure they complied with HEERF suspension and debarment requirements. Specifically, at OC and PCC, the secondary reviewer did not require staff follow procedures in place for procurement. At PCC the secondary reviewer also did not ensure that staff searched the federal System of Award Management to verify that entities it contracted with were not suspended, debarred, or otherwise excluded from participating in a contract for federal funds. In addition, they did not provide training over grant processes related to state procurement rules, such as training on requirements for staff to maintain appropriate supporting documentation for procurement-related verifications and procurement decisions. Further, CCA and OC experienced staff turnover in key positions, and existing employees could not locate the supporting documentation. Why do these problems matter? It is important for CCA, OC, and PCC to ensure that they obtain and maintain appropriate documentation to support procurement decisions, especially when they are the basis for determining CCA, OC, and PCC?s compliance with specific HEERF program requirements. In addition, CCA and PCC?s failure to perform procedures to ensure an entity is not suspended or debarred could result in the System paying funds to an entity that is disallowed from receiving such funds, thereby exposing the State to increased business risk and potential federal disallowances. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-056 Community College of Aurora should strengthen their internal controls over suspension and debarment and ensure they comply with the Higher Education Emergency Relief Fund (HEERF) requirements by: A. Ensuring staff maintain supporting documentation of suspension and debarment checks. B. Providing training and cross-training to existing employees over suspension and debarment requirements. Response Community College of Aurora A. Agree Implementation Date: October 2022 Beginning in October 2022, the duty was moved from the Principal Investigator or instructional staff previously responsible for this step to the Director of Purchasing to ensure compliance for all grant transactions. B. Agree Implementation Date: October 2022 Training will be provided for identifying when suspension and debarment must be checked for vendors of federal programs, processes and websites to access, and methodology for documenting with the purchase, to fiscal and grant staff
Findings 2022-056, 2022-057, and 2022-058 Higher Education Emergency Relief Fund (HEERF) Procurement Compliance The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 and appropriated federal funds to provide economic aid to the American people negatively impacted by the COVID-19 pandemic. As part of the CARES Act, funds were given to the System under the Higher Education Emergency Relief Fund (HEERF) Program. The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), was signed into law on December 27, 2020, and authorized additional funding under the HEERF program (HEERF II). Finally, the American Rescue Plan Act of 2021 (ARP), enacted on March 11, 2021, authorized a third round of funding (HEERF III) in order for higher education institutions to serve students and ensure learning continues during the COVID-19 pandemic. The HEERF Program is one of the subprograms of the federal Education Stabilization Fund [ALN 84.425]. The HEERF program contains two portions: The Student Aid portion [ALN 84.425E] and the Institutional portion, which is made up of the following: ? HEERF Institutional Aid Portion (ALN 84.425F); ? HEERF Minority Serving Institutions (ALN 84.425L); ? HEERF Strengthening Institutions Program (ALN 84.425M); ? Institutional Resilience and Expanded Postsecondary Opportunity (ALN 84.425P); ? HEERF Supplemental Assistance to Institutions of Higher Education program (ALN 84.425S). Since April 2020, the System has been awarded a total of approximately $255.6 million in HEERF funding. From inception through June 30, 2022, the System spent a total of approximately $97.8 million for the HEERF program Student Aid portion and $113.9 million for the HEERF Institutional Portion. During Fiscal Year 2022, the System spent $71.9 million for the Student Aid portion and $45.1 million for the Institutional Portion; of this amount, $28.7 million represented the System?s procurement for goods and services. The System reports that it will spend the remaining amount of funding during Fiscal Year 2023 and beyond. Each of the System?s 13 campuses separately signed an agreement titled the ?Certification and Agreement? with the U.S. Department of Education (ED) to indicate each campus? acceptance of the HEERF funding and the applicable terms and requirements. Under the requirements, each campus is required to follow the State?s procurement policies and procedures. Federal procurement regulations also require that each campus include any clauses required by federal regulations in every HEERF-related purchase order or other contract. In addition, non-federal entities, including the System and its campuses, are prohibited from contracting with or making subawards under ?covered transactions? to parties that are suspended or debarred from doing business with the federal government. ?Covered transactions? include those procurement contracts for goods and services awarded under a grant or cooperative agreement. In order to comply with federal suspension and debarment requirements, the campuses can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. What was the purpose of our audit work and what work was performed? The purpose of the audit work was to determine whether the System?s campuses had effective internal controls in place over, and complied with, federal procurement and suspension and debarment requirements for the HEERF grant during Fiscal Year 2022. As part of our audit work, we reviewed the campuses? internal controls over the HEERF grant procurement requirements. In addition, we tested a sample of 60 of the campuses? HEERF-related 435 procurement transactions, totaling $18.8 million, to determine if the campuses were in compliance with federal procurement requirements, and whether the campuses? contractors were suspended, debarred, or otherwise excluded from participating in the contract by the federal government, through verification on the SAM website exclusions listing. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulation [2 CFR 180.220] states that a contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. Also, federal regulation [2 CFR 180.300] requires that when a non-federal entity enters into a covered transaction with another entity, the non-federal entity must verify that the person or entity they intend to do business with is not excluded or disqualified from receiving federal funds. This can be done by: (1) checking the SAM exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity. ? Federal regulation [2 CFR 200.303] states that the System and its campuses, as recipients of federal funds, must establish and maintain effective internal control over their federal awards that provides reasonable assurance that the System?s campuses are managing the federal awards in compliance with federal statutes, regulations, and the award terms and conditions. ? Federal regulation [2 CFR 200.318] states that the System must document procurement procedures. The System and its campuses utilize Colorado Revised Statute Section 24, Government -State, Procurement Code; Articles 101- 112, as their procurement policy. Relevant sections of the policy include: o R-24-103-201-01 Purchasing Thresholds - (b) Small purchases are goods and services purchases costing less than $150,000. Goods and services between $25,000 and $150,000 may be purchased using a documented quote process, described in rule R-24-103-204-01. o R-24-103-201-01 Purchasing Thresholds - (c) Invitation for bids, described in rule R-24-103-202-01, request for proposals, described in rule R-24-103-203, and invitations to negotiate, described in rule R-24-103-208-03, may be used for goods or services estimated to exceed the small purchase threshold of $150,000. o R-24-103-205 Sole Source Procurements -Contracts may be awarded by use of a sole source procurement only if the following conditions are met: (a) A sole source procurement is justified when there is only one good or service that can reasonably meet the need and there is only one vendor who can provide the good or service. A requirement for a particular proprietary item (i.e., a brand name specification) does not justify a sole source procurement if there is more than one potential bidder or offeror for that item; (b) The procurement official or his or her designee shall make a written determination that a procurement is sole source, setting forth the reasons. In cases of reasonable doubt, competition should be solicited. Any request by a using agency that a procurement be restricted to one potential contractor shall be accompanied by an explanation as to why no other contractors will be suitable or acceptable to meet the need. What problems did the audit work identify? We identified at least one issue with 34 of the 60 transactions tested (57 percent), which resulted in a total of $3,254,216 in known federal questioned costs. In total, we identified 43 errors within the 34 transactions tested. Specifically, we identified the following: ? Community College of Aurora (CCA) and Pueblo Community College (PCC) could not provide documentation to support that suspension and debarment verification procedures were performed for nine transactions we reviewed for CCA and for 21 transactions we reviewed for PCC. We confirmed through additional audit work that none of the vendors were suspended or debarred; as a result, we determined that these errors did not result in questioned costs. ? Otero College (OC) did not complete the required Sole Source justification for four transactions. These errors resulted in $1,535,455 of questioned costs. ? PCC did not perform a request for proposals for two transactions which exceeded $150,000 and did not obtain documented quotes for seven transactions which were between $25,000 and $150,000, as required. These errors resulted in questioned costs of $1,718,761. Why did these problems occur? OC and PCC did not have adequate internal controls in place to ensure they complied with HEERF procurement requirements. In addition, CCA and PCC did not have adequate internal controls in place to ensure they complied with HEERF suspension and debarment requirements. Specifically, at OC and PCC, the secondary reviewer did not require staff follow procedures in place for procurement. At PCC the secondary reviewer also did not ensure that staff searched the federal System of Award Management to verify that entities it contracted with were not suspended, debarred, or otherwise excluded from participating in a contract for federal funds. In addition, they did not provide training over grant processes related to state procurement rules, such as training on requirements for staff to maintain appropriate supporting documentation for procurement-related verifications and procurement decisions. Further, CCA and OC experienced staff turnover in key positions, and existing employees could not locate the supporting documentation. Why do these problems matter? It is important for CCA, OC, and PCC to ensure that they obtain and maintain appropriate documentation to support procurement decisions, especially when they are the basis for determining CCA, OC, and PCC?s compliance with specific HEERF program requirements. In addition, CCA and PCC?s failure to perform procedures to ensure an entity is not suspended or debarred could result in the System paying funds to an entity that is disallowed from receiving such funds, thereby exposing the State to increased business risk and potential federal disallowances. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-057 Otero College should strengthen their internal controls over procurement and ensure they comply with the Higher Education Emergency Relief Fund (HEERF) requirements and State procurement policies by: A. Ensuring the secondary reviewer enforces compliance with the Colorado Community College System?s (System) procurement procedures. B. Ensuring staff maintain supporting documentation for procurements. C. Providing training and cross-training to existing employees over procurement requirements. Response Otero College A. Agree Implementation Date: August 2022 Otero College has adopted the system offices Sole Source justification form that will be posted to the State procurement site, requires supervisory approval, and has put that into place as of August 2022. B. Agree Implementation Date: August 2022 Otero College will ensure they maintain supporting documentation for procurements. C. Agree Implementation Date: August 2022 Otero College has a new procurement official that has attended various trainings regarding procurement rules.
Findings 2022-056, 2022-057, and 2022-058 Higher Education Emergency Relief Fund (HEERF) Procurement Compliance The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 and appropriated federal funds to provide economic aid to the American people negatively impacted by the COVID-19 pandemic. As part of the CARES Act, funds were given to the System under the Higher Education Emergency Relief Fund (HEERF) Program. The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), was signed into law on December 27, 2020, and authorized additional funding under the HEERF program (HEERF II). Finally, the American Rescue Plan Act of 2021 (ARP), enacted on March 11, 2021, authorized a third round of funding (HEERF III) in order for higher education institutions to serve students and ensure learning continues during the COVID-19 pandemic. The HEERF Program is one of the subprograms of the federal Education Stabilization Fund [ALN 84.425]. The HEERF program contains two portions: The Student Aid portion [ALN 84.425E] and the Institutional portion, which is made up of the following: ? HEERF Institutional Aid Portion (ALN 84.425F); ? HEERF Minority Serving Institutions (ALN 84.425L); ? HEERF Strengthening Institutions Program (ALN 84.425M); ? Institutional Resilience and Expanded Postsecondary Opportunity (ALN 84.425P); ? HEERF Supplemental Assistance to Institutions of Higher Education program (ALN 84.425S). Since April 2020, the System has been awarded a total of approximately $255.6 million in HEERF funding. From inception through June 30, 2022, the System spent a total of approximately $97.8 million for the HEERF program Student Aid portion and $113.9 million for the HEERF Institutional Portion. During Fiscal Year 2022, the System spent $71.9 million for the Student Aid portion and $45.1 million for the Institutional Portion; of this amount, $28.7 million represented the System?s procurement for goods and services. The System reports that it will spend the remaining amount of funding during Fiscal Year 2023 and beyond. Each of the System?s 13 campuses separately signed an agreement titled the ?Certification and Agreement? with the U.S. Department of Education (ED) to indicate each campus? acceptance of the HEERF funding and the applicable terms and requirements. Under the requirements, each campus is required to follow the State?s procurement policies and procedures. Federal procurement regulations also require that each campus include any clauses required by federal regulations in every HEERF-related purchase order or other contract. In addition, non-federal entities, including the System and its campuses, are prohibited from contracting with or making subawards under ?covered transactions? to parties that are suspended or debarred from doing business with the federal government. ?Covered transactions? include those procurement contracts for goods and services awarded under a grant or cooperative agreement. In order to comply with federal suspension and debarment requirements, the campuses can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. What was the purpose of our audit work and what work was performed? The purpose of the audit work was to determine whether the System?s campuses had effective internal controls in place over, and complied with, federal procurement and suspension and debarment requirements for the HEERF grant during Fiscal Year 2022. As part of our audit work, we reviewed the campuses? internal controls over the HEERF grant procurement requirements. In addition, we tested a sample of 60 of the campuses? HEERF-related 435 procurement transactions, totaling $18.8 million, to determine if the campuses were in compliance with federal procurement requirements, and whether the campuses? contractors were suspended, debarred, or otherwise excluded from participating in the contract by the federal government, through verification on the SAM website exclusions listing. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulation [2 CFR 180.220] states that a contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. Also, federal regulation [2 CFR 180.300] requires that when a non-federal entity enters into a covered transaction with another entity, the non-federal entity must verify that the person or entity they intend to do business with is not excluded or disqualified from receiving federal funds. This can be done by: (1) checking the SAM exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity. ? Federal regulation [2 CFR 200.303] states that the System and its campuses, as recipients of federal funds, must establish and maintain effective internal control over their federal awards that provides reasonable assurance that the System?s campuses are managing the federal awards in compliance with federal statutes, regulations, and the award terms and conditions. ? Federal regulation [2 CFR 200.318] states that the System must document procurement procedures. The System and its campuses utilize Colorado Revised Statute Section 24, Government -State, Procurement Code; Articles 101- 112, as their procurement policy. Relevant sections of the policy include: o R-24-103-201-01 Purchasing Thresholds - (b) Small purchases are goods and services purchases costing less than $150,000. Goods and services between $25,000 and $150,000 may be purchased using a documented quote process, described in rule R-24-103-204-01. o R-24-103-201-01 Purchasing Thresholds - (c) Invitation for bids, described in rule R-24-103-202-01, request for proposals, described in rule R-24-103-203, and invitations to negotiate, described in rule R-24-103-208-03, may be used for goods or services estimated to exceed the small purchase threshold of $150,000. o R-24-103-205 Sole Source Procurements -Contracts may be awarded by use of a sole source procurement only if the following conditions are met: (a) A sole source procurement is justified when there is only one good or service that can reasonably meet the need and there is only one vendor who can provide the good or service. A requirement for a particular proprietary item (i.e., a brand name specification) does not justify a sole source procurement if there is more than one potential bidder or offeror for that item; (b) The procurement official or his or her designee shall make a written determination that a procurement is sole source, setting forth the reasons. In cases of reasonable doubt, competition should be solicited. Any request by a using agency that a procurement be restricted to one potential contractor shall be accompanied by an explanation as to why no other contractors will be suitable or acceptable to meet the need. What problems did the audit work identify? We identified at least one issue with 34 of the 60 transactions tested (57 percent), which resulted in a total of $3,254,216 in known federal questioned costs. In total, we identified 43 errors within the 34 transactions tested. Specifically, we identified the following: ? Community College of Aurora (CCA) and Pueblo Community College (PCC) could not provide documentation to support that suspension and debarment verification procedures were performed for nine transactions we reviewed for CCA and for 21 transactions we reviewed for PCC. We confirmed through additional audit work that none of the vendors were suspended or debarred; as a result, we determined that these errors did not result in questioned costs. ? Otero College (OC) did not complete the required Sole Source justification for four transactions. These errors resulted in $1,535,455 of questioned costs. ? PCC did not perform a request for proposals for two transactions which exceeded $150,000 and did not obtain documented quotes for seven transactions which were between $25,000 and $150,000, as required. These errors resulted in questioned costs of $1,718,761. Why did these problems occur? OC and PCC did not have adequate internal controls in place to ensure they complied with HEERF procurement requirements. In addition, CCA and PCC did not have adequate internal controls in place to ensure they complied with HEERF suspension and debarment requirements. Specifically, at OC and PCC, the secondary reviewer did not require staff follow procedures in place for procurement. At PCC the secondary reviewer also did not ensure that staff searched the federal System of Award Management to verify that entities it contracted with were not suspended, debarred, or otherwise excluded from participating in a contract for federal funds. In addition, they did not provide training over grant processes related to state procurement rules, such as training on requirements for staff to maintain appropriate supporting documentation for procurement-related verifications and procurement decisions. Further, CCA and OC experienced staff turnover in key positions, and existing employees could not locate the supporting documentation. Why do these problems matter? It is important for CCA, OC, and PCC to ensure that they obtain and maintain appropriate documentation to support procurement decisions, especially when they are the basis for determining CCA, OC, and PCC?s compliance with specific HEERF program requirements. In addition, CCA and PCC?s failure to perform procedures to ensure an entity is not suspended or debarred could result in the System paying funds to an entity that is disallowed from receiving such funds, thereby exposing the State to increased business risk and potential federal disallowances. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-058 Pueblo Community College should strengthen their internal controls over procurement, suspension and debarment and ensure they comply with the Higher Education Emergency Relief Fund (HEERF) requirements and State procurement policies by: A. Ensuring the secondary reviewer enforces compliance with the Colorado Community College System?s (System) procurement procedures and that staff perform procedures to verify contracted entities are not excluded or disqualified from receiving federal funds. B. Ensuring staff maintain supporting documentation for procurements and suspension and debarment checks. C. Providing training and cross-training to existing employees over procurement, suspension and debarment requirements. Response Pueblo Community College A. Agree Implementation Date: September 2022 Going forward, the Director of Purchasing will perform all Sam.Gov searches. The secondary reviews to ensure compliance for the System's procurement and suspension and debarment procedures will be conducted by the Vice President of Administration and Finance. B. Agree Implementation Date: September 2022 The corresponding documents supporting procurement transactions and suspension and debarment checks will be scanned and filed along with the Purchase order. C. Agree Implementation Date: September 2022 Training will be provided to fiscal and grant staff for identifying when suspension and debarment must be checked for vendors of federal programs, processes and websites to access, and methodology for documenting with the purchase documentation.
Findings 2022-056, 2022-057, and 2022-058 Higher Education Emergency Relief Fund (HEERF) Procurement Compliance The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 and appropriated federal funds to provide economic aid to the American people negatively impacted by the COVID-19 pandemic. As part of the CARES Act, funds were given to the System under the Higher Education Emergency Relief Fund (HEERF) Program. The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), was signed into law on December 27, 2020, and authorized additional funding under the HEERF program (HEERF II). Finally, the American Rescue Plan Act of 2021 (ARP), enacted on March 11, 2021, authorized a third round of funding (HEERF III) in order for higher education institutions to serve students and ensure learning continues during the COVID-19 pandemic. The HEERF Program is one of the subprograms of the federal Education Stabilization Fund [ALN 84.425]. The HEERF program contains two portions: The Student Aid portion [ALN 84.425E] and the Institutional portion, which is made up of the following: ? HEERF Institutional Aid Portion (ALN 84.425F); ? HEERF Minority Serving Institutions (ALN 84.425L); ? HEERF Strengthening Institutions Program (ALN 84.425M); ? Institutional Resilience and Expanded Postsecondary Opportunity (ALN 84.425P); ? HEERF Supplemental Assistance to Institutions of Higher Education program (ALN 84.425S). Since April 2020, the System has been awarded a total of approximately $255.6 million in HEERF funding. From inception through June 30, 2022, the System spent a total of approximately $97.8 million for the HEERF program Student Aid portion and $113.9 million for the HEERF Institutional Portion. During Fiscal Year 2022, the System spent $71.9 million for the Student Aid portion and $45.1 million for the Institutional Portion; of this amount, $28.7 million represented the System?s procurement for goods and services. The System reports that it will spend the remaining amount of funding during Fiscal Year 2023 and beyond. Each of the System?s 13 campuses separately signed an agreement titled the ?Certification and Agreement? with the U.S. Department of Education (ED) to indicate each campus? acceptance of the HEERF funding and the applicable terms and requirements. Under the requirements, each campus is required to follow the State?s procurement policies and procedures. Federal procurement regulations also require that each campus include any clauses required by federal regulations in every HEERF-related purchase order or other contract. In addition, non-federal entities, including the System and its campuses, are prohibited from contracting with or making subawards under ?covered transactions? to parties that are suspended or debarred from doing business with the federal government. ?Covered transactions? include those procurement contracts for goods and services awarded under a grant or cooperative agreement. In order to comply with federal suspension and debarment requirements, the campuses can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. What was the purpose of our audit work and what work was performed? The purpose of the audit work was to determine whether the System?s campuses had effective internal controls in place over, and complied with, federal procurement and suspension and debarment requirements for the HEERF grant during Fiscal Year 2022. As part of our audit work, we reviewed the campuses? internal controls over the HEERF grant procurement requirements. In addition, we tested a sample of 60 of the campuses? HEERF-related 435 procurement transactions, totaling $18.8 million, to determine if the campuses were in compliance with federal procurement requirements, and whether the campuses? contractors were suspended, debarred, or otherwise excluded from participating in the contract by the federal government, through verification on the SAM website exclusions listing. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulation [2 CFR 180.220] states that a contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. Also, federal regulation [2 CFR 180.300] requires that when a non-federal entity enters into a covered transaction with another entity, the non-federal entity must verify that the person or entity they intend to do business with is not excluded or disqualified from receiving federal funds. This can be done by: (1) checking the SAM exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity. ? Federal regulation [2 CFR 200.303] states that the System and its campuses, as recipients of federal funds, must establish and maintain effective internal control over their federal awards that provides reasonable assurance that the System?s campuses are managing the federal awards in compliance with federal statutes, regulations, and the award terms and conditions. ? Federal regulation [2 CFR 200.318] states that the System must document procurement procedures. The System and its campuses utilize Colorado Revised Statute Section 24, Government -State, Procurement Code; Articles 101- 112, as their procurement policy. Relevant sections of the policy include: o R-24-103-201-01 Purchasing Thresholds - (b) Small purchases are goods and services purchases costing less than $150,000. Goods and services between $25,000 and $150,000 may be purchased using a documented quote process, described in rule R-24-103-204-01. o R-24-103-201-01 Purchasing Thresholds - (c) Invitation for bids, described in rule R-24-103-202-01, request for proposals, described in rule R-24-103-203, and invitations to negotiate, described in rule R-24-103-208-03, may be used for goods or services estimated to exceed the small purchase threshold of $150,000. o R-24-103-205 Sole Source Procurements -Contracts may be awarded by use of a sole source procurement only if the following conditions are met: (a) A sole source procurement is justified when there is only one good or service that can reasonably meet the need and there is only one vendor who can provide the good or service. A requirement for a particular proprietary item (i.e., a brand name specification) does not justify a sole source procurement if there is more than one potential bidder or offeror for that item; (b) The procurement official or his or her designee shall make a written determination that a procurement is sole source, setting forth the reasons. In cases of reasonable doubt, competition should be solicited. Any request by a using agency that a procurement be restricted to one potential contractor shall be accompanied by an explanation as to why no other contractors will be suitable or acceptable to meet the need. What problems did the audit work identify? We identified at least one issue with 34 of the 60 transactions tested (57 percent), which resulted in a total of $3,254,216 in known federal questioned costs. In total, we identified 43 errors within the 34 transactions tested. Specifically, we identified the following: ? Community College of Aurora (CCA) and Pueblo Community College (PCC) could not provide documentation to support that suspension and debarment verification procedures were performed for nine transactions we reviewed for CCA and for 21 transactions we reviewed for PCC. We confirmed through additional audit work that none of the vendors were suspended or debarred; as a result, we determined that these errors did not result in questioned costs. ? Otero College (OC) did not complete the required Sole Source justification for four transactions. These errors resulted in $1,535,455 of questioned costs. ? PCC did not perform a request for proposals for two transactions which exceeded $150,000 and did not obtain documented quotes for seven transactions which were between $25,000 and $150,000, as required. These errors resulted in questioned costs of $1,718,761. Why did these problems occur? OC and PCC did not have adequate internal controls in place to ensure they complied with HEERF procurement requirements. In addition, CCA and PCC did not have adequate internal controls in place to ensure they complied with HEERF suspension and debarment requirements. Specifically, at OC and PCC, the secondary reviewer did not require staff follow procedures in place for procurement. At PCC the secondary reviewer also did not ensure that staff searched the federal System of Award Management to verify that entities it contracted with were not suspended, debarred, or otherwise excluded from participating in a contract for federal funds. In addition, they did not provide training over grant processes related to state procurement rules, such as training on requirements for staff to maintain appropriate supporting documentation for procurement-related verifications and procurement decisions. Further, CCA and OC experienced staff turnover in key positions, and existing employees could not locate the supporting documentation. Why do these problems matter? It is important for CCA, OC, and PCC to ensure that they obtain and maintain appropriate documentation to support procurement decisions, especially when they are the basis for determining CCA, OC, and PCC?s compliance with specific HEERF program requirements. In addition, CCA and PCC?s failure to perform procedures to ensure an entity is not suspended or debarred could result in the System paying funds to an entity that is disallowed from receiving such funds, thereby exposing the State to increased business risk and potential federal disallowances. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-056 Community College of Aurora should strengthen their internal controls over suspension and debarment and ensure they comply with the Higher Education Emergency Relief Fund (HEERF) requirements by: A. Ensuring staff maintain supporting documentation of suspension and debarment checks. B. Providing training and cross-training to existing employees over suspension and debarment requirements. Response Community College of Aurora A. Agree Implementation Date: October 2022 Beginning in October 2022, the duty was moved from the Principal Investigator or instructional staff previously responsible for this step to the Director of Purchasing to ensure compliance for all grant transactions. B. Agree Implementation Date: October 2022 Training will be provided for identifying when suspension and debarment must be checked for vendors of federal programs, processes and websites to access, and methodology for documenting with the purchase, to fiscal and grant staff
Findings 2022-056, 2022-057, and 2022-058 Higher Education Emergency Relief Fund (HEERF) Procurement Compliance The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 and appropriated federal funds to provide economic aid to the American people negatively impacted by the COVID-19 pandemic. As part of the CARES Act, funds were given to the System under the Higher Education Emergency Relief Fund (HEERF) Program. The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), was signed into law on December 27, 2020, and authorized additional funding under the HEERF program (HEERF II). Finally, the American Rescue Plan Act of 2021 (ARP), enacted on March 11, 2021, authorized a third round of funding (HEERF III) in order for higher education institutions to serve students and ensure learning continues during the COVID-19 pandemic. The HEERF Program is one of the subprograms of the federal Education Stabilization Fund [ALN 84.425]. The HEERF program contains two portions: The Student Aid portion [ALN 84.425E] and the Institutional portion, which is made up of the following: ? HEERF Institutional Aid Portion (ALN 84.425F); ? HEERF Minority Serving Institutions (ALN 84.425L); ? HEERF Strengthening Institutions Program (ALN 84.425M); ? Institutional Resilience and Expanded Postsecondary Opportunity (ALN 84.425P); ? HEERF Supplemental Assistance to Institutions of Higher Education program (ALN 84.425S). Since April 2020, the System has been awarded a total of approximately $255.6 million in HEERF funding. From inception through June 30, 2022, the System spent a total of approximately $97.8 million for the HEERF program Student Aid portion and $113.9 million for the HEERF Institutional Portion. During Fiscal Year 2022, the System spent $71.9 million for the Student Aid portion and $45.1 million for the Institutional Portion; of this amount, $28.7 million represented the System?s procurement for goods and services. The System reports that it will spend the remaining amount of funding during Fiscal Year 2023 and beyond. Each of the System?s 13 campuses separately signed an agreement titled the ?Certification and Agreement? with the U.S. Department of Education (ED) to indicate each campus? acceptance of the HEERF funding and the applicable terms and requirements. Under the requirements, each campus is required to follow the State?s procurement policies and procedures. Federal procurement regulations also require that each campus include any clauses required by federal regulations in every HEERF-related purchase order or other contract. In addition, non-federal entities, including the System and its campuses, are prohibited from contracting with or making subawards under ?covered transactions? to parties that are suspended or debarred from doing business with the federal government. ?Covered transactions? include those procurement contracts for goods and services awarded under a grant or cooperative agreement. In order to comply with federal suspension and debarment requirements, the campuses can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. What was the purpose of our audit work and what work was performed? The purpose of the audit work was to determine whether the System?s campuses had effective internal controls in place over, and complied with, federal procurement and suspension and debarment requirements for the HEERF grant during Fiscal Year 2022. As part of our audit work, we reviewed the campuses? internal controls over the HEERF grant procurement requirements. In addition, we tested a sample of 60 of the campuses? HEERF-related 435 procurement transactions, totaling $18.8 million, to determine if the campuses were in compliance with federal procurement requirements, and whether the campuses? contractors were suspended, debarred, or otherwise excluded from participating in the contract by the federal government, through verification on the SAM website exclusions listing. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulation [2 CFR 180.220] states that a contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. Also, federal regulation [2 CFR 180.300] requires that when a non-federal entity enters into a covered transaction with another entity, the non-federal entity must verify that the person or entity they intend to do business with is not excluded or disqualified from receiving federal funds. This can be done by: (1) checking the SAM exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity. ? Federal regulation [2 CFR 200.303] states that the System and its campuses, as recipients of federal funds, must establish and maintain effective internal control over their federal awards that provides reasonable assurance that the System?s campuses are managing the federal awards in compliance with federal statutes, regulations, and the award terms and conditions. ? Federal regulation [2 CFR 200.318] states that the System must document procurement procedures. The System and its campuses utilize Colorado Revised Statute Section 24, Government -State, Procurement Code; Articles 101- 112, as their procurement policy. Relevant sections of the policy include: o R-24-103-201-01 Purchasing Thresholds - (b) Small purchases are goods and services purchases costing less than $150,000. Goods and services between $25,000 and $150,000 may be purchased using a documented quote process, described in rule R-24-103-204-01. o R-24-103-201-01 Purchasing Thresholds - (c) Invitation for bids, described in rule R-24-103-202-01, request for proposals, described in rule R-24-103-203, and invitations to negotiate, described in rule R-24-103-208-03, may be used for goods or services estimated to exceed the small purchase threshold of $150,000. o R-24-103-205 Sole Source Procurements -Contracts may be awarded by use of a sole source procurement only if the following conditions are met: (a) A sole source procurement is justified when there is only one good or service that can reasonably meet the need and there is only one vendor who can provide the good or service. A requirement for a particular proprietary item (i.e., a brand name specification) does not justify a sole source procurement if there is more than one potential bidder or offeror for that item; (b) The procurement official or his or her designee shall make a written determination that a procurement is sole source, setting forth the reasons. In cases of reasonable doubt, competition should be solicited. Any request by a using agency that a procurement be restricted to one potential contractor shall be accompanied by an explanation as to why no other contractors will be suitable or acceptable to meet the need. What problems did the audit work identify? We identified at least one issue with 34 of the 60 transactions tested (57 percent), which resulted in a total of $3,254,216 in known federal questioned costs. In total, we identified 43 errors within the 34 transactions tested. Specifically, we identified the following: ? Community College of Aurora (CCA) and Pueblo Community College (PCC) could not provide documentation to support that suspension and debarment verification procedures were performed for nine transactions we reviewed for CCA and for 21 transactions we reviewed for PCC. We confirmed through additional audit work that none of the vendors were suspended or debarred; as a result, we determined that these errors did not result in questioned costs. ? Otero College (OC) did not complete the required Sole Source justification for four transactions. These errors resulted in $1,535,455 of questioned costs. ? PCC did not perform a request for proposals for two transactions which exceeded $150,000 and did not obtain documented quotes for seven transactions which were between $25,000 and $150,000, as required. These errors resulted in questioned costs of $1,718,761. Why did these problems occur? OC and PCC did not have adequate internal controls in place to ensure they complied with HEERF procurement requirements. In addition, CCA and PCC did not have adequate internal controls in place to ensure they complied with HEERF suspension and debarment requirements. Specifically, at OC and PCC, the secondary reviewer did not require staff follow procedures in place for procurement. At PCC the secondary reviewer also did not ensure that staff searched the federal System of Award Management to verify that entities it contracted with were not suspended, debarred, or otherwise excluded from participating in a contract for federal funds. In addition, they did not provide training over grant processes related to state procurement rules, such as training on requirements for staff to maintain appropriate supporting documentation for procurement-related verifications and procurement decisions. Further, CCA and OC experienced staff turnover in key positions, and existing employees could not locate the supporting documentation. Why do these problems matter? It is important for CCA, OC, and PCC to ensure that they obtain and maintain appropriate documentation to support procurement decisions, especially when they are the basis for determining CCA, OC, and PCC?s compliance with specific HEERF program requirements. In addition, CCA and PCC?s failure to perform procedures to ensure an entity is not suspended or debarred could result in the System paying funds to an entity that is disallowed from receiving such funds, thereby exposing the State to increased business risk and potential federal disallowances. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-058 Pueblo Community College should strengthen their internal controls over procurement, suspension and debarment and ensure they comply with the Higher Education Emergency Relief Fund (HEERF) requirements and State procurement policies by: A. Ensuring the secondary reviewer enforces compliance with the Colorado Community College System?s (System) procurement procedures and that staff perform procedures to verify contracted entities are not excluded or disqualified from receiving federal funds. B. Ensuring staff maintain supporting documentation for procurements and suspension and debarment checks. C. Providing training and cross-training to existing employees over procurement, suspension and debarment requirements. Response Pueblo Community College A. Agree Implementation Date: September 2022 Going forward, the Director of Purchasing will perform all Sam.Gov searches. The secondary reviews to ensure compliance for the System's procurement and suspension and debarment procedures will be conducted by the Vice President of Administration and Finance. B. Agree Implementation Date: September 2022 The corresponding documents supporting procurement transactions and suspension and debarment checks will be scanned and filed along with the Purchase order. C. Agree Implementation Date: September 2022 Training will be provided to fiscal and grant staff for identifying when suspension and debarment must be checked for vendors of federal programs, processes and websites to access, and methodology for documenting with the purchase documentation.
Findings 2022-056, 2022-057, and 2022-058 Higher Education Emergency Relief Fund (HEERF) Procurement Compliance The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 and appropriated federal funds to provide economic aid to the American people negatively impacted by the COVID-19 pandemic. As part of the CARES Act, funds were given to the System under the Higher Education Emergency Relief Fund (HEERF) Program. The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), was signed into law on December 27, 2020, and authorized additional funding under the HEERF program (HEERF II). Finally, the American Rescue Plan Act of 2021 (ARP), enacted on March 11, 2021, authorized a third round of funding (HEERF III) in order for higher education institutions to serve students and ensure learning continues during the COVID-19 pandemic. The HEERF Program is one of the subprograms of the federal Education Stabilization Fund [ALN 84.425]. The HEERF program contains two portions: The Student Aid portion [ALN 84.425E] and the Institutional portion, which is made up of the following: ? HEERF Institutional Aid Portion (ALN 84.425F); ? HEERF Minority Serving Institutions (ALN 84.425L); ? HEERF Strengthening Institutions Program (ALN 84.425M); ? Institutional Resilience and Expanded Postsecondary Opportunity (ALN 84.425P); ? HEERF Supplemental Assistance to Institutions of Higher Education program (ALN 84.425S). Since April 2020, the System has been awarded a total of approximately $255.6 million in HEERF funding. From inception through June 30, 2022, the System spent a total of approximately $97.8 million for the HEERF program Student Aid portion and $113.9 million for the HEERF Institutional Portion. During Fiscal Year 2022, the System spent $71.9 million for the Student Aid portion and $45.1 million for the Institutional Portion; of this amount, $28.7 million represented the System?s procurement for goods and services. The System reports that it will spend the remaining amount of funding during Fiscal Year 2023 and beyond. Each of the System?s 13 campuses separately signed an agreement titled the ?Certification and Agreement? with the U.S. Department of Education (ED) to indicate each campus? acceptance of the HEERF funding and the applicable terms and requirements. Under the requirements, each campus is required to follow the State?s procurement policies and procedures. Federal procurement regulations also require that each campus include any clauses required by federal regulations in every HEERF-related purchase order or other contract. In addition, non-federal entities, including the System and its campuses, are prohibited from contracting with or making subawards under ?covered transactions? to parties that are suspended or debarred from doing business with the federal government. ?Covered transactions? include those procurement contracts for goods and services awarded under a grant or cooperative agreement. In order to comply with federal suspension and debarment requirements, the campuses can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. What was the purpose of our audit work and what work was performed? The purpose of the audit work was to determine whether the System?s campuses had effective internal controls in place over, and complied with, federal procurement and suspension and debarment requirements for the HEERF grant during Fiscal Year 2022. As part of our audit work, we reviewed the campuses? internal controls over the HEERF grant procurement requirements. In addition, we tested a sample of 60 of the campuses? HEERF-related 435 procurement transactions, totaling $18.8 million, to determine if the campuses were in compliance with federal procurement requirements, and whether the campuses? contractors were suspended, debarred, or otherwise excluded from participating in the contract by the federal government, through verification on the SAM website exclusions listing. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulation [2 CFR 180.220] states that a contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. Also, federal regulation [2 CFR 180.300] requires that when a non-federal entity enters into a covered transaction with another entity, the non-federal entity must verify that the person or entity they intend to do business with is not excluded or disqualified from receiving federal funds. This can be done by: (1) checking the SAM exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity. ? Federal regulation [2 CFR 200.303] states that the System and its campuses, as recipients of federal funds, must establish and maintain effective internal control over their federal awards that provides reasonable assurance that the System?s campuses are managing the federal awards in compliance with federal statutes, regulations, and the award terms and conditions. ? Federal regulation [2 CFR 200.318] states that the System must document procurement procedures. The System and its campuses utilize Colorado Revised Statute Section 24, Government -State, Procurement Code; Articles 101- 112, as their procurement policy. Relevant sections of the policy include: o R-24-103-201-01 Purchasing Thresholds - (b) Small purchases are goods and services purchases costing less than $150,000. Goods and services between $25,000 and $150,000 may be purchased using a documented quote process, described in rule R-24-103-204-01. o R-24-103-201-01 Purchasing Thresholds - (c) Invitation for bids, described in rule R-24-103-202-01, request for proposals, described in rule R-24-103-203, and invitations to negotiate, described in rule R-24-103-208-03, may be used for goods or services estimated to exceed the small purchase threshold of $150,000. o R-24-103-205 Sole Source Procurements -Contracts may be awarded by use of a sole source procurement only if the following conditions are met: (a) A sole source procurement is justified when there is only one good or service that can reasonably meet the need and there is only one vendor who can provide the good or service. A requirement for a particular proprietary item (i.e., a brand name specification) does not justify a sole source procurement if there is more than one potential bidder or offeror for that item; (b) The procurement official or his or her designee shall make a written determination that a procurement is sole source, setting forth the reasons. In cases of reasonable doubt, competition should be solicited. Any request by a using agency that a procurement be restricted to one potential contractor shall be accompanied by an explanation as to why no other contractors will be suitable or acceptable to meet the need. What problems did the audit work identify? We identified at least one issue with 34 of the 60 transactions tested (57 percent), which resulted in a total of $3,254,216 in known federal questioned costs. In total, we identified 43 errors within the 34 transactions tested. Specifically, we identified the following: ? Community College of Aurora (CCA) and Pueblo Community College (PCC) could not provide documentation to support that suspension and debarment verification procedures were performed for nine transactions we reviewed for CCA and for 21 transactions we reviewed for PCC. We confirmed through additional audit work that none of the vendors were suspended or debarred; as a result, we determined that these errors did not result in questioned costs. ? Otero College (OC) did not complete the required Sole Source justification for four transactions. These errors resulted in $1,535,455 of questioned costs. ? PCC did not perform a request for proposals for two transactions which exceeded $150,000 and did not obtain documented quotes for seven transactions which were between $25,000 and $150,000, as required. These errors resulted in questioned costs of $1,718,761. Why did these problems occur? OC and PCC did not have adequate internal controls in place to ensure they complied with HEERF procurement requirements. In addition, CCA and PCC did not have adequate internal controls in place to ensure they complied with HEERF suspension and debarment requirements. Specifically, at OC and PCC, the secondary reviewer did not require staff follow procedures in place for procurement. At PCC the secondary reviewer also did not ensure that staff searched the federal System of Award Management to verify that entities it contracted with were not suspended, debarred, or otherwise excluded from participating in a contract for federal funds. In addition, they did not provide training over grant processes related to state procurement rules, such as training on requirements for staff to maintain appropriate supporting documentation for procurement-related verifications and procurement decisions. Further, CCA and OC experienced staff turnover in key positions, and existing employees could not locate the supporting documentation. Why do these problems matter? It is important for CCA, OC, and PCC to ensure that they obtain and maintain appropriate documentation to support procurement decisions, especially when they are the basis for determining CCA, OC, and PCC?s compliance with specific HEERF program requirements. In addition, CCA and PCC?s failure to perform procedures to ensure an entity is not suspended or debarred could result in the System paying funds to an entity that is disallowed from receiving such funds, thereby exposing the State to increased business risk and potential federal disallowances. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-057 Otero College should strengthen their internal controls over procurement and ensure they comply with the Higher Education Emergency Relief Fund (HEERF) requirements and State procurement policies by: A. Ensuring the secondary reviewer enforces compliance with the Colorado Community College System?s (System) procurement procedures. B. Ensuring staff maintain supporting documentation for procurements. C. Providing training and cross-training to existing employees over procurement requirements. Response Otero College A. Agree Implementation Date: August 2022 Otero College has adopted the system offices Sole Source justification form that will be posted to the State procurement site, requires supervisory approval, and has put that into place as of August 2022. B. Agree Implementation Date: August 2022 Otero College will ensure they maintain supporting documentation for procurements. C. Agree Implementation Date: August 2022 Otero College has a new procurement official that has attended various trainings regarding procurement rules.
Findings 2022-056, 2022-057, and 2022-058 Higher Education Emergency Relief Fund (HEERF) Procurement Compliance The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 and appropriated federal funds to provide economic aid to the American people negatively impacted by the COVID-19 pandemic. As part of the CARES Act, funds were given to the System under the Higher Education Emergency Relief Fund (HEERF) Program. The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), was signed into law on December 27, 2020, and authorized additional funding under the HEERF program (HEERF II). Finally, the American Rescue Plan Act of 2021 (ARP), enacted on March 11, 2021, authorized a third round of funding (HEERF III) in order for higher education institutions to serve students and ensure learning continues during the COVID-19 pandemic. The HEERF Program is one of the subprograms of the federal Education Stabilization Fund [ALN 84.425]. The HEERF program contains two portions: The Student Aid portion [ALN 84.425E] and the Institutional portion, which is made up of the following: ? HEERF Institutional Aid Portion (ALN 84.425F); ? HEERF Minority Serving Institutions (ALN 84.425L); ? HEERF Strengthening Institutions Program (ALN 84.425M); ? Institutional Resilience and Expanded Postsecondary Opportunity (ALN 84.425P); ? HEERF Supplemental Assistance to Institutions of Higher Education program (ALN 84.425S). Since April 2020, the System has been awarded a total of approximately $255.6 million in HEERF funding. From inception through June 30, 2022, the System spent a total of approximately $97.8 million for the HEERF program Student Aid portion and $113.9 million for the HEERF Institutional Portion. During Fiscal Year 2022, the System spent $71.9 million for the Student Aid portion and $45.1 million for the Institutional Portion; of this amount, $28.7 million represented the System?s procurement for goods and services. The System reports that it will spend the remaining amount of funding during Fiscal Year 2023 and beyond. Each of the System?s 13 campuses separately signed an agreement titled the ?Certification and Agreement? with the U.S. Department of Education (ED) to indicate each campus? acceptance of the HEERF funding and the applicable terms and requirements. Under the requirements, each campus is required to follow the State?s procurement policies and procedures. Federal procurement regulations also require that each campus include any clauses required by federal regulations in every HEERF-related purchase order or other contract. In addition, non-federal entities, including the System and its campuses, are prohibited from contracting with or making subawards under ?covered transactions? to parties that are suspended or debarred from doing business with the federal government. ?Covered transactions? include those procurement contracts for goods and services awarded under a grant or cooperative agreement. In order to comply with federal suspension and debarment requirements, the campuses can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. What was the purpose of our audit work and what work was performed? The purpose of the audit work was to determine whether the System?s campuses had effective internal controls in place over, and complied with, federal procurement and suspension and debarment requirements for the HEERF grant during Fiscal Year 2022. As part of our audit work, we reviewed the campuses? internal controls over the HEERF grant procurement requirements. In addition, we tested a sample of 60 of the campuses? HEERF-related 435 procurement transactions, totaling $18.8 million, to determine if the campuses were in compliance with federal procurement requirements, and whether the campuses? contractors were suspended, debarred, or otherwise excluded from participating in the contract by the federal government, through verification on the SAM website exclusions listing. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulation [2 CFR 180.220] states that a contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. Also, federal regulation [2 CFR 180.300] requires that when a non-federal entity enters into a covered transaction with another entity, the non-federal entity must verify that the person or entity they intend to do business with is not excluded or disqualified from receiving federal funds. This can be done by: (1) checking the SAM exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity. ? Federal regulation [2 CFR 200.303] states that the System and its campuses, as recipients of federal funds, must establish and maintain effective internal control over their federal awards that provides reasonable assurance that the System?s campuses are managing the federal awards in compliance with federal statutes, regulations, and the award terms and conditions. ? Federal regulation [2 CFR 200.318] states that the System must document procurement procedures. The System and its campuses utilize Colorado Revised Statute Section 24, Government -State, Procurement Code; Articles 101- 112, as their procurement policy. Relevant sections of the policy include: o R-24-103-201-01 Purchasing Thresholds - (b) Small purchases are goods and services purchases costing less than $150,000. Goods and services between $25,000 and $150,000 may be purchased using a documented quote process, described in rule R-24-103-204-01. o R-24-103-201-01 Purchasing Thresholds - (c) Invitation for bids, described in rule R-24-103-202-01, request for proposals, described in rule R-24-103-203, and invitations to negotiate, described in rule R-24-103-208-03, may be used for goods or services estimated to exceed the small purchase threshold of $150,000. o R-24-103-205 Sole Source Procurements -Contracts may be awarded by use of a sole source procurement only if the following conditions are met: (a) A sole source procurement is justified when there is only one good or service that can reasonably meet the need and there is only one vendor who can provide the good or service. A requirement for a particular proprietary item (i.e., a brand name specification) does not justify a sole source procurement if there is more than one potential bidder or offeror for that item; (b) The procurement official or his or her designee shall make a written determination that a procurement is sole source, setting forth the reasons. In cases of reasonable doubt, competition should be solicited. Any request by a using agency that a procurement be restricted to one potential contractor shall be accompanied by an explanation as to why no other contractors will be suitable or acceptable to meet the need. What problems did the audit work identify? We identified at least one issue with 34 of the 60 transactions tested (57 percent), which resulted in a total of $3,254,216 in known federal questioned costs. In total, we identified 43 errors within the 34 transactions tested. Specifically, we identified the following: ? Community College of Aurora (CCA) and Pueblo Community College (PCC) could not provide documentation to support that suspension and debarment verification procedures were performed for nine transactions we reviewed for CCA and for 21 transactions we reviewed for PCC. We confirmed through additional audit work that none of the vendors were suspended or debarred; as a result, we determined that these errors did not result in questioned costs. ? Otero College (OC) did not complete the required Sole Source justification for four transactions. These errors resulted in $1,535,455 of questioned costs. ? PCC did not perform a request for proposals for two transactions which exceeded $150,000 and did not obtain documented quotes for seven transactions which were between $25,000 and $150,000, as required. These errors resulted in questioned costs of $1,718,761. Why did these problems occur? OC and PCC did not have adequate internal controls in place to ensure they complied with HEERF procurement requirements. In addition, CCA and PCC did not have adequate internal controls in place to ensure they complied with HEERF suspension and debarment requirements. Specifically, at OC and PCC, the secondary reviewer did not require staff follow procedures in place for procurement. At PCC the secondary reviewer also did not ensure that staff searched the federal System of Award Management to verify that entities it contracted with were not suspended, debarred, or otherwise excluded from participating in a contract for federal funds. In addition, they did not provide training over grant processes related to state procurement rules, such as training on requirements for staff to maintain appropriate supporting documentation for procurement-related verifications and procurement decisions. Further, CCA and OC experienced staff turnover in key positions, and existing employees could not locate the supporting documentation. Why do these problems matter? It is important for CCA, OC, and PCC to ensure that they obtain and maintain appropriate documentation to support procurement decisions, especially when they are the basis for determining CCA, OC, and PCC?s compliance with specific HEERF program requirements. In addition, CCA and PCC?s failure to perform procedures to ensure an entity is not suspended or debarred could result in the System paying funds to an entity that is disallowed from receiving such funds, thereby exposing the State to increased business risk and potential federal disallowances. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-056 Community College of Aurora should strengthen their internal controls over suspension and debarment and ensure they comply with the Higher Education Emergency Relief Fund (HEERF) requirements by: A. Ensuring staff maintain supporting documentation of suspension and debarment checks. B. Providing training and cross-training to existing employees over suspension and debarment requirements. Response Community College of Aurora A. Agree Implementation Date: October 2022 Beginning in October 2022, the duty was moved from the Principal Investigator or instructional staff previously responsible for this step to the Director of Purchasing to ensure compliance for all grant transactions. B. Agree Implementation Date: October 2022 Training will be provided for identifying when suspension and debarment must be checked for vendors of federal programs, processes and websites to access, and methodology for documenting with the purchase, to fiscal and grant staff
Findings 2022-056, 2022-057, and 2022-058 Higher Education Emergency Relief Fund (HEERF) Procurement Compliance The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 and appropriated federal funds to provide economic aid to the American people negatively impacted by the COVID-19 pandemic. As part of the CARES Act, funds were given to the System under the Higher Education Emergency Relief Fund (HEERF) Program. The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), was signed into law on December 27, 2020, and authorized additional funding under the HEERF program (HEERF II). Finally, the American Rescue Plan Act of 2021 (ARP), enacted on March 11, 2021, authorized a third round of funding (HEERF III) in order for higher education institutions to serve students and ensure learning continues during the COVID-19 pandemic. The HEERF Program is one of the subprograms of the federal Education Stabilization Fund [ALN 84.425]. The HEERF program contains two portions: The Student Aid portion [ALN 84.425E] and the Institutional portion, which is made up of the following: ? HEERF Institutional Aid Portion (ALN 84.425F); ? HEERF Minority Serving Institutions (ALN 84.425L); ? HEERF Strengthening Institutions Program (ALN 84.425M); ? Institutional Resilience and Expanded Postsecondary Opportunity (ALN 84.425P); ? HEERF Supplemental Assistance to Institutions of Higher Education program (ALN 84.425S). Since April 2020, the System has been awarded a total of approximately $255.6 million in HEERF funding. From inception through June 30, 2022, the System spent a total of approximately $97.8 million for the HEERF program Student Aid portion and $113.9 million for the HEERF Institutional Portion. During Fiscal Year 2022, the System spent $71.9 million for the Student Aid portion and $45.1 million for the Institutional Portion; of this amount, $28.7 million represented the System?s procurement for goods and services. The System reports that it will spend the remaining amount of funding during Fiscal Year 2023 and beyond. Each of the System?s 13 campuses separately signed an agreement titled the ?Certification and Agreement? with the U.S. Department of Education (ED) to indicate each campus? acceptance of the HEERF funding and the applicable terms and requirements. Under the requirements, each campus is required to follow the State?s procurement policies and procedures. Federal procurement regulations also require that each campus include any clauses required by federal regulations in every HEERF-related purchase order or other contract. In addition, non-federal entities, including the System and its campuses, are prohibited from contracting with or making subawards under ?covered transactions? to parties that are suspended or debarred from doing business with the federal government. ?Covered transactions? include those procurement contracts for goods and services awarded under a grant or cooperative agreement. In order to comply with federal suspension and debarment requirements, the campuses can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. What was the purpose of our audit work and what work was performed? The purpose of the audit work was to determine whether the System?s campuses had effective internal controls in place over, and complied with, federal procurement and suspension and debarment requirements for the HEERF grant during Fiscal Year 2022. As part of our audit work, we reviewed the campuses? internal controls over the HEERF grant procurement requirements. In addition, we tested a sample of 60 of the campuses? HEERF-related 435 procurement transactions, totaling $18.8 million, to determine if the campuses were in compliance with federal procurement requirements, and whether the campuses? contractors were suspended, debarred, or otherwise excluded from participating in the contract by the federal government, through verification on the SAM website exclusions listing. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulation [2 CFR 180.220] states that a contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. Also, federal regulation [2 CFR 180.300] requires that when a non-federal entity enters into a covered transaction with another entity, the non-federal entity must verify that the person or entity they intend to do business with is not excluded or disqualified from receiving federal funds. This can be done by: (1) checking the SAM exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity. ? Federal regulation [2 CFR 200.303] states that the System and its campuses, as recipients of federal funds, must establish and maintain effective internal control over their federal awards that provides reasonable assurance that the System?s campuses are managing the federal awards in compliance with federal statutes, regulations, and the award terms and conditions. ? Federal regulation [2 CFR 200.318] states that the System must document procurement procedures. The System and its campuses utilize Colorado Revised Statute Section 24, Government -State, Procurement Code; Articles 101- 112, as their procurement policy. Relevant sections of the policy include: o R-24-103-201-01 Purchasing Thresholds - (b) Small purchases are goods and services purchases costing less than $150,000. Goods and services between $25,000 and $150,000 may be purchased using a documented quote process, described in rule R-24-103-204-01. o R-24-103-201-01 Purchasing Thresholds - (c) Invitation for bids, described in rule R-24-103-202-01, request for proposals, described in rule R-24-103-203, and invitations to negotiate, described in rule R-24-103-208-03, may be used for goods or services estimated to exceed the small purchase threshold of $150,000. o R-24-103-205 Sole Source Procurements -Contracts may be awarded by use of a sole source procurement only if the following conditions are met: (a) A sole source procurement is justified when there is only one good or service that can reasonably meet the need and there is only one vendor who can provide the good or service. A requirement for a particular proprietary item (i.e., a brand name specification) does not justify a sole source procurement if there is more than one potential bidder or offeror for that item; (b) The procurement official or his or her designee shall make a written determination that a procurement is sole source, setting forth the reasons. In cases of reasonable doubt, competition should be solicited. Any request by a using agency that a procurement be restricted to one potential contractor shall be accompanied by an explanation as to why no other contractors will be suitable or acceptable to meet the need. What problems did the audit work identify? We identified at least one issue with 34 of the 60 transactions tested (57 percent), which resulted in a total of $3,254,216 in known federal questioned costs. In total, we identified 43 errors within the 34 transactions tested. Specifically, we identified the following: ? Community College of Aurora (CCA) and Pueblo Community College (PCC) could not provide documentation to support that suspension and debarment verification procedures were performed for nine transactions we reviewed for CCA and for 21 transactions we reviewed for PCC. We confirmed through additional audit work that none of the vendors were suspended or debarred; as a result, we determined that these errors did not result in questioned costs. ? Otero College (OC) did not complete the required Sole Source justification for four transactions. These errors resulted in $1,535,455 of questioned costs. ? PCC did not perform a request for proposals for two transactions which exceeded $150,000 and did not obtain documented quotes for seven transactions which were between $25,000 and $150,000, as required. These errors resulted in questioned costs of $1,718,761. Why did these problems occur? OC and PCC did not have adequate internal controls in place to ensure they complied with HEERF procurement requirements. In addition, CCA and PCC did not have adequate internal controls in place to ensure they complied with HEERF suspension and debarment requirements. Specifically, at OC and PCC, the secondary reviewer did not require staff follow procedures in place for procurement. At PCC the secondary reviewer also did not ensure that staff searched the federal System of Award Management to verify that entities it contracted with were not suspended, debarred, or otherwise excluded from participating in a contract for federal funds. In addition, they did not provide training over grant processes related to state procurement rules, such as training on requirements for staff to maintain appropriate supporting documentation for procurement-related verifications and procurement decisions. Further, CCA and OC experienced staff turnover in key positions, and existing employees could not locate the supporting documentation. Why do these problems matter? It is important for CCA, OC, and PCC to ensure that they obtain and maintain appropriate documentation to support procurement decisions, especially when they are the basis for determining CCA, OC, and PCC?s compliance with specific HEERF program requirements. In addition, CCA and PCC?s failure to perform procedures to ensure an entity is not suspended or debarred could result in the System paying funds to an entity that is disallowed from receiving such funds, thereby exposing the State to increased business risk and potential federal disallowances. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-058 Pueblo Community College should strengthen their internal controls over procurement, suspension and debarment and ensure they comply with the Higher Education Emergency Relief Fund (HEERF) requirements and State procurement policies by: A. Ensuring the secondary reviewer enforces compliance with the Colorado Community College System?s (System) procurement procedures and that staff perform procedures to verify contracted entities are not excluded or disqualified from receiving federal funds. B. Ensuring staff maintain supporting documentation for procurements and suspension and debarment checks. C. Providing training and cross-training to existing employees over procurement, suspension and debarment requirements. Response Pueblo Community College A. Agree Implementation Date: September 2022 Going forward, the Director of Purchasing will perform all Sam.Gov searches. The secondary reviews to ensure compliance for the System's procurement and suspension and debarment procedures will be conducted by the Vice President of Administration and Finance. B. Agree Implementation Date: September 2022 The corresponding documents supporting procurement transactions and suspension and debarment checks will be scanned and filed along with the Purchase order. C. Agree Implementation Date: September 2022 Training will be provided to fiscal and grant staff for identifying when suspension and debarment must be checked for vendors of federal programs, processes and websites to access, and methodology for documenting with the purchase documentation.
Findings 2022-056, 2022-057, and 2022-058 Higher Education Emergency Relief Fund (HEERF) Procurement Compliance The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 and appropriated federal funds to provide economic aid to the American people negatively impacted by the COVID-19 pandemic. As part of the CARES Act, funds were given to the System under the Higher Education Emergency Relief Fund (HEERF) Program. The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), was signed into law on December 27, 2020, and authorized additional funding under the HEERF program (HEERF II). Finally, the American Rescue Plan Act of 2021 (ARP), enacted on March 11, 2021, authorized a third round of funding (HEERF III) in order for higher education institutions to serve students and ensure learning continues during the COVID-19 pandemic. The HEERF Program is one of the subprograms of the federal Education Stabilization Fund [ALN 84.425]. The HEERF program contains two portions: The Student Aid portion [ALN 84.425E] and the Institutional portion, which is made up of the following: ? HEERF Institutional Aid Portion (ALN 84.425F); ? HEERF Minority Serving Institutions (ALN 84.425L); ? HEERF Strengthening Institutions Program (ALN 84.425M); ? Institutional Resilience and Expanded Postsecondary Opportunity (ALN 84.425P); ? HEERF Supplemental Assistance to Institutions of Higher Education program (ALN 84.425S). Since April 2020, the System has been awarded a total of approximately $255.6 million in HEERF funding. From inception through June 30, 2022, the System spent a total of approximately $97.8 million for the HEERF program Student Aid portion and $113.9 million for the HEERF Institutional Portion. During Fiscal Year 2022, the System spent $71.9 million for the Student Aid portion and $45.1 million for the Institutional Portion; of this amount, $28.7 million represented the System?s procurement for goods and services. The System reports that it will spend the remaining amount of funding during Fiscal Year 2023 and beyond. Each of the System?s 13 campuses separately signed an agreement titled the ?Certification and Agreement? with the U.S. Department of Education (ED) to indicate each campus? acceptance of the HEERF funding and the applicable terms and requirements. Under the requirements, each campus is required to follow the State?s procurement policies and procedures. Federal procurement regulations also require that each campus include any clauses required by federal regulations in every HEERF-related purchase order or other contract. In addition, non-federal entities, including the System and its campuses, are prohibited from contracting with or making subawards under ?covered transactions? to parties that are suspended or debarred from doing business with the federal government. ?Covered transactions? include those procurement contracts for goods and services awarded under a grant or cooperative agreement. In order to comply with federal suspension and debarment requirements, the campuses can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. What was the purpose of our audit work and what work was performed? The purpose of the audit work was to determine whether the System?s campuses had effective internal controls in place over, and complied with, federal procurement and suspension and debarment requirements for the HEERF grant during Fiscal Year 2022. As part of our audit work, we reviewed the campuses? internal controls over the HEERF grant procurement requirements. In addition, we tested a sample of 60 of the campuses? HEERF-related 435 procurement transactions, totaling $18.8 million, to determine if the campuses were in compliance with federal procurement requirements, and whether the campuses? contractors were suspended, debarred, or otherwise excluded from participating in the contract by the federal government, through verification on the SAM website exclusions listing. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulation [2 CFR 180.220] states that a contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. Also, federal regulation [2 CFR 180.300] requires that when a non-federal entity enters into a covered transaction with another entity, the non-federal entity must verify that the person or entity they intend to do business with is not excluded or disqualified from receiving federal funds. This can be done by: (1) checking the SAM exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity. ? Federal regulation [2 CFR 200.303] states that the System and its campuses, as recipients of federal funds, must establish and maintain effective internal control over their federal awards that provides reasonable assurance that the System?s campuses are managing the federal awards in compliance with federal statutes, regulations, and the award terms and conditions. ? Federal regulation [2 CFR 200.318] states that the System must document procurement procedures. The System and its campuses utilize Colorado Revised Statute Section 24, Government -State, Procurement Code; Articles 101- 112, as their procurement policy. Relevant sections of the policy include: o R-24-103-201-01 Purchasing Thresholds - (b) Small purchases are goods and services purchases costing less than $150,000. Goods and services between $25,000 and $150,000 may be purchased using a documented quote process, described in rule R-24-103-204-01. o R-24-103-201-01 Purchasing Thresholds - (c) Invitation for bids, described in rule R-24-103-202-01, request for proposals, described in rule R-24-103-203, and invitations to negotiate, described in rule R-24-103-208-03, may be used for goods or services estimated to exceed the small purchase threshold of $150,000. o R-24-103-205 Sole Source Procurements -Contracts may be awarded by use of a sole source procurement only if the following conditions are met: (a) A sole source procurement is justified when there is only one good or service that can reasonably meet the need and there is only one vendor who can provide the good or service. A requirement for a particular proprietary item (i.e., a brand name specification) does not justify a sole source procurement if there is more than one potential bidder or offeror for that item; (b) The procurement official or his or her designee shall make a written determination that a procurement is sole source, setting forth the reasons. In cases of reasonable doubt, competition should be solicited. Any request by a using agency that a procurement be restricted to one potential contractor shall be accompanied by an explanation as to why no other contractors will be suitable or acceptable to meet the need. What problems did the audit work identify? We identified at least one issue with 34 of the 60 transactions tested (57 percent), which resulted in a total of $3,254,216 in known federal questioned costs. In total, we identified 43 errors within the 34 transactions tested. Specifically, we identified the following: ? Community College of Aurora (CCA) and Pueblo Community College (PCC) could not provide documentation to support that suspension and debarment verification procedures were performed for nine transactions we reviewed for CCA and for 21 transactions we reviewed for PCC. We confirmed through additional audit work that none of the vendors were suspended or debarred; as a result, we determined that these errors did not result in questioned costs. ? Otero College (OC) did not complete the required Sole Source justification for four transactions. These errors resulted in $1,535,455 of questioned costs. ? PCC did not perform a request for proposals for two transactions which exceeded $150,000 and did not obtain documented quotes for seven transactions which were between $25,000 and $150,000, as required. These errors resulted in questioned costs of $1,718,761. Why did these problems occur? OC and PCC did not have adequate internal controls in place to ensure they complied with HEERF procurement requirements. In addition, CCA and PCC did not have adequate internal controls in place to ensure they complied with HEERF suspension and debarment requirements. Specifically, at OC and PCC, the secondary reviewer did not require staff follow procedures in place for procurement. At PCC the secondary reviewer also did not ensure that staff searched the federal System of Award Management to verify that entities it contracted with were not suspended, debarred, or otherwise excluded from participating in a contract for federal funds. In addition, they did not provide training over grant processes related to state procurement rules, such as training on requirements for staff to maintain appropriate supporting documentation for procurement-related verifications and procurement decisions. Further, CCA and OC experienced staff turnover in key positions, and existing employees could not locate the supporting documentation. Why do these problems matter? It is important for CCA, OC, and PCC to ensure that they obtain and maintain appropriate documentation to support procurement decisions, especially when they are the basis for determining CCA, OC, and PCC?s compliance with specific HEERF program requirements. In addition, CCA and PCC?s failure to perform procedures to ensure an entity is not suspended or debarred could result in the System paying funds to an entity that is disallowed from receiving such funds, thereby exposing the State to increased business risk and potential federal disallowances. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-057 Otero College should strengthen their internal controls over procurement and ensure they comply with the Higher Education Emergency Relief Fund (HEERF) requirements and State procurement policies by: A. Ensuring the secondary reviewer enforces compliance with the Colorado Community College System?s (System) procurement procedures. B. Ensuring staff maintain supporting documentation for procurements. C. Providing training and cross-training to existing employees over procurement requirements. Response Otero College A. Agree Implementation Date: August 2022 Otero College has adopted the system offices Sole Source justification form that will be posted to the State procurement site, requires supervisory approval, and has put that into place as of August 2022. B. Agree Implementation Date: August 2022 Otero College will ensure they maintain supporting documentation for procurements. C. Agree Implementation Date: August 2022 Otero College has a new procurement official that has attended various trainings regarding procurement rules.
Findings 2022-056, 2022-057, and 2022-058 Higher Education Emergency Relief Fund (HEERF) Procurement Compliance The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 and appropriated federal funds to provide economic aid to the American people negatively impacted by the COVID-19 pandemic. As part of the CARES Act, funds were given to the System under the Higher Education Emergency Relief Fund (HEERF) Program. The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), was signed into law on December 27, 2020, and authorized additional funding under the HEERF program (HEERF II). Finally, the American Rescue Plan Act of 2021 (ARP), enacted on March 11, 2021, authorized a third round of funding (HEERF III) in order for higher education institutions to serve students and ensure learning continues during the COVID-19 pandemic. The HEERF Program is one of the subprograms of the federal Education Stabilization Fund [ALN 84.425]. The HEERF program contains two portions: The Student Aid portion [ALN 84.425E] and the Institutional portion, which is made up of the following: ? HEERF Institutional Aid Portion (ALN 84.425F); ? HEERF Minority Serving Institutions (ALN 84.425L); ? HEERF Strengthening Institutions Program (ALN 84.425M); ? Institutional Resilience and Expanded Postsecondary Opportunity (ALN 84.425P); ? HEERF Supplemental Assistance to Institutions of Higher Education program (ALN 84.425S). Since April 2020, the System has been awarded a total of approximately $255.6 million in HEERF funding. From inception through June 30, 2022, the System spent a total of approximately $97.8 million for the HEERF program Student Aid portion and $113.9 million for the HEERF Institutional Portion. During Fiscal Year 2022, the System spent $71.9 million for the Student Aid portion and $45.1 million for the Institutional Portion; of this amount, $28.7 million represented the System?s procurement for goods and services. The System reports that it will spend the remaining amount of funding during Fiscal Year 2023 and beyond. Each of the System?s 13 campuses separately signed an agreement titled the ?Certification and Agreement? with the U.S. Department of Education (ED) to indicate each campus? acceptance of the HEERF funding and the applicable terms and requirements. Under the requirements, each campus is required to follow the State?s procurement policies and procedures. Federal procurement regulations also require that each campus include any clauses required by federal regulations in every HEERF-related purchase order or other contract. In addition, non-federal entities, including the System and its campuses, are prohibited from contracting with or making subawards under ?covered transactions? to parties that are suspended or debarred from doing business with the federal government. ?Covered transactions? include those procurement contracts for goods and services awarded under a grant or cooperative agreement. In order to comply with federal suspension and debarment requirements, the campuses can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. What was the purpose of our audit work and what work was performed? The purpose of the audit work was to determine whether the System?s campuses had effective internal controls in place over, and complied with, federal procurement and suspension and debarment requirements for the HEERF grant during Fiscal Year 2022. As part of our audit work, we reviewed the campuses? internal controls over the HEERF grant procurement requirements. In addition, we tested a sample of 60 of the campuses? HEERF-related 435 procurement transactions, totaling $18.8 million, to determine if the campuses were in compliance with federal procurement requirements, and whether the campuses? contractors were suspended, debarred, or otherwise excluded from participating in the contract by the federal government, through verification on the SAM website exclusions listing. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulation [2 CFR 180.220] states that a contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. Also, federal regulation [2 CFR 180.300] requires that when a non-federal entity enters into a covered transaction with another entity, the non-federal entity must verify that the person or entity they intend to do business with is not excluded or disqualified from receiving federal funds. This can be done by: (1) checking the SAM exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity. ? Federal regulation [2 CFR 200.303] states that the System and its campuses, as recipients of federal funds, must establish and maintain effective internal control over their federal awards that provides reasonable assurance that the System?s campuses are managing the federal awards in compliance with federal statutes, regulations, and the award terms and conditions. ? Federal regulation [2 CFR 200.318] states that the System must document procurement procedures. The System and its campuses utilize Colorado Revised Statute Section 24, Government -State, Procurement Code; Articles 101- 112, as their procurement policy. Relevant sections of the policy include: o R-24-103-201-01 Purchasing Thresholds - (b) Small purchases are goods and services purchases costing less than $150,000. Goods and services between $25,000 and $150,000 may be purchased using a documented quote process, described in rule R-24-103-204-01. o R-24-103-201-01 Purchasing Thresholds - (c) Invitation for bids, described in rule R-24-103-202-01, request for proposals, described in rule R-24-103-203, and invitations to negotiate, described in rule R-24-103-208-03, may be used for goods or services estimated to exceed the small purchase threshold of $150,000. o R-24-103-205 Sole Source Procurements -Contracts may be awarded by use of a sole source procurement only if the following conditions are met: (a) A sole source procurement is justified when there is only one good or service that can reasonably meet the need and there is only one vendor who can provide the good or service. A requirement for a particular proprietary item (i.e., a brand name specification) does not justify a sole source procurement if there is more than one potential bidder or offeror for that item; (b) The procurement official or his or her designee shall make a written determination that a procurement is sole source, setting forth the reasons. In cases of reasonable doubt, competition should be solicited. Any request by a using agency that a procurement be restricted to one potential contractor shall be accompanied by an explanation as to why no other contractors will be suitable or acceptable to meet the need. What problems did the audit work identify? We identified at least one issue with 34 of the 60 transactions tested (57 percent), which resulted in a total of $3,254,216 in known federal questioned costs. In total, we identified 43 errors within the 34 transactions tested. Specifically, we identified the following: ? Community College of Aurora (CCA) and Pueblo Community College (PCC) could not provide documentation to support that suspension and debarment verification procedures were performed for nine transactions we reviewed for CCA and for 21 transactions we reviewed for PCC. We confirmed through additional audit work that none of the vendors were suspended or debarred; as a result, we determined that these errors did not result in questioned costs. ? Otero College (OC) did not complete the required Sole Source justification for four transactions. These errors resulted in $1,535,455 of questioned costs. ? PCC did not perform a request for proposals for two transactions which exceeded $150,000 and did not obtain documented quotes for seven transactions which were between $25,000 and $150,000, as required. These errors resulted in questioned costs of $1,718,761. Why did these problems occur? OC and PCC did not have adequate internal controls in place to ensure they complied with HEERF procurement requirements. In addition, CCA and PCC did not have adequate internal controls in place to ensure they complied with HEERF suspension and debarment requirements. Specifically, at OC and PCC, the secondary reviewer did not require staff follow procedures in place for procurement. At PCC the secondary reviewer also did not ensure that staff searched the federal System of Award Management to verify that entities it contracted with were not suspended, debarred, or otherwise excluded from participating in a contract for federal funds. In addition, they did not provide training over grant processes related to state procurement rules, such as training on requirements for staff to maintain appropriate supporting documentation for procurement-related verifications and procurement decisions. Further, CCA and OC experienced staff turnover in key positions, and existing employees could not locate the supporting documentation. Why do these problems matter? It is important for CCA, OC, and PCC to ensure that they obtain and maintain appropriate documentation to support procurement decisions, especially when they are the basis for determining CCA, OC, and PCC?s compliance with specific HEERF program requirements. In addition, CCA and PCC?s failure to perform procedures to ensure an entity is not suspended or debarred could result in the System paying funds to an entity that is disallowed from receiving such funds, thereby exposing the State to increased business risk and potential federal disallowances. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-058 Pueblo Community College should strengthen their internal controls over procurement, suspension and debarment and ensure they comply with the Higher Education Emergency Relief Fund (HEERF) requirements and State procurement policies by: A. Ensuring the secondary reviewer enforces compliance with the Colorado Community College System?s (System) procurement procedures and that staff perform procedures to verify contracted entities are not excluded or disqualified from receiving federal funds. B. Ensuring staff maintain supporting documentation for procurements and suspension and debarment checks. C. Providing training and cross-training to existing employees over procurement, suspension and debarment requirements. Response Pueblo Community College A. Agree Implementation Date: September 2022 Going forward, the Director of Purchasing will perform all Sam.Gov searches. The secondary reviews to ensure compliance for the System's procurement and suspension and debarment procedures will be conducted by the Vice President of Administration and Finance. B. Agree Implementation Date: September 2022 The corresponding documents supporting procurement transactions and suspension and debarment checks will be scanned and filed along with the Purchase order. C. Agree Implementation Date: September 2022 Training will be provided to fiscal and grant staff for identifying when suspension and debarment must be checked for vendors of federal programs, processes and websites to access, and methodology for documenting with the purchase documentation.
Findings 2022-056, 2022-057, and 2022-058 Higher Education Emergency Relief Fund (HEERF) Procurement Compliance The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 and appropriated federal funds to provide economic aid to the American people negatively impacted by the COVID-19 pandemic. As part of the CARES Act, funds were given to the System under the Higher Education Emergency Relief Fund (HEERF) Program. The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), was signed into law on December 27, 2020, and authorized additional funding under the HEERF program (HEERF II). Finally, the American Rescue Plan Act of 2021 (ARP), enacted on March 11, 2021, authorized a third round of funding (HEERF III) in order for higher education institutions to serve students and ensure learning continues during the COVID-19 pandemic. The HEERF Program is one of the subprograms of the federal Education Stabilization Fund [ALN 84.425]. The HEERF program contains two portions: The Student Aid portion [ALN 84.425E] and the Institutional portion, which is made up of the following: ? HEERF Institutional Aid Portion (ALN 84.425F); ? HEERF Minority Serving Institutions (ALN 84.425L); ? HEERF Strengthening Institutions Program (ALN 84.425M); ? Institutional Resilience and Expanded Postsecondary Opportunity (ALN 84.425P); ? HEERF Supplemental Assistance to Institutions of Higher Education program (ALN 84.425S). Since April 2020, the System has been awarded a total of approximately $255.6 million in HEERF funding. From inception through June 30, 2022, the System spent a total of approximately $97.8 million for the HEERF program Student Aid portion and $113.9 million for the HEERF Institutional Portion. During Fiscal Year 2022, the System spent $71.9 million for the Student Aid portion and $45.1 million for the Institutional Portion; of this amount, $28.7 million represented the System?s procurement for goods and services. The System reports that it will spend the remaining amount of funding during Fiscal Year 2023 and beyond. Each of the System?s 13 campuses separately signed an agreement titled the ?Certification and Agreement? with the U.S. Department of Education (ED) to indicate each campus? acceptance of the HEERF funding and the applicable terms and requirements. Under the requirements, each campus is required to follow the State?s procurement policies and procedures. Federal procurement regulations also require that each campus include any clauses required by federal regulations in every HEERF-related purchase order or other contract. In addition, non-federal entities, including the System and its campuses, are prohibited from contracting with or making subawards under ?covered transactions? to parties that are suspended or debarred from doing business with the federal government. ?Covered transactions? include those procurement contracts for goods and services awarded under a grant or cooperative agreement. In order to comply with federal suspension and debarment requirements, the campuses can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. What was the purpose of our audit work and what work was performed? The purpose of the audit work was to determine whether the System?s campuses had effective internal controls in place over, and complied with, federal procurement and suspension and debarment requirements for the HEERF grant during Fiscal Year 2022. As part of our audit work, we reviewed the campuses? internal controls over the HEERF grant procurement requirements. In addition, we tested a sample of 60 of the campuses? HEERF-related 435 procurement transactions, totaling $18.8 million, to determine if the campuses were in compliance with federal procurement requirements, and whether the campuses? contractors were suspended, debarred, or otherwise excluded from participating in the contract by the federal government, through verification on the SAM website exclusions listing. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulation [2 CFR 180.220] states that a contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. Also, federal regulation [2 CFR 180.300] requires that when a non-federal entity enters into a covered transaction with another entity, the non-federal entity must verify that the person or entity they intend to do business with is not excluded or disqualified from receiving federal funds. This can be done by: (1) checking the SAM exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity. ? Federal regulation [2 CFR 200.303] states that the System and its campuses, as recipients of federal funds, must establish and maintain effective internal control over their federal awards that provides reasonable assurance that the System?s campuses are managing the federal awards in compliance with federal statutes, regulations, and the award terms and conditions. ? Federal regulation [2 CFR 200.318] states that the System must document procurement procedures. The System and its campuses utilize Colorado Revised Statute Section 24, Government -State, Procurement Code; Articles 101- 112, as their procurement policy. Relevant sections of the policy include: o R-24-103-201-01 Purchasing Thresholds - (b) Small purchases are goods and services purchases costing less than $150,000. Goods and services between $25,000 and $150,000 may be purchased using a documented quote process, described in rule R-24-103-204-01. o R-24-103-201-01 Purchasing Thresholds - (c) Invitation for bids, described in rule R-24-103-202-01, request for proposals, described in rule R-24-103-203, and invitations to negotiate, described in rule R-24-103-208-03, may be used for goods or services estimated to exceed the small purchase threshold of $150,000. o R-24-103-205 Sole Source Procurements -Contracts may be awarded by use of a sole source procurement only if the following conditions are met: (a) A sole source procurement is justified when there is only one good or service that can reasonably meet the need and there is only one vendor who can provide the good or service. A requirement for a particular proprietary item (i.e., a brand name specification) does not justify a sole source procurement if there is more than one potential bidder or offeror for that item; (b) The procurement official or his or her designee shall make a written determination that a procurement is sole source, setting forth the reasons. In cases of reasonable doubt, competition should be solicited. Any request by a using agency that a procurement be restricted to one potential contractor shall be accompanied by an explanation as to why no other contractors will be suitable or acceptable to meet the need. What problems did the audit work identify? We identified at least one issue with 34 of the 60 transactions tested (57 percent), which resulted in a total of $3,254,216 in known federal questioned costs. In total, we identified 43 errors within the 34 transactions tested. Specifically, we identified the following: ? Community College of Aurora (CCA) and Pueblo Community College (PCC) could not provide documentation to support that suspension and debarment verification procedures were performed for nine transactions we reviewed for CCA and for 21 transactions we reviewed for PCC. We confirmed through additional audit work that none of the vendors were suspended or debarred; as a result, we determined that these errors did not result in questioned costs. ? Otero College (OC) did not complete the required Sole Source justification for four transactions. These errors resulted in $1,535,455 of questioned costs. ? PCC did not perform a request for proposals for two transactions which exceeded $150,000 and did not obtain documented quotes for seven transactions which were between $25,000 and $150,000, as required. These errors resulted in questioned costs of $1,718,761. Why did these problems occur? OC and PCC did not have adequate internal controls in place to ensure they complied with HEERF procurement requirements. In addition, CCA and PCC did not have adequate internal controls in place to ensure they complied with HEERF suspension and debarment requirements. Specifically, at OC and PCC, the secondary reviewer did not require staff follow procedures in place for procurement. At PCC the secondary reviewer also did not ensure that staff searched the federal System of Award Management to verify that entities it contracted with were not suspended, debarred, or otherwise excluded from participating in a contract for federal funds. In addition, they did not provide training over grant processes related to state procurement rules, such as training on requirements for staff to maintain appropriate supporting documentation for procurement-related verifications and procurement decisions. Further, CCA and OC experienced staff turnover in key positions, and existing employees could not locate the supporting documentation. Why do these problems matter? It is important for CCA, OC, and PCC to ensure that they obtain and maintain appropriate documentation to support procurement decisions, especially when they are the basis for determining CCA, OC, and PCC?s compliance with specific HEERF program requirements. In addition, CCA and PCC?s failure to perform procedures to ensure an entity is not suspended or debarred could result in the System paying funds to an entity that is disallowed from receiving such funds, thereby exposing the State to increased business risk and potential federal disallowances. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-057 Otero College should strengthen their internal controls over procurement and ensure they comply with the Higher Education Emergency Relief Fund (HEERF) requirements and State procurement policies by: A. Ensuring the secondary reviewer enforces compliance with the Colorado Community College System?s (System) procurement procedures. B. Ensuring staff maintain supporting documentation for procurements. C. Providing training and cross-training to existing employees over procurement requirements. Response Otero College A. Agree Implementation Date: August 2022 Otero College has adopted the system offices Sole Source justification form that will be posted to the State procurement site, requires supervisory approval, and has put that into place as of August 2022. B. Agree Implementation Date: August 2022 Otero College will ensure they maintain supporting documentation for procurements. C. Agree Implementation Date: August 2022 Otero College has a new procurement official that has attended various trainings regarding procurement rules.
Findings 2022-056, 2022-057, and 2022-058 Higher Education Emergency Relief Fund (HEERF) Procurement Compliance The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 and appropriated federal funds to provide economic aid to the American people negatively impacted by the COVID-19 pandemic. As part of the CARES Act, funds were given to the System under the Higher Education Emergency Relief Fund (HEERF) Program. The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), was signed into law on December 27, 2020, and authorized additional funding under the HEERF program (HEERF II). Finally, the American Rescue Plan Act of 2021 (ARP), enacted on March 11, 2021, authorized a third round of funding (HEERF III) in order for higher education institutions to serve students and ensure learning continues during the COVID-19 pandemic. The HEERF Program is one of the subprograms of the federal Education Stabilization Fund [ALN 84.425]. The HEERF program contains two portions: The Student Aid portion [ALN 84.425E] and the Institutional portion, which is made up of the following: ? HEERF Institutional Aid Portion (ALN 84.425F); ? HEERF Minority Serving Institutions (ALN 84.425L); ? HEERF Strengthening Institutions Program (ALN 84.425M); ? Institutional Resilience and Expanded Postsecondary Opportunity (ALN 84.425P); ? HEERF Supplemental Assistance to Institutions of Higher Education program (ALN 84.425S). Since April 2020, the System has been awarded a total of approximately $255.6 million in HEERF funding. From inception through June 30, 2022, the System spent a total of approximately $97.8 million for the HEERF program Student Aid portion and $113.9 million for the HEERF Institutional Portion. During Fiscal Year 2022, the System spent $71.9 million for the Student Aid portion and $45.1 million for the Institutional Portion; of this amount, $28.7 million represented the System?s procurement for goods and services. The System reports that it will spend the remaining amount of funding during Fiscal Year 2023 and beyond. Each of the System?s 13 campuses separately signed an agreement titled the ?Certification and Agreement? with the U.S. Department of Education (ED) to indicate each campus? acceptance of the HEERF funding and the applicable terms and requirements. Under the requirements, each campus is required to follow the State?s procurement policies and procedures. Federal procurement regulations also require that each campus include any clauses required by federal regulations in every HEERF-related purchase order or other contract. In addition, non-federal entities, including the System and its campuses, are prohibited from contracting with or making subawards under ?covered transactions? to parties that are suspended or debarred from doing business with the federal government. ?Covered transactions? include those procurement contracts for goods and services awarded under a grant or cooperative agreement. In order to comply with federal suspension and debarment requirements, the campuses can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. What was the purpose of our audit work and what work was performed? The purpose of the audit work was to determine whether the System?s campuses had effective internal controls in place over, and complied with, federal procurement and suspension and debarment requirements for the HEERF grant during Fiscal Year 2022. As part of our audit work, we reviewed the campuses? internal controls over the HEERF grant procurement requirements. In addition, we tested a sample of 60 of the campuses? HEERF-related 435 procurement transactions, totaling $18.8 million, to determine if the campuses were in compliance with federal procurement requirements, and whether the campuses? contractors were suspended, debarred, or otherwise excluded from participating in the contract by the federal government, through verification on the SAM website exclusions listing. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulation [2 CFR 180.220] states that a contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. Also, federal regulation [2 CFR 180.300] requires that when a non-federal entity enters into a covered transaction with another entity, the non-federal entity must verify that the person or entity they intend to do business with is not excluded or disqualified from receiving federal funds. This can be done by: (1) checking the SAM exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity. ? Federal regulation [2 CFR 200.303] states that the System and its campuses, as recipients of federal funds, must establish and maintain effective internal control over their federal awards that provides reasonable assurance that the System?s campuses are managing the federal awards in compliance with federal statutes, regulations, and the award terms and conditions. ? Federal regulation [2 CFR 200.318] states that the System must document procurement procedures. The System and its campuses utilize Colorado Revised Statute Section 24, Government -State, Procurement Code; Articles 101- 112, as their procurement policy. Relevant sections of the policy include: o R-24-103-201-01 Purchasing Thresholds - (b) Small purchases are goods and services purchases costing less than $150,000. Goods and services between $25,000 and $150,000 may be purchased using a documented quote process, described in rule R-24-103-204-01. o R-24-103-201-01 Purchasing Thresholds - (c) Invitation for bids, described in rule R-24-103-202-01, request for proposals, described in rule R-24-103-203, and invitations to negotiate, described in rule R-24-103-208-03, may be used for goods or services estimated to exceed the small purchase threshold of $150,000. o R-24-103-205 Sole Source Procurements -Contracts may be awarded by use of a sole source procurement only if the following conditions are met: (a) A sole source procurement is justified when there is only one good or service that can reasonably meet the need and there is only one vendor who can provide the good or service. A requirement for a particular proprietary item (i.e., a brand name specification) does not justify a sole source procurement if there is more than one potential bidder or offeror for that item; (b) The procurement official or his or her designee shall make a written determination that a procurement is sole source, setting forth the reasons. In cases of reasonable doubt, competition should be solicited. Any request by a using agency that a procurement be restricted to one potential contractor shall be accompanied by an explanation as to why no other contractors will be suitable or acceptable to meet the need. What problems did the audit work identify? We identified at least one issue with 34 of the 60 transactions tested (57 percent), which resulted in a total of $3,254,216 in known federal questioned costs. In total, we identified 43 errors within the 34 transactions tested. Specifically, we identified the following: ? Community College of Aurora (CCA) and Pueblo Community College (PCC) could not provide documentation to support that suspension and debarment verification procedures were performed for nine transactions we reviewed for CCA and for 21 transactions we reviewed for PCC. We confirmed through additional audit work that none of the vendors were suspended or debarred; as a result, we determined that these errors did not result in questioned costs. ? Otero College (OC) did not complete the required Sole Source justification for four transactions. These errors resulted in $1,535,455 of questioned costs. ? PCC did not perform a request for proposals for two transactions which exceeded $150,000 and did not obtain documented quotes for seven transactions which were between $25,000 and $150,000, as required. These errors resulted in questioned costs of $1,718,761. Why did these problems occur? OC and PCC did not have adequate internal controls in place to ensure they complied with HEERF procurement requirements. In addition, CCA and PCC did not have adequate internal controls in place to ensure they complied with HEERF suspension and debarment requirements. Specifically, at OC and PCC, the secondary reviewer did not require staff follow procedures in place for procurement. At PCC the secondary reviewer also did not ensure that staff searched the federal System of Award Management to verify that entities it contracted with were not suspended, debarred, or otherwise excluded from participating in a contract for federal funds. In addition, they did not provide training over grant processes related to state procurement rules, such as training on requirements for staff to maintain appropriate supporting documentation for procurement-related verifications and procurement decisions. Further, CCA and OC experienced staff turnover in key positions, and existing employees could not locate the supporting documentation. Why do these problems matter? It is important for CCA, OC, and PCC to ensure that they obtain and maintain appropriate documentation to support procurement decisions, especially when they are the basis for determining CCA, OC, and PCC?s compliance with specific HEERF program requirements. In addition, CCA and PCC?s failure to perform procedures to ensure an entity is not suspended or debarred could result in the System paying funds to an entity that is disallowed from receiving such funds, thereby exposing the State to increased business risk and potential federal disallowances. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-056 Community College of Aurora should strengthen their internal controls over suspension and debarment and ensure they comply with the Higher Education Emergency Relief Fund (HEERF) requirements by: A. Ensuring staff maintain supporting documentation of suspension and debarment checks. B. Providing training and cross-training to existing employees over suspension and debarment requirements. Response Community College of Aurora A. Agree Implementation Date: October 2022 Beginning in October 2022, the duty was moved from the Principal Investigator or instructional staff previously responsible for this step to the Director of Purchasing to ensure compliance for all grant transactions. B. Agree Implementation Date: October 2022 Training will be provided for identifying when suspension and debarment must be checked for vendors of federal programs, processes and websites to access, and methodology for documenting with the purchase, to fiscal and grant staff
Findings 2022-056, 2022-057, and 2022-058 Higher Education Emergency Relief Fund (HEERF) Procurement Compliance The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 and appropriated federal funds to provide economic aid to the American people negatively impacted by the COVID-19 pandemic. As part of the CARES Act, funds were given to the System under the Higher Education Emergency Relief Fund (HEERF) Program. The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), was signed into law on December 27, 2020, and authorized additional funding under the HEERF program (HEERF II). Finally, the American Rescue Plan Act of 2021 (ARP), enacted on March 11, 2021, authorized a third round of funding (HEERF III) in order for higher education institutions to serve students and ensure learning continues during the COVID-19 pandemic. The HEERF Program is one of the subprograms of the federal Education Stabilization Fund [ALN 84.425]. The HEERF program contains two portions: The Student Aid portion [ALN 84.425E] and the Institutional portion, which is made up of the following: ? HEERF Institutional Aid Portion (ALN 84.425F); ? HEERF Minority Serving Institutions (ALN 84.425L); ? HEERF Strengthening Institutions Program (ALN 84.425M); ? Institutional Resilience and Expanded Postsecondary Opportunity (ALN 84.425P); ? HEERF Supplemental Assistance to Institutions of Higher Education program (ALN 84.425S). Since April 2020, the System has been awarded a total of approximately $255.6 million in HEERF funding. From inception through June 30, 2022, the System spent a total of approximately $97.8 million for the HEERF program Student Aid portion and $113.9 million for the HEERF Institutional Portion. During Fiscal Year 2022, the System spent $71.9 million for the Student Aid portion and $45.1 million for the Institutional Portion; of this amount, $28.7 million represented the System?s procurement for goods and services. The System reports that it will spend the remaining amount of funding during Fiscal Year 2023 and beyond. Each of the System?s 13 campuses separately signed an agreement titled the ?Certification and Agreement? with the U.S. Department of Education (ED) to indicate each campus? acceptance of the HEERF funding and the applicable terms and requirements. Under the requirements, each campus is required to follow the State?s procurement policies and procedures. Federal procurement regulations also require that each campus include any clauses required by federal regulations in every HEERF-related purchase order or other contract. In addition, non-federal entities, including the System and its campuses, are prohibited from contracting with or making subawards under ?covered transactions? to parties that are suspended or debarred from doing business with the federal government. ?Covered transactions? include those procurement contracts for goods and services awarded under a grant or cooperative agreement. In order to comply with federal suspension and debarment requirements, the campuses can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. What was the purpose of our audit work and what work was performed? The purpose of the audit work was to determine whether the System?s campuses had effective internal controls in place over, and complied with, federal procurement and suspension and debarment requirements for the HEERF grant during Fiscal Year 2022. As part of our audit work, we reviewed the campuses? internal controls over the HEERF grant procurement requirements. In addition, we tested a sample of 60 of the campuses? HEERF-related 435 procurement transactions, totaling $18.8 million, to determine if the campuses were in compliance with federal procurement requirements, and whether the campuses? contractors were suspended, debarred, or otherwise excluded from participating in the contract by the federal government, through verification on the SAM website exclusions listing. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulation [2 CFR 180.220] states that a contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. Also, federal regulation [2 CFR 180.300] requires that when a non-federal entity enters into a covered transaction with another entity, the non-federal entity must verify that the person or entity they intend to do business with is not excluded or disqualified from receiving federal funds. This can be done by: (1) checking the SAM exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity. ? Federal regulation [2 CFR 200.303] states that the System and its campuses, as recipients of federal funds, must establish and maintain effective internal control over their federal awards that provides reasonable assurance that the System?s campuses are managing the federal awards in compliance with federal statutes, regulations, and the award terms and conditions. ? Federal regulation [2 CFR 200.318] states that the System must document procurement procedures. The System and its campuses utilize Colorado Revised Statute Section 24, Government -State, Procurement Code; Articles 101- 112, as their procurement policy. Relevant sections of the policy include: o R-24-103-201-01 Purchasing Thresholds - (b) Small purchases are goods and services purchases costing less than $150,000. Goods and services between $25,000 and $150,000 may be purchased using a documented quote process, described in rule R-24-103-204-01. o R-24-103-201-01 Purchasing Thresholds - (c) Invitation for bids, described in rule R-24-103-202-01, request for proposals, described in rule R-24-103-203, and invitations to negotiate, described in rule R-24-103-208-03, may be used for goods or services estimated to exceed the small purchase threshold of $150,000. o R-24-103-205 Sole Source Procurements -Contracts may be awarded by use of a sole source procurement only if the following conditions are met: (a) A sole source procurement is justified when there is only one good or service that can reasonably meet the need and there is only one vendor who can provide the good or service. A requirement for a particular proprietary item (i.e., a brand name specification) does not justify a sole source procurement if there is more than one potential bidder or offeror for that item; (b) The procurement official or his or her designee shall make a written determination that a procurement is sole source, setting forth the reasons. In cases of reasonable doubt, competition should be solicited. Any request by a using agency that a procurement be restricted to one potential contractor shall be accompanied by an explanation as to why no other contractors will be suitable or acceptable to meet the need. What problems did the audit work identify? We identified at least one issue with 34 of the 60 transactions tested (57 percent), which resulted in a total of $3,254,216 in known federal questioned costs. In total, we identified 43 errors within the 34 transactions tested. Specifically, we identified the following: ? Community College of Aurora (CCA) and Pueblo Community College (PCC) could not provide documentation to support that suspension and debarment verification procedures were performed for nine transactions we reviewed for CCA and for 21 transactions we reviewed for PCC. We confirmed through additional audit work that none of the vendors were suspended or debarred; as a result, we determined that these errors did not result in questioned costs. ? Otero College (OC) did not complete the required Sole Source justification for four transactions. These errors resulted in $1,535,455 of questioned costs. ? PCC did not perform a request for proposals for two transactions which exceeded $150,000 and did not obtain documented quotes for seven transactions which were between $25,000 and $150,000, as required. These errors resulted in questioned costs of $1,718,761. Why did these problems occur? OC and PCC did not have adequate internal controls in place to ensure they complied with HEERF procurement requirements. In addition, CCA and PCC did not have adequate internal controls in place to ensure they complied with HEERF suspension and debarment requirements. Specifically, at OC and PCC, the secondary reviewer did not require staff follow procedures in place for procurement. At PCC the secondary reviewer also did not ensure that staff searched the federal System of Award Management to verify that entities it contracted with were not suspended, debarred, or otherwise excluded from participating in a contract for federal funds. In addition, they did not provide training over grant processes related to state procurement rules, such as training on requirements for staff to maintain appropriate supporting documentation for procurement-related verifications and procurement decisions. Further, CCA and OC experienced staff turnover in key positions, and existing employees could not locate the supporting documentation. Why do these problems matter? It is important for CCA, OC, and PCC to ensure that they obtain and maintain appropriate documentation to support procurement decisions, especially when they are the basis for determining CCA, OC, and PCC?s compliance with specific HEERF program requirements. In addition, CCA and PCC?s failure to perform procedures to ensure an entity is not suspended or debarred could result in the System paying funds to an entity that is disallowed from receiving such funds, thereby exposing the State to increased business risk and potential federal disallowances. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-056 Community College of Aurora should strengthen their internal controls over suspension and debarment and ensure they comply with the Higher Education Emergency Relief Fund (HEERF) requirements by: A. Ensuring staff maintain supporting documentation of suspension and debarment checks. B. Providing training and cross-training to existing employees over suspension and debarment requirements. Response Community College of Aurora A. Agree Implementation Date: October 2022 Beginning in October 2022, the duty was moved from the Principal Investigator or instructional staff previously responsible for this step to the Director of Purchasing to ensure compliance for all grant transactions. B. Agree Implementation Date: October 2022 Training will be provided for identifying when suspension and debarment must be checked for vendors of federal programs, processes and websites to access, and methodology for documenting with the purchase, to fiscal and grant staff
Findings 2022-056, 2022-057, and 2022-058 Higher Education Emergency Relief Fund (HEERF) Procurement Compliance The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 and appropriated federal funds to provide economic aid to the American people negatively impacted by the COVID-19 pandemic. As part of the CARES Act, funds were given to the System under the Higher Education Emergency Relief Fund (HEERF) Program. The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), was signed into law on December 27, 2020, and authorized additional funding under the HEERF program (HEERF II). Finally, the American Rescue Plan Act of 2021 (ARP), enacted on March 11, 2021, authorized a third round of funding (HEERF III) in order for higher education institutions to serve students and ensure learning continues during the COVID-19 pandemic. The HEERF Program is one of the subprograms of the federal Education Stabilization Fund [ALN 84.425]. The HEERF program contains two portions: The Student Aid portion [ALN 84.425E] and the Institutional portion, which is made up of the following: ? HEERF Institutional Aid Portion (ALN 84.425F); ? HEERF Minority Serving Institutions (ALN 84.425L); ? HEERF Strengthening Institutions Program (ALN 84.425M); ? Institutional Resilience and Expanded Postsecondary Opportunity (ALN 84.425P); ? HEERF Supplemental Assistance to Institutions of Higher Education program (ALN 84.425S). Since April 2020, the System has been awarded a total of approximately $255.6 million in HEERF funding. From inception through June 30, 2022, the System spent a total of approximately $97.8 million for the HEERF program Student Aid portion and $113.9 million for the HEERF Institutional Portion. During Fiscal Year 2022, the System spent $71.9 million for the Student Aid portion and $45.1 million for the Institutional Portion; of this amount, $28.7 million represented the System?s procurement for goods and services. The System reports that it will spend the remaining amount of funding during Fiscal Year 2023 and beyond. Each of the System?s 13 campuses separately signed an agreement titled the ?Certification and Agreement? with the U.S. Department of Education (ED) to indicate each campus? acceptance of the HEERF funding and the applicable terms and requirements. Under the requirements, each campus is required to follow the State?s procurement policies and procedures. Federal procurement regulations also require that each campus include any clauses required by federal regulations in every HEERF-related purchase order or other contract. In addition, non-federal entities, including the System and its campuses, are prohibited from contracting with or making subawards under ?covered transactions? to parties that are suspended or debarred from doing business with the federal government. ?Covered transactions? include those procurement contracts for goods and services awarded under a grant or cooperative agreement. In order to comply with federal suspension and debarment requirements, the campuses can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. What was the purpose of our audit work and what work was performed? The purpose of the audit work was to determine whether the System?s campuses had effective internal controls in place over, and complied with, federal procurement and suspension and debarment requirements for the HEERF grant during Fiscal Year 2022. As part of our audit work, we reviewed the campuses? internal controls over the HEERF grant procurement requirements. In addition, we tested a sample of 60 of the campuses? HEERF-related 435 procurement transactions, totaling $18.8 million, to determine if the campuses were in compliance with federal procurement requirements, and whether the campuses? contractors were suspended, debarred, or otherwise excluded from participating in the contract by the federal government, through verification on the SAM website exclusions listing. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulation [2 CFR 180.220] states that a contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. Also, federal regulation [2 CFR 180.300] requires that when a non-federal entity enters into a covered transaction with another entity, the non-federal entity must verify that the person or entity they intend to do business with is not excluded or disqualified from receiving federal funds. This can be done by: (1) checking the SAM exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity. ? Federal regulation [2 CFR 200.303] states that the System and its campuses, as recipients of federal funds, must establish and maintain effective internal control over their federal awards that provides reasonable assurance that the System?s campuses are managing the federal awards in compliance with federal statutes, regulations, and the award terms and conditions. ? Federal regulation [2 CFR 200.318] states that the System must document procurement procedures. The System and its campuses utilize Colorado Revised Statute Section 24, Government -State, Procurement Code; Articles 101- 112, as their procurement policy. Relevant sections of the policy include: o R-24-103-201-01 Purchasing Thresholds - (b) Small purchases are goods and services purchases costing less than $150,000. Goods and services between $25,000 and $150,000 may be purchased using a documented quote process, described in rule R-24-103-204-01. o R-24-103-201-01 Purchasing Thresholds - (c) Invitation for bids, described in rule R-24-103-202-01, request for proposals, described in rule R-24-103-203, and invitations to negotiate, described in rule R-24-103-208-03, may be used for goods or services estimated to exceed the small purchase threshold of $150,000. o R-24-103-205 Sole Source Procurements -Contracts may be awarded by use of a sole source procurement only if the following conditions are met: (a) A sole source procurement is justified when there is only one good or service that can reasonably meet the need and there is only one vendor who can provide the good or service. A requirement for a particular proprietary item (i.e., a brand name specification) does not justify a sole source procurement if there is more than one potential bidder or offeror for that item; (b) The procurement official or his or her designee shall make a written determination that a procurement is sole source, setting forth the reasons. In cases of reasonable doubt, competition should be solicited. Any request by a using agency that a procurement be restricted to one potential contractor shall be accompanied by an explanation as to why no other contractors will be suitable or acceptable to meet the need. What problems did the audit work identify? We identified at least one issue with 34 of the 60 transactions tested (57 percent), which resulted in a total of $3,254,216 in known federal questioned costs. In total, we identified 43 errors within the 34 transactions tested. Specifically, we identified the following: ? Community College of Aurora (CCA) and Pueblo Community College (PCC) could not provide documentation to support that suspension and debarment verification procedures were performed for nine transactions we reviewed for CCA and for 21 transactions we reviewed for PCC. We confirmed through additional audit work that none of the vendors were suspended or debarred; as a result, we determined that these errors did not result in questioned costs. ? Otero College (OC) did not complete the required Sole Source justification for four transactions. These errors resulted in $1,535,455 of questioned costs. ? PCC did not perform a request for proposals for two transactions which exceeded $150,000 and did not obtain documented quotes for seven transactions which were between $25,000 and $150,000, as required. These errors resulted in questioned costs of $1,718,761. Why did these problems occur? OC and PCC did not have adequate internal controls in place to ensure they complied with HEERF procurement requirements. In addition, CCA and PCC did not have adequate internal controls in place to ensure they complied with HEERF suspension and debarment requirements. Specifically, at OC and PCC, the secondary reviewer did not require staff follow procedures in place for procurement. At PCC the secondary reviewer also did not ensure that staff searched the federal System of Award Management to verify that entities it contracted with were not suspended, debarred, or otherwise excluded from participating in a contract for federal funds. In addition, they did not provide training over grant processes related to state procurement rules, such as training on requirements for staff to maintain appropriate supporting documentation for procurement-related verifications and procurement decisions. Further, CCA and OC experienced staff turnover in key positions, and existing employees could not locate the supporting documentation. Why do these problems matter? It is important for CCA, OC, and PCC to ensure that they obtain and maintain appropriate documentation to support procurement decisions, especially when they are the basis for determining CCA, OC, and PCC?s compliance with specific HEERF program requirements. In addition, CCA and PCC?s failure to perform procedures to ensure an entity is not suspended or debarred could result in the System paying funds to an entity that is disallowed from receiving such funds, thereby exposing the State to increased business risk and potential federal disallowances. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-057 Otero College should strengthen their internal controls over procurement and ensure they comply with the Higher Education Emergency Relief Fund (HEERF) requirements and State procurement policies by: A. Ensuring the secondary reviewer enforces compliance with the Colorado Community College System?s (System) procurement procedures. B. Ensuring staff maintain supporting documentation for procurements. C. Providing training and cross-training to existing employees over procurement requirements. Response Otero College A. Agree Implementation Date: August 2022 Otero College has adopted the system offices Sole Source justification form that will be posted to the State procurement site, requires supervisory approval, and has put that into place as of August 2022. B. Agree Implementation Date: August 2022 Otero College will ensure they maintain supporting documentation for procurements. C. Agree Implementation Date: August 2022 Otero College has a new procurement official that has attended various trainings regarding procurement rules.
Findings 2022-056, 2022-057, and 2022-058 Higher Education Emergency Relief Fund (HEERF) Procurement Compliance The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 and appropriated federal funds to provide economic aid to the American people negatively impacted by the COVID-19 pandemic. As part of the CARES Act, funds were given to the System under the Higher Education Emergency Relief Fund (HEERF) Program. The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), was signed into law on December 27, 2020, and authorized additional funding under the HEERF program (HEERF II). Finally, the American Rescue Plan Act of 2021 (ARP), enacted on March 11, 2021, authorized a third round of funding (HEERF III) in order for higher education institutions to serve students and ensure learning continues during the COVID-19 pandemic. The HEERF Program is one of the subprograms of the federal Education Stabilization Fund [ALN 84.425]. The HEERF program contains two portions: The Student Aid portion [ALN 84.425E] and the Institutional portion, which is made up of the following: ? HEERF Institutional Aid Portion (ALN 84.425F); ? HEERF Minority Serving Institutions (ALN 84.425L); ? HEERF Strengthening Institutions Program (ALN 84.425M); ? Institutional Resilience and Expanded Postsecondary Opportunity (ALN 84.425P); ? HEERF Supplemental Assistance to Institutions of Higher Education program (ALN 84.425S). Since April 2020, the System has been awarded a total of approximately $255.6 million in HEERF funding. From inception through June 30, 2022, the System spent a total of approximately $97.8 million for the HEERF program Student Aid portion and $113.9 million for the HEERF Institutional Portion. During Fiscal Year 2022, the System spent $71.9 million for the Student Aid portion and $45.1 million for the Institutional Portion; of this amount, $28.7 million represented the System?s procurement for goods and services. The System reports that it will spend the remaining amount of funding during Fiscal Year 2023 and beyond. Each of the System?s 13 campuses separately signed an agreement titled the ?Certification and Agreement? with the U.S. Department of Education (ED) to indicate each campus? acceptance of the HEERF funding and the applicable terms and requirements. Under the requirements, each campus is required to follow the State?s procurement policies and procedures. Federal procurement regulations also require that each campus include any clauses required by federal regulations in every HEERF-related purchase order or other contract. In addition, non-federal entities, including the System and its campuses, are prohibited from contracting with or making subawards under ?covered transactions? to parties that are suspended or debarred from doing business with the federal government. ?Covered transactions? include those procurement contracts for goods and services awarded under a grant or cooperative agreement. In order to comply with federal suspension and debarment requirements, the campuses can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. What was the purpose of our audit work and what work was performed? The purpose of the audit work was to determine whether the System?s campuses had effective internal controls in place over, and complied with, federal procurement and suspension and debarment requirements for the HEERF grant during Fiscal Year 2022. As part of our audit work, we reviewed the campuses? internal controls over the HEERF grant procurement requirements. In addition, we tested a sample of 60 of the campuses? HEERF-related 435 procurement transactions, totaling $18.8 million, to determine if the campuses were in compliance with federal procurement requirements, and whether the campuses? contractors were suspended, debarred, or otherwise excluded from participating in the contract by the federal government, through verification on the SAM website exclusions listing. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulation [2 CFR 180.220] states that a contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. Also, federal regulation [2 CFR 180.300] requires that when a non-federal entity enters into a covered transaction with another entity, the non-federal entity must verify that the person or entity they intend to do business with is not excluded or disqualified from receiving federal funds. This can be done by: (1) checking the SAM exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity. ? Federal regulation [2 CFR 200.303] states that the System and its campuses, as recipients of federal funds, must establish and maintain effective internal control over their federal awards that provides reasonable assurance that the System?s campuses are managing the federal awards in compliance with federal statutes, regulations, and the award terms and conditions. ? Federal regulation [2 CFR 200.318] states that the System must document procurement procedures. The System and its campuses utilize Colorado Revised Statute Section 24, Government -State, Procurement Code; Articles 101- 112, as their procurement policy. Relevant sections of the policy include: o R-24-103-201-01 Purchasing Thresholds - (b) Small purchases are goods and services purchases costing less than $150,000. Goods and services between $25,000 and $150,000 may be purchased using a documented quote process, described in rule R-24-103-204-01. o R-24-103-201-01 Purchasing Thresholds - (c) Invitation for bids, described in rule R-24-103-202-01, request for proposals, described in rule R-24-103-203, and invitations to negotiate, described in rule R-24-103-208-03, may be used for goods or services estimated to exceed the small purchase threshold of $150,000. o R-24-103-205 Sole Source Procurements -Contracts may be awarded by use of a sole source procurement only if the following conditions are met: (a) A sole source procurement is justified when there is only one good or service that can reasonably meet the need and there is only one vendor who can provide the good or service. A requirement for a particular proprietary item (i.e., a brand name specification) does not justify a sole source procurement if there is more than one potential bidder or offeror for that item; (b) The procurement official or his or her designee shall make a written determination that a procurement is sole source, setting forth the reasons. In cases of reasonable doubt, competition should be solicited. Any request by a using agency that a procurement be restricted to one potential contractor shall be accompanied by an explanation as to why no other contractors will be suitable or acceptable to meet the need. What problems did the audit work identify? We identified at least one issue with 34 of the 60 transactions tested (57 percent), which resulted in a total of $3,254,216 in known federal questioned costs. In total, we identified 43 errors within the 34 transactions tested. Specifically, we identified the following: ? Community College of Aurora (CCA) and Pueblo Community College (PCC) could not provide documentation to support that suspension and debarment verification procedures were performed for nine transactions we reviewed for CCA and for 21 transactions we reviewed for PCC. We confirmed through additional audit work that none of the vendors were suspended or debarred; as a result, we determined that these errors did not result in questioned costs. ? Otero College (OC) did not complete the required Sole Source justification for four transactions. These errors resulted in $1,535,455 of questioned costs. ? PCC did not perform a request for proposals for two transactions which exceeded $150,000 and did not obtain documented quotes for seven transactions which were between $25,000 and $150,000, as required. These errors resulted in questioned costs of $1,718,761. Why did these problems occur? OC and PCC did not have adequate internal controls in place to ensure they complied with HEERF procurement requirements. In addition, CCA and PCC did not have adequate internal controls in place to ensure they complied with HEERF suspension and debarment requirements. Specifically, at OC and PCC, the secondary reviewer did not require staff follow procedures in place for procurement. At PCC the secondary reviewer also did not ensure that staff searched the federal System of Award Management to verify that entities it contracted with were not suspended, debarred, or otherwise excluded from participating in a contract for federal funds. In addition, they did not provide training over grant processes related to state procurement rules, such as training on requirements for staff to maintain appropriate supporting documentation for procurement-related verifications and procurement decisions. Further, CCA and OC experienced staff turnover in key positions, and existing employees could not locate the supporting documentation. Why do these problems matter? It is important for CCA, OC, and PCC to ensure that they obtain and maintain appropriate documentation to support procurement decisions, especially when they are the basis for determining CCA, OC, and PCC?s compliance with specific HEERF program requirements. In addition, CCA and PCC?s failure to perform procedures to ensure an entity is not suspended or debarred could result in the System paying funds to an entity that is disallowed from receiving such funds, thereby exposing the State to increased business risk and potential federal disallowances. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-058 Pueblo Community College should strengthen their internal controls over procurement, suspension and debarment and ensure they comply with the Higher Education Emergency Relief Fund (HEERF) requirements and State procurement policies by: A. Ensuring the secondary reviewer enforces compliance with the Colorado Community College System?s (System) procurement procedures and that staff perform procedures to verify contracted entities are not excluded or disqualified from receiving federal funds. B. Ensuring staff maintain supporting documentation for procurements and suspension and debarment checks. C. Providing training and cross-training to existing employees over procurement, suspension and debarment requirements. Response Pueblo Community College A. Agree Implementation Date: September 2022 Going forward, the Director of Purchasing will perform all Sam.Gov searches. The secondary reviews to ensure compliance for the System's procurement and suspension and debarment procedures will be conducted by the Vice President of Administration and Finance. B. Agree Implementation Date: September 2022 The corresponding documents supporting procurement transactions and suspension and debarment checks will be scanned and filed along with the Purchase order. C. Agree Implementation Date: September 2022 Training will be provided to fiscal and grant staff for identifying when suspension and debarment must be checked for vendors of federal programs, processes and websites to access, and methodology for documenting with the purchase documentation.
Findings 2022-056, 2022-057, and 2022-058 Higher Education Emergency Relief Fund (HEERF) Procurement Compliance The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 and appropriated federal funds to provide economic aid to the American people negatively impacted by the COVID-19 pandemic. As part of the CARES Act, funds were given to the System under the Higher Education Emergency Relief Fund (HEERF) Program. The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), was signed into law on December 27, 2020, and authorized additional funding under the HEERF program (HEERF II). Finally, the American Rescue Plan Act of 2021 (ARP), enacted on March 11, 2021, authorized a third round of funding (HEERF III) in order for higher education institutions to serve students and ensure learning continues during the COVID-19 pandemic. The HEERF Program is one of the subprograms of the federal Education Stabilization Fund [ALN 84.425]. The HEERF program contains two portions: The Student Aid portion [ALN 84.425E] and the Institutional portion, which is made up of the following: ? HEERF Institutional Aid Portion (ALN 84.425F); ? HEERF Minority Serving Institutions (ALN 84.425L); ? HEERF Strengthening Institutions Program (ALN 84.425M); ? Institutional Resilience and Expanded Postsecondary Opportunity (ALN 84.425P); ? HEERF Supplemental Assistance to Institutions of Higher Education program (ALN 84.425S). Since April 2020, the System has been awarded a total of approximately $255.6 million in HEERF funding. From inception through June 30, 2022, the System spent a total of approximately $97.8 million for the HEERF program Student Aid portion and $113.9 million for the HEERF Institutional Portion. During Fiscal Year 2022, the System spent $71.9 million for the Student Aid portion and $45.1 million for the Institutional Portion; of this amount, $28.7 million represented the System?s procurement for goods and services. The System reports that it will spend the remaining amount of funding during Fiscal Year 2023 and beyond. Each of the System?s 13 campuses separately signed an agreement titled the ?Certification and Agreement? with the U.S. Department of Education (ED) to indicate each campus? acceptance of the HEERF funding and the applicable terms and requirements. Under the requirements, each campus is required to follow the State?s procurement policies and procedures. Federal procurement regulations also require that each campus include any clauses required by federal regulations in every HEERF-related purchase order or other contract. In addition, non-federal entities, including the System and its campuses, are prohibited from contracting with or making subawards under ?covered transactions? to parties that are suspended or debarred from doing business with the federal government. ?Covered transactions? include those procurement contracts for goods and services awarded under a grant or cooperative agreement. In order to comply with federal suspension and debarment requirements, the campuses can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. What was the purpose of our audit work and what work was performed? The purpose of the audit work was to determine whether the System?s campuses had effective internal controls in place over, and complied with, federal procurement and suspension and debarment requirements for the HEERF grant during Fiscal Year 2022. As part of our audit work, we reviewed the campuses? internal controls over the HEERF grant procurement requirements. In addition, we tested a sample of 60 of the campuses? HEERF-related 435 procurement transactions, totaling $18.8 million, to determine if the campuses were in compliance with federal procurement requirements, and whether the campuses? contractors were suspended, debarred, or otherwise excluded from participating in the contract by the federal government, through verification on the SAM website exclusions listing. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulation [2 CFR 180.220] states that a contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. Also, federal regulation [2 CFR 180.300] requires that when a non-federal entity enters into a covered transaction with another entity, the non-federal entity must verify that the person or entity they intend to do business with is not excluded or disqualified from receiving federal funds. This can be done by: (1) checking the SAM exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity. ? Federal regulation [2 CFR 200.303] states that the System and its campuses, as recipients of federal funds, must establish and maintain effective internal control over their federal awards that provides reasonable assurance that the System?s campuses are managing the federal awards in compliance with federal statutes, regulations, and the award terms and conditions. ? Federal regulation [2 CFR 200.318] states that the System must document procurement procedures. The System and its campuses utilize Colorado Revised Statute Section 24, Government -State, Procurement Code; Articles 101- 112, as their procurement policy. Relevant sections of the policy include: o R-24-103-201-01 Purchasing Thresholds - (b) Small purchases are goods and services purchases costing less than $150,000. Goods and services between $25,000 and $150,000 may be purchased using a documented quote process, described in rule R-24-103-204-01. o R-24-103-201-01 Purchasing Thresholds - (c) Invitation for bids, described in rule R-24-103-202-01, request for proposals, described in rule R-24-103-203, and invitations to negotiate, described in rule R-24-103-208-03, may be used for goods or services estimated to exceed the small purchase threshold of $150,000. o R-24-103-205 Sole Source Procurements -Contracts may be awarded by use of a sole source procurement only if the following conditions are met: (a) A sole source procurement is justified when there is only one good or service that can reasonably meet the need and there is only one vendor who can provide the good or service. A requirement for a particular proprietary item (i.e., a brand name specification) does not justify a sole source procurement if there is more than one potential bidder or offeror for that item; (b) The procurement official or his or her designee shall make a written determination that a procurement is sole source, setting forth the reasons. In cases of reasonable doubt, competition should be solicited. Any request by a using agency that a procurement be restricted to one potential contractor shall be accompanied by an explanation as to why no other contractors will be suitable or acceptable to meet the need. What problems did the audit work identify? We identified at least one issue with 34 of the 60 transactions tested (57 percent), which resulted in a total of $3,254,216 in known federal questioned costs. In total, we identified 43 errors within the 34 transactions tested. Specifically, we identified the following: ? Community College of Aurora (CCA) and Pueblo Community College (PCC) could not provide documentation to support that suspension and debarment verification procedures were performed for nine transactions we reviewed for CCA and for 21 transactions we reviewed for PCC. We confirmed through additional audit work that none of the vendors were suspended or debarred; as a result, we determined that these errors did not result in questioned costs. ? Otero College (OC) did not complete the required Sole Source justification for four transactions. These errors resulted in $1,535,455 of questioned costs. ? PCC did not perform a request for proposals for two transactions which exceeded $150,000 and did not obtain documented quotes for seven transactions which were between $25,000 and $150,000, as required. These errors resulted in questioned costs of $1,718,761. Why did these problems occur? OC and PCC did not have adequate internal controls in place to ensure they complied with HEERF procurement requirements. In addition, CCA and PCC did not have adequate internal controls in place to ensure they complied with HEERF suspension and debarment requirements. Specifically, at OC and PCC, the secondary reviewer did not require staff follow procedures in place for procurement. At PCC the secondary reviewer also did not ensure that staff searched the federal System of Award Management to verify that entities it contracted with were not suspended, debarred, or otherwise excluded from participating in a contract for federal funds. In addition, they did not provide training over grant processes related to state procurement rules, such as training on requirements for staff to maintain appropriate supporting documentation for procurement-related verifications and procurement decisions. Further, CCA and OC experienced staff turnover in key positions, and existing employees could not locate the supporting documentation. Why do these problems matter? It is important for CCA, OC, and PCC to ensure that they obtain and maintain appropriate documentation to support procurement decisions, especially when they are the basis for determining CCA, OC, and PCC?s compliance with specific HEERF program requirements. In addition, CCA and PCC?s failure to perform procedures to ensure an entity is not suspended or debarred could result in the System paying funds to an entity that is disallowed from receiving such funds, thereby exposing the State to increased business risk and potential federal disallowances. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-056 Community College of Aurora should strengthen their internal controls over suspension and debarment and ensure they comply with the Higher Education Emergency Relief Fund (HEERF) requirements by: A. Ensuring staff maintain supporting documentation of suspension and debarment checks. B. Providing training and cross-training to existing employees over suspension and debarment requirements. Response Community College of Aurora A. Agree Implementation Date: October 2022 Beginning in October 2022, the duty was moved from the Principal Investigator or instructional staff previously responsible for this step to the Director of Purchasing to ensure compliance for all grant transactions. B. Agree Implementation Date: October 2022 Training will be provided for identifying when suspension and debarment must be checked for vendors of federal programs, processes and websites to access, and methodology for documenting with the purchase, to fiscal and grant staff
Findings 2022-056, 2022-057, and 2022-058 Higher Education Emergency Relief Fund (HEERF) Procurement Compliance The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 and appropriated federal funds to provide economic aid to the American people negatively impacted by the COVID-19 pandemic. As part of the CARES Act, funds were given to the System under the Higher Education Emergency Relief Fund (HEERF) Program. The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), was signed into law on December 27, 2020, and authorized additional funding under the HEERF program (HEERF II). Finally, the American Rescue Plan Act of 2021 (ARP), enacted on March 11, 2021, authorized a third round of funding (HEERF III) in order for higher education institutions to serve students and ensure learning continues during the COVID-19 pandemic. The HEERF Program is one of the subprograms of the federal Education Stabilization Fund [ALN 84.425]. The HEERF program contains two portions: The Student Aid portion [ALN 84.425E] and the Institutional portion, which is made up of the following: ? HEERF Institutional Aid Portion (ALN 84.425F); ? HEERF Minority Serving Institutions (ALN 84.425L); ? HEERF Strengthening Institutions Program (ALN 84.425M); ? Institutional Resilience and Expanded Postsecondary Opportunity (ALN 84.425P); ? HEERF Supplemental Assistance to Institutions of Higher Education program (ALN 84.425S). Since April 2020, the System has been awarded a total of approximately $255.6 million in HEERF funding. From inception through June 30, 2022, the System spent a total of approximately $97.8 million for the HEERF program Student Aid portion and $113.9 million for the HEERF Institutional Portion. During Fiscal Year 2022, the System spent $71.9 million for the Student Aid portion and $45.1 million for the Institutional Portion; of this amount, $28.7 million represented the System?s procurement for goods and services. The System reports that it will spend the remaining amount of funding during Fiscal Year 2023 and beyond. Each of the System?s 13 campuses separately signed an agreement titled the ?Certification and Agreement? with the U.S. Department of Education (ED) to indicate each campus? acceptance of the HEERF funding and the applicable terms and requirements. Under the requirements, each campus is required to follow the State?s procurement policies and procedures. Federal procurement regulations also require that each campus include any clauses required by federal regulations in every HEERF-related purchase order or other contract. In addition, non-federal entities, including the System and its campuses, are prohibited from contracting with or making subawards under ?covered transactions? to parties that are suspended or debarred from doing business with the federal government. ?Covered transactions? include those procurement contracts for goods and services awarded under a grant or cooperative agreement. In order to comply with federal suspension and debarment requirements, the campuses can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. What was the purpose of our audit work and what work was performed? The purpose of the audit work was to determine whether the System?s campuses had effective internal controls in place over, and complied with, federal procurement and suspension and debarment requirements for the HEERF grant during Fiscal Year 2022. As part of our audit work, we reviewed the campuses? internal controls over the HEERF grant procurement requirements. In addition, we tested a sample of 60 of the campuses? HEERF-related 435 procurement transactions, totaling $18.8 million, to determine if the campuses were in compliance with federal procurement requirements, and whether the campuses? contractors were suspended, debarred, or otherwise excluded from participating in the contract by the federal government, through verification on the SAM website exclusions listing. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulation [2 CFR 180.220] states that a contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. Also, federal regulation [2 CFR 180.300] requires that when a non-federal entity enters into a covered transaction with another entity, the non-federal entity must verify that the person or entity they intend to do business with is not excluded or disqualified from receiving federal funds. This can be done by: (1) checking the SAM exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity. ? Federal regulation [2 CFR 200.303] states that the System and its campuses, as recipients of federal funds, must establish and maintain effective internal control over their federal awards that provides reasonable assurance that the System?s campuses are managing the federal awards in compliance with federal statutes, regulations, and the award terms and conditions. ? Federal regulation [2 CFR 200.318] states that the System must document procurement procedures. The System and its campuses utilize Colorado Revised Statute Section 24, Government -State, Procurement Code; Articles 101- 112, as their procurement policy. Relevant sections of the policy include: o R-24-103-201-01 Purchasing Thresholds - (b) Small purchases are goods and services purchases costing less than $150,000. Goods and services between $25,000 and $150,000 may be purchased using a documented quote process, described in rule R-24-103-204-01. o R-24-103-201-01 Purchasing Thresholds - (c) Invitation for bids, described in rule R-24-103-202-01, request for proposals, described in rule R-24-103-203, and invitations to negotiate, described in rule R-24-103-208-03, may be used for goods or services estimated to exceed the small purchase threshold of $150,000. o R-24-103-205 Sole Source Procurements -Contracts may be awarded by use of a sole source procurement only if the following conditions are met: (a) A sole source procurement is justified when there is only one good or service that can reasonably meet the need and there is only one vendor who can provide the good or service. A requirement for a particular proprietary item (i.e., a brand name specification) does not justify a sole source procurement if there is more than one potential bidder or offeror for that item; (b) The procurement official or his or her designee shall make a written determination that a procurement is sole source, setting forth the reasons. In cases of reasonable doubt, competition should be solicited. Any request by a using agency that a procurement be restricted to one potential contractor shall be accompanied by an explanation as to why no other contractors will be suitable or acceptable to meet the need. What problems did the audit work identify? We identified at least one issue with 34 of the 60 transactions tested (57 percent), which resulted in a total of $3,254,216 in known federal questioned costs. In total, we identified 43 errors within the 34 transactions tested. Specifically, we identified the following: ? Community College of Aurora (CCA) and Pueblo Community College (PCC) could not provide documentation to support that suspension and debarment verification procedures were performed for nine transactions we reviewed for CCA and for 21 transactions we reviewed for PCC. We confirmed through additional audit work that none of the vendors were suspended or debarred; as a result, we determined that these errors did not result in questioned costs. ? Otero College (OC) did not complete the required Sole Source justification for four transactions. These errors resulted in $1,535,455 of questioned costs. ? PCC did not perform a request for proposals for two transactions which exceeded $150,000 and did not obtain documented quotes for seven transactions which were between $25,000 and $150,000, as required. These errors resulted in questioned costs of $1,718,761. Why did these problems occur? OC and PCC did not have adequate internal controls in place to ensure they complied with HEERF procurement requirements. In addition, CCA and PCC did not have adequate internal controls in place to ensure they complied with HEERF suspension and debarment requirements. Specifically, at OC and PCC, the secondary reviewer did not require staff follow procedures in place for procurement. At PCC the secondary reviewer also did not ensure that staff searched the federal System of Award Management to verify that entities it contracted with were not suspended, debarred, or otherwise excluded from participating in a contract for federal funds. In addition, they did not provide training over grant processes related to state procurement rules, such as training on requirements for staff to maintain appropriate supporting documentation for procurement-related verifications and procurement decisions. Further, CCA and OC experienced staff turnover in key positions, and existing employees could not locate the supporting documentation. Why do these problems matter? It is important for CCA, OC, and PCC to ensure that they obtain and maintain appropriate documentation to support procurement decisions, especially when they are the basis for determining CCA, OC, and PCC?s compliance with specific HEERF program requirements. In addition, CCA and PCC?s failure to perform procedures to ensure an entity is not suspended or debarred could result in the System paying funds to an entity that is disallowed from receiving such funds, thereby exposing the State to increased business risk and potential federal disallowances. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-057 Otero College should strengthen their internal controls over procurement and ensure they comply with the Higher Education Emergency Relief Fund (HEERF) requirements and State procurement policies by: A. Ensuring the secondary reviewer enforces compliance with the Colorado Community College System?s (System) procurement procedures. B. Ensuring staff maintain supporting documentation for procurements. C. Providing training and cross-training to existing employees over procurement requirements. Response Otero College A. Agree Implementation Date: August 2022 Otero College has adopted the system offices Sole Source justification form that will be posted to the State procurement site, requires supervisory approval, and has put that into place as of August 2022. B. Agree Implementation Date: August 2022 Otero College will ensure they maintain supporting documentation for procurements. C. Agree Implementation Date: August 2022 Otero College has a new procurement official that has attended various trainings regarding procurement rules.
Findings 2022-056, 2022-057, and 2022-058 Higher Education Emergency Relief Fund (HEERF) Procurement Compliance The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 and appropriated federal funds to provide economic aid to the American people negatively impacted by the COVID-19 pandemic. As part of the CARES Act, funds were given to the System under the Higher Education Emergency Relief Fund (HEERF) Program. The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), was signed into law on December 27, 2020, and authorized additional funding under the HEERF program (HEERF II). Finally, the American Rescue Plan Act of 2021 (ARP), enacted on March 11, 2021, authorized a third round of funding (HEERF III) in order for higher education institutions to serve students and ensure learning continues during the COVID-19 pandemic. The HEERF Program is one of the subprograms of the federal Education Stabilization Fund [ALN 84.425]. The HEERF program contains two portions: The Student Aid portion [ALN 84.425E] and the Institutional portion, which is made up of the following: ? HEERF Institutional Aid Portion (ALN 84.425F); ? HEERF Minority Serving Institutions (ALN 84.425L); ? HEERF Strengthening Institutions Program (ALN 84.425M); ? Institutional Resilience and Expanded Postsecondary Opportunity (ALN 84.425P); ? HEERF Supplemental Assistance to Institutions of Higher Education program (ALN 84.425S). Since April 2020, the System has been awarded a total of approximately $255.6 million in HEERF funding. From inception through June 30, 2022, the System spent a total of approximately $97.8 million for the HEERF program Student Aid portion and $113.9 million for the HEERF Institutional Portion. During Fiscal Year 2022, the System spent $71.9 million for the Student Aid portion and $45.1 million for the Institutional Portion; of this amount, $28.7 million represented the System?s procurement for goods and services. The System reports that it will spend the remaining amount of funding during Fiscal Year 2023 and beyond. Each of the System?s 13 campuses separately signed an agreement titled the ?Certification and Agreement? with the U.S. Department of Education (ED) to indicate each campus? acceptance of the HEERF funding and the applicable terms and requirements. Under the requirements, each campus is required to follow the State?s procurement policies and procedures. Federal procurement regulations also require that each campus include any clauses required by federal regulations in every HEERF-related purchase order or other contract. In addition, non-federal entities, including the System and its campuses, are prohibited from contracting with or making subawards under ?covered transactions? to parties that are suspended or debarred from doing business with the federal government. ?Covered transactions? include those procurement contracts for goods and services awarded under a grant or cooperative agreement. In order to comply with federal suspension and debarment requirements, the campuses can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. What was the purpose of our audit work and what work was performed? The purpose of the audit work was to determine whether the System?s campuses had effective internal controls in place over, and complied with, federal procurement and suspension and debarment requirements for the HEERF grant during Fiscal Year 2022. As part of our audit work, we reviewed the campuses? internal controls over the HEERF grant procurement requirements. In addition, we tested a sample of 60 of the campuses? HEERF-related 435 procurement transactions, totaling $18.8 million, to determine if the campuses were in compliance with federal procurement requirements, and whether the campuses? contractors were suspended, debarred, or otherwise excluded from participating in the contract by the federal government, through verification on the SAM website exclusions listing. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulation [2 CFR 180.220] states that a contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. Also, federal regulation [2 CFR 180.300] requires that when a non-federal entity enters into a covered transaction with another entity, the non-federal entity must verify that the person or entity they intend to do business with is not excluded or disqualified from receiving federal funds. This can be done by: (1) checking the SAM exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity. ? Federal regulation [2 CFR 200.303] states that the System and its campuses, as recipients of federal funds, must establish and maintain effective internal control over their federal awards that provides reasonable assurance that the System?s campuses are managing the federal awards in compliance with federal statutes, regulations, and the award terms and conditions. ? Federal regulation [2 CFR 200.318] states that the System must document procurement procedures. The System and its campuses utilize Colorado Revised Statute Section 24, Government -State, Procurement Code; Articles 101- 112, as their procurement policy. Relevant sections of the policy include: o R-24-103-201-01 Purchasing Thresholds - (b) Small purchases are goods and services purchases costing less than $150,000. Goods and services between $25,000 and $150,000 may be purchased using a documented quote process, described in rule R-24-103-204-01. o R-24-103-201-01 Purchasing Thresholds - (c) Invitation for bids, described in rule R-24-103-202-01, request for proposals, described in rule R-24-103-203, and invitations to negotiate, described in rule R-24-103-208-03, may be used for goods or services estimated to exceed the small purchase threshold of $150,000. o R-24-103-205 Sole Source Procurements -Contracts may be awarded by use of a sole source procurement only if the following conditions are met: (a) A sole source procurement is justified when there is only one good or service that can reasonably meet the need and there is only one vendor who can provide the good or service. A requirement for a particular proprietary item (i.e., a brand name specification) does not justify a sole source procurement if there is more than one potential bidder or offeror for that item; (b) The procurement official or his or her designee shall make a written determination that a procurement is sole source, setting forth the reasons. In cases of reasonable doubt, competition should be solicited. Any request by a using agency that a procurement be restricted to one potential contractor shall be accompanied by an explanation as to why no other contractors will be suitable or acceptable to meet the need. What problems did the audit work identify? We identified at least one issue with 34 of the 60 transactions tested (57 percent), which resulted in a total of $3,254,216 in known federal questioned costs. In total, we identified 43 errors within the 34 transactions tested. Specifically, we identified the following: ? Community College of Aurora (CCA) and Pueblo Community College (PCC) could not provide documentation to support that suspension and debarment verification procedures were performed for nine transactions we reviewed for CCA and for 21 transactions we reviewed for PCC. We confirmed through additional audit work that none of the vendors were suspended or debarred; as a result, we determined that these errors did not result in questioned costs. ? Otero College (OC) did not complete the required Sole Source justification for four transactions. These errors resulted in $1,535,455 of questioned costs. ? PCC did not perform a request for proposals for two transactions which exceeded $150,000 and did not obtain documented quotes for seven transactions which were between $25,000 and $150,000, as required. These errors resulted in questioned costs of $1,718,761. Why did these problems occur? OC and PCC did not have adequate internal controls in place to ensure they complied with HEERF procurement requirements. In addition, CCA and PCC did not have adequate internal controls in place to ensure they complied with HEERF suspension and debarment requirements. Specifically, at OC and PCC, the secondary reviewer did not require staff follow procedures in place for procurement. At PCC the secondary reviewer also did not ensure that staff searched the federal System of Award Management to verify that entities it contracted with were not suspended, debarred, or otherwise excluded from participating in a contract for federal funds. In addition, they did not provide training over grant processes related to state procurement rules, such as training on requirements for staff to maintain appropriate supporting documentation for procurement-related verifications and procurement decisions. Further, CCA and OC experienced staff turnover in key positions, and existing employees could not locate the supporting documentation. Why do these problems matter? It is important for CCA, OC, and PCC to ensure that they obtain and maintain appropriate documentation to support procurement decisions, especially when they are the basis for determining CCA, OC, and PCC?s compliance with specific HEERF program requirements. In addition, CCA and PCC?s failure to perform procedures to ensure an entity is not suspended or debarred could result in the System paying funds to an entity that is disallowed from receiving such funds, thereby exposing the State to increased business risk and potential federal disallowances. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-058 Pueblo Community College should strengthen their internal controls over procurement, suspension and debarment and ensure they comply with the Higher Education Emergency Relief Fund (HEERF) requirements and State procurement policies by: A. Ensuring the secondary reviewer enforces compliance with the Colorado Community College System?s (System) procurement procedures and that staff perform procedures to verify contracted entities are not excluded or disqualified from receiving federal funds. B. Ensuring staff maintain supporting documentation for procurements and suspension and debarment checks. C. Providing training and cross-training to existing employees over procurement, suspension and debarment requirements. Response Pueblo Community College A. Agree Implementation Date: September 2022 Going forward, the Director of Purchasing will perform all Sam.Gov searches. The secondary reviews to ensure compliance for the System's procurement and suspension and debarment procedures will be conducted by the Vice President of Administration and Finance. B. Agree Implementation Date: September 2022 The corresponding documents supporting procurement transactions and suspension and debarment checks will be scanned and filed along with the Purchase order. C. Agree Implementation Date: September 2022 Training will be provided to fiscal and grant staff for identifying when suspension and debarment must be checked for vendors of federal programs, processes and websites to access, and methodology for documenting with the purchase documentation.
Findings 2022-056, 2022-057, and 2022-058 Higher Education Emergency Relief Fund (HEERF) Procurement Compliance The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 and appropriated federal funds to provide economic aid to the American people negatively impacted by the COVID-19 pandemic. As part of the CARES Act, funds were given to the System under the Higher Education Emergency Relief Fund (HEERF) Program. The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), was signed into law on December 27, 2020, and authorized additional funding under the HEERF program (HEERF II). Finally, the American Rescue Plan Act of 2021 (ARP), enacted on March 11, 2021, authorized a third round of funding (HEERF III) in order for higher education institutions to serve students and ensure learning continues during the COVID-19 pandemic. The HEERF Program is one of the subprograms of the federal Education Stabilization Fund [ALN 84.425]. The HEERF program contains two portions: The Student Aid portion [ALN 84.425E] and the Institutional portion, which is made up of the following: ? HEERF Institutional Aid Portion (ALN 84.425F); ? HEERF Minority Serving Institutions (ALN 84.425L); ? HEERF Strengthening Institutions Program (ALN 84.425M); ? Institutional Resilience and Expanded Postsecondary Opportunity (ALN 84.425P); ? HEERF Supplemental Assistance to Institutions of Higher Education program (ALN 84.425S). Since April 2020, the System has been awarded a total of approximately $255.6 million in HEERF funding. From inception through June 30, 2022, the System spent a total of approximately $97.8 million for the HEERF program Student Aid portion and $113.9 million for the HEERF Institutional Portion. During Fiscal Year 2022, the System spent $71.9 million for the Student Aid portion and $45.1 million for the Institutional Portion; of this amount, $28.7 million represented the System?s procurement for goods and services. The System reports that it will spend the remaining amount of funding during Fiscal Year 2023 and beyond. Each of the System?s 13 campuses separately signed an agreement titled the ?Certification and Agreement? with the U.S. Department of Education (ED) to indicate each campus? acceptance of the HEERF funding and the applicable terms and requirements. Under the requirements, each campus is required to follow the State?s procurement policies and procedures. Federal procurement regulations also require that each campus include any clauses required by federal regulations in every HEERF-related purchase order or other contract. In addition, non-federal entities, including the System and its campuses, are prohibited from contracting with or making subawards under ?covered transactions? to parties that are suspended or debarred from doing business with the federal government. ?Covered transactions? include those procurement contracts for goods and services awarded under a grant or cooperative agreement. In order to comply with federal suspension and debarment requirements, the campuses can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. What was the purpose of our audit work and what work was performed? The purpose of the audit work was to determine whether the System?s campuses had effective internal controls in place over, and complied with, federal procurement and suspension and debarment requirements for the HEERF grant during Fiscal Year 2022. As part of our audit work, we reviewed the campuses? internal controls over the HEERF grant procurement requirements. In addition, we tested a sample of 60 of the campuses? HEERF-related 435 procurement transactions, totaling $18.8 million, to determine if the campuses were in compliance with federal procurement requirements, and whether the campuses? contractors were suspended, debarred, or otherwise excluded from participating in the contract by the federal government, through verification on the SAM website exclusions listing. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulation [2 CFR 180.220] states that a contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. Also, federal regulation [2 CFR 180.300] requires that when a non-federal entity enters into a covered transaction with another entity, the non-federal entity must verify that the person or entity they intend to do business with is not excluded or disqualified from receiving federal funds. This can be done by: (1) checking the SAM exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity. ? Federal regulation [2 CFR 200.303] states that the System and its campuses, as recipients of federal funds, must establish and maintain effective internal control over their federal awards that provides reasonable assurance that the System?s campuses are managing the federal awards in compliance with federal statutes, regulations, and the award terms and conditions. ? Federal regulation [2 CFR 200.318] states that the System must document procurement procedures. The System and its campuses utilize Colorado Revised Statute Section 24, Government -State, Procurement Code; Articles 101- 112, as their procurement policy. Relevant sections of the policy include: o R-24-103-201-01 Purchasing Thresholds - (b) Small purchases are goods and services purchases costing less than $150,000. Goods and services between $25,000 and $150,000 may be purchased using a documented quote process, described in rule R-24-103-204-01. o R-24-103-201-01 Purchasing Thresholds - (c) Invitation for bids, described in rule R-24-103-202-01, request for proposals, described in rule R-24-103-203, and invitations to negotiate, described in rule R-24-103-208-03, may be used for goods or services estimated to exceed the small purchase threshold of $150,000. o R-24-103-205 Sole Source Procurements -Contracts may be awarded by use of a sole source procurement only if the following conditions are met: (a) A sole source procurement is justified when there is only one good or service that can reasonably meet the need and there is only one vendor who can provide the good or service. A requirement for a particular proprietary item (i.e., a brand name specification) does not justify a sole source procurement if there is more than one potential bidder or offeror for that item; (b) The procurement official or his or her designee shall make a written determination that a procurement is sole source, setting forth the reasons. In cases of reasonable doubt, competition should be solicited. Any request by a using agency that a procurement be restricted to one potential contractor shall be accompanied by an explanation as to why no other contractors will be suitable or acceptable to meet the need. What problems did the audit work identify? We identified at least one issue with 34 of the 60 transactions tested (57 percent), which resulted in a total of $3,254,216 in known federal questioned costs. In total, we identified 43 errors within the 34 transactions tested. Specifically, we identified the following: ? Community College of Aurora (CCA) and Pueblo Community College (PCC) could not provide documentation to support that suspension and debarment verification procedures were performed for nine transactions we reviewed for CCA and for 21 transactions we reviewed for PCC. We confirmed through additional audit work that none of the vendors were suspended or debarred; as a result, we determined that these errors did not result in questioned costs. ? Otero College (OC) did not complete the required Sole Source justification for four transactions. These errors resulted in $1,535,455 of questioned costs. ? PCC did not perform a request for proposals for two transactions which exceeded $150,000 and did not obtain documented quotes for seven transactions which were between $25,000 and $150,000, as required. These errors resulted in questioned costs of $1,718,761. Why did these problems occur? OC and PCC did not have adequate internal controls in place to ensure they complied with HEERF procurement requirements. In addition, CCA and PCC did not have adequate internal controls in place to ensure they complied with HEERF suspension and debarment requirements. Specifically, at OC and PCC, the secondary reviewer did not require staff follow procedures in place for procurement. At PCC the secondary reviewer also did not ensure that staff searched the federal System of Award Management to verify that entities it contracted with were not suspended, debarred, or otherwise excluded from participating in a contract for federal funds. In addition, they did not provide training over grant processes related to state procurement rules, such as training on requirements for staff to maintain appropriate supporting documentation for procurement-related verifications and procurement decisions. Further, CCA and OC experienced staff turnover in key positions, and existing employees could not locate the supporting documentation. Why do these problems matter? It is important for CCA, OC, and PCC to ensure that they obtain and maintain appropriate documentation to support procurement decisions, especially when they are the basis for determining CCA, OC, and PCC?s compliance with specific HEERF program requirements. In addition, CCA and PCC?s failure to perform procedures to ensure an entity is not suspended or debarred could result in the System paying funds to an entity that is disallowed from receiving such funds, thereby exposing the State to increased business risk and potential federal disallowances. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-058 Pueblo Community College should strengthen their internal controls over procurement, suspension and debarment and ensure they comply with the Higher Education Emergency Relief Fund (HEERF) requirements and State procurement policies by: A. Ensuring the secondary reviewer enforces compliance with the Colorado Community College System?s (System) procurement procedures and that staff perform procedures to verify contracted entities are not excluded or disqualified from receiving federal funds. B. Ensuring staff maintain supporting documentation for procurements and suspension and debarment checks. C. Providing training and cross-training to existing employees over procurement, suspension and debarment requirements. Response Pueblo Community College A. Agree Implementation Date: September 2022 Going forward, the Director of Purchasing will perform all Sam.Gov searches. The secondary reviews to ensure compliance for the System's procurement and suspension and debarment procedures will be conducted by the Vice President of Administration and Finance. B. Agree Implementation Date: September 2022 The corresponding documents supporting procurement transactions and suspension and debarment checks will be scanned and filed along with the Purchase order. C. Agree Implementation Date: September 2022 Training will be provided to fiscal and grant staff for identifying when suspension and debarment must be checked for vendors of federal programs, processes and websites to access, and methodology for documenting with the purchase documentation.
Findings 2022-056, 2022-057, and 2022-058 Higher Education Emergency Relief Fund (HEERF) Procurement Compliance The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 and appropriated federal funds to provide economic aid to the American people negatively impacted by the COVID-19 pandemic. As part of the CARES Act, funds were given to the System under the Higher Education Emergency Relief Fund (HEERF) Program. The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), was signed into law on December 27, 2020, and authorized additional funding under the HEERF program (HEERF II). Finally, the American Rescue Plan Act of 2021 (ARP), enacted on March 11, 2021, authorized a third round of funding (HEERF III) in order for higher education institutions to serve students and ensure learning continues during the COVID-19 pandemic. The HEERF Program is one of the subprograms of the federal Education Stabilization Fund [ALN 84.425]. The HEERF program contains two portions: The Student Aid portion [ALN 84.425E] and the Institutional portion, which is made up of the following: ? HEERF Institutional Aid Portion (ALN 84.425F); ? HEERF Minority Serving Institutions (ALN 84.425L); ? HEERF Strengthening Institutions Program (ALN 84.425M); ? Institutional Resilience and Expanded Postsecondary Opportunity (ALN 84.425P); ? HEERF Supplemental Assistance to Institutions of Higher Education program (ALN 84.425S). Since April 2020, the System has been awarded a total of approximately $255.6 million in HEERF funding. From inception through June 30, 2022, the System spent a total of approximately $97.8 million for the HEERF program Student Aid portion and $113.9 million for the HEERF Institutional Portion. During Fiscal Year 2022, the System spent $71.9 million for the Student Aid portion and $45.1 million for the Institutional Portion; of this amount, $28.7 million represented the System?s procurement for goods and services. The System reports that it will spend the remaining amount of funding during Fiscal Year 2023 and beyond. Each of the System?s 13 campuses separately signed an agreement titled the ?Certification and Agreement? with the U.S. Department of Education (ED) to indicate each campus? acceptance of the HEERF funding and the applicable terms and requirements. Under the requirements, each campus is required to follow the State?s procurement policies and procedures. Federal procurement regulations also require that each campus include any clauses required by federal regulations in every HEERF-related purchase order or other contract. In addition, non-federal entities, including the System and its campuses, are prohibited from contracting with or making subawards under ?covered transactions? to parties that are suspended or debarred from doing business with the federal government. ?Covered transactions? include those procurement contracts for goods and services awarded under a grant or cooperative agreement. In order to comply with federal suspension and debarment requirements, the campuses can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. What was the purpose of our audit work and what work was performed? The purpose of the audit work was to determine whether the System?s campuses had effective internal controls in place over, and complied with, federal procurement and suspension and debarment requirements for the HEERF grant during Fiscal Year 2022. As part of our audit work, we reviewed the campuses? internal controls over the HEERF grant procurement requirements. In addition, we tested a sample of 60 of the campuses? HEERF-related 435 procurement transactions, totaling $18.8 million, to determine if the campuses were in compliance with federal procurement requirements, and whether the campuses? contractors were suspended, debarred, or otherwise excluded from participating in the contract by the federal government, through verification on the SAM website exclusions listing. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulation [2 CFR 180.220] states that a contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. Also, federal regulation [2 CFR 180.300] requires that when a non-federal entity enters into a covered transaction with another entity, the non-federal entity must verify that the person or entity they intend to do business with is not excluded or disqualified from receiving federal funds. This can be done by: (1) checking the SAM exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity. ? Federal regulation [2 CFR 200.303] states that the System and its campuses, as recipients of federal funds, must establish and maintain effective internal control over their federal awards that provides reasonable assurance that the System?s campuses are managing the federal awards in compliance with federal statutes, regulations, and the award terms and conditions. ? Federal regulation [2 CFR 200.318] states that the System must document procurement procedures. The System and its campuses utilize Colorado Revised Statute Section 24, Government -State, Procurement Code; Articles 101- 112, as their procurement policy. Relevant sections of the policy include: o R-24-103-201-01 Purchasing Thresholds - (b) Small purchases are goods and services purchases costing less than $150,000. Goods and services between $25,000 and $150,000 may be purchased using a documented quote process, described in rule R-24-103-204-01. o R-24-103-201-01 Purchasing Thresholds - (c) Invitation for bids, described in rule R-24-103-202-01, request for proposals, described in rule R-24-103-203, and invitations to negotiate, described in rule R-24-103-208-03, may be used for goods or services estimated to exceed the small purchase threshold of $150,000. o R-24-103-205 Sole Source Procurements -Contracts may be awarded by use of a sole source procurement only if the following conditions are met: (a) A sole source procurement is justified when there is only one good or service that can reasonably meet the need and there is only one vendor who can provide the good or service. A requirement for a particular proprietary item (i.e., a brand name specification) does not justify a sole source procurement if there is more than one potential bidder or offeror for that item; (b) The procurement official or his or her designee shall make a written determination that a procurement is sole source, setting forth the reasons. In cases of reasonable doubt, competition should be solicited. Any request by a using agency that a procurement be restricted to one potential contractor shall be accompanied by an explanation as to why no other contractors will be suitable or acceptable to meet the need. What problems did the audit work identify? We identified at least one issue with 34 of the 60 transactions tested (57 percent), which resulted in a total of $3,254,216 in known federal questioned costs. In total, we identified 43 errors within the 34 transactions tested. Specifically, we identified the following: ? Community College of Aurora (CCA) and Pueblo Community College (PCC) could not provide documentation to support that suspension and debarment verification procedures were performed for nine transactions we reviewed for CCA and for 21 transactions we reviewed for PCC. We confirmed through additional audit work that none of the vendors were suspended or debarred; as a result, we determined that these errors did not result in questioned costs. ? Otero College (OC) did not complete the required Sole Source justification for four transactions. These errors resulted in $1,535,455 of questioned costs. ? PCC did not perform a request for proposals for two transactions which exceeded $150,000 and did not obtain documented quotes for seven transactions which were between $25,000 and $150,000, as required. These errors resulted in questioned costs of $1,718,761. Why did these problems occur? OC and PCC did not have adequate internal controls in place to ensure they complied with HEERF procurement requirements. In addition, CCA and PCC did not have adequate internal controls in place to ensure they complied with HEERF suspension and debarment requirements. Specifically, at OC and PCC, the secondary reviewer did not require staff follow procedures in place for procurement. At PCC the secondary reviewer also did not ensure that staff searched the federal System of Award Management to verify that entities it contracted with were not suspended, debarred, or otherwise excluded from participating in a contract for federal funds. In addition, they did not provide training over grant processes related to state procurement rules, such as training on requirements for staff to maintain appropriate supporting documentation for procurement-related verifications and procurement decisions. Further, CCA and OC experienced staff turnover in key positions, and existing employees could not locate the supporting documentation. Why do these problems matter? It is important for CCA, OC, and PCC to ensure that they obtain and maintain appropriate documentation to support procurement decisions, especially when they are the basis for determining CCA, OC, and PCC?s compliance with specific HEERF program requirements. In addition, CCA and PCC?s failure to perform procedures to ensure an entity is not suspended or debarred could result in the System paying funds to an entity that is disallowed from receiving such funds, thereby exposing the State to increased business risk and potential federal disallowances. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-057 Otero College should strengthen their internal controls over procurement and ensure they comply with the Higher Education Emergency Relief Fund (HEERF) requirements and State procurement policies by: A. Ensuring the secondary reviewer enforces compliance with the Colorado Community College System?s (System) procurement procedures. B. Ensuring staff maintain supporting documentation for procurements. C. Providing training and cross-training to existing employees over procurement requirements. Response Otero College A. Agree Implementation Date: August 2022 Otero College has adopted the system offices Sole Source justification form that will be posted to the State procurement site, requires supervisory approval, and has put that into place as of August 2022. B. Agree Implementation Date: August 2022 Otero College will ensure they maintain supporting documentation for procurements. C. Agree Implementation Date: August 2022 Otero College has a new procurement official that has attended various trainings regarding procurement rules.
Findings 2022-056, 2022-057, and 2022-058 Higher Education Emergency Relief Fund (HEERF) Procurement Compliance The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 and appropriated federal funds to provide economic aid to the American people negatively impacted by the COVID-19 pandemic. As part of the CARES Act, funds were given to the System under the Higher Education Emergency Relief Fund (HEERF) Program. The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), was signed into law on December 27, 2020, and authorized additional funding under the HEERF program (HEERF II). Finally, the American Rescue Plan Act of 2021 (ARP), enacted on March 11, 2021, authorized a third round of funding (HEERF III) in order for higher education institutions to serve students and ensure learning continues during the COVID-19 pandemic. The HEERF Program is one of the subprograms of the federal Education Stabilization Fund [ALN 84.425]. The HEERF program contains two portions: The Student Aid portion [ALN 84.425E] and the Institutional portion, which is made up of the following: ? HEERF Institutional Aid Portion (ALN 84.425F); ? HEERF Minority Serving Institutions (ALN 84.425L); ? HEERF Strengthening Institutions Program (ALN 84.425M); ? Institutional Resilience and Expanded Postsecondary Opportunity (ALN 84.425P); ? HEERF Supplemental Assistance to Institutions of Higher Education program (ALN 84.425S). Since April 2020, the System has been awarded a total of approximately $255.6 million in HEERF funding. From inception through June 30, 2022, the System spent a total of approximately $97.8 million for the HEERF program Student Aid portion and $113.9 million for the HEERF Institutional Portion. During Fiscal Year 2022, the System spent $71.9 million for the Student Aid portion and $45.1 million for the Institutional Portion; of this amount, $28.7 million represented the System?s procurement for goods and services. The System reports that it will spend the remaining amount of funding during Fiscal Year 2023 and beyond. Each of the System?s 13 campuses separately signed an agreement titled the ?Certification and Agreement? with the U.S. Department of Education (ED) to indicate each campus? acceptance of the HEERF funding and the applicable terms and requirements. Under the requirements, each campus is required to follow the State?s procurement policies and procedures. Federal procurement regulations also require that each campus include any clauses required by federal regulations in every HEERF-related purchase order or other contract. In addition, non-federal entities, including the System and its campuses, are prohibited from contracting with or making subawards under ?covered transactions? to parties that are suspended or debarred from doing business with the federal government. ?Covered transactions? include those procurement contracts for goods and services awarded under a grant or cooperative agreement. In order to comply with federal suspension and debarment requirements, the campuses can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. What was the purpose of our audit work and what work was performed? The purpose of the audit work was to determine whether the System?s campuses had effective internal controls in place over, and complied with, federal procurement and suspension and debarment requirements for the HEERF grant during Fiscal Year 2022. As part of our audit work, we reviewed the campuses? internal controls over the HEERF grant procurement requirements. In addition, we tested a sample of 60 of the campuses? HEERF-related 435 procurement transactions, totaling $18.8 million, to determine if the campuses were in compliance with federal procurement requirements, and whether the campuses? contractors were suspended, debarred, or otherwise excluded from participating in the contract by the federal government, through verification on the SAM website exclusions listing. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulation [2 CFR 180.220] states that a contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. Also, federal regulation [2 CFR 180.300] requires that when a non-federal entity enters into a covered transaction with another entity, the non-federal entity must verify that the person or entity they intend to do business with is not excluded or disqualified from receiving federal funds. This can be done by: (1) checking the SAM exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity. ? Federal regulation [2 CFR 200.303] states that the System and its campuses, as recipients of federal funds, must establish and maintain effective internal control over their federal awards that provides reasonable assurance that the System?s campuses are managing the federal awards in compliance with federal statutes, regulations, and the award terms and conditions. ? Federal regulation [2 CFR 200.318] states that the System must document procurement procedures. The System and its campuses utilize Colorado Revised Statute Section 24, Government -State, Procurement Code; Articles 101- 112, as their procurement policy. Relevant sections of the policy include: o R-24-103-201-01 Purchasing Thresholds - (b) Small purchases are goods and services purchases costing less than $150,000. Goods and services between $25,000 and $150,000 may be purchased using a documented quote process, described in rule R-24-103-204-01. o R-24-103-201-01 Purchasing Thresholds - (c) Invitation for bids, described in rule R-24-103-202-01, request for proposals, described in rule R-24-103-203, and invitations to negotiate, described in rule R-24-103-208-03, may be used for goods or services estimated to exceed the small purchase threshold of $150,000. o R-24-103-205 Sole Source Procurements -Contracts may be awarded by use of a sole source procurement only if the following conditions are met: (a) A sole source procurement is justified when there is only one good or service that can reasonably meet the need and there is only one vendor who can provide the good or service. A requirement for a particular proprietary item (i.e., a brand name specification) does not justify a sole source procurement if there is more than one potential bidder or offeror for that item; (b) The procurement official or his or her designee shall make a written determination that a procurement is sole source, setting forth the reasons. In cases of reasonable doubt, competition should be solicited. Any request by a using agency that a procurement be restricted to one potential contractor shall be accompanied by an explanation as to why no other contractors will be suitable or acceptable to meet the need. What problems did the audit work identify? We identified at least one issue with 34 of the 60 transactions tested (57 percent), which resulted in a total of $3,254,216 in known federal questioned costs. In total, we identified 43 errors within the 34 transactions tested. Specifically, we identified the following: ? Community College of Aurora (CCA) and Pueblo Community College (PCC) could not provide documentation to support that suspension and debarment verification procedures were performed for nine transactions we reviewed for CCA and for 21 transactions we reviewed for PCC. We confirmed through additional audit work that none of the vendors were suspended or debarred; as a result, we determined that these errors did not result in questioned costs. ? Otero College (OC) did not complete the required Sole Source justification for four transactions. These errors resulted in $1,535,455 of questioned costs. ? PCC did not perform a request for proposals for two transactions which exceeded $150,000 and did not obtain documented quotes for seven transactions which were between $25,000 and $150,000, as required. These errors resulted in questioned costs of $1,718,761. Why did these problems occur? OC and PCC did not have adequate internal controls in place to ensure they complied with HEERF procurement requirements. In addition, CCA and PCC did not have adequate internal controls in place to ensure they complied with HEERF suspension and debarment requirements. Specifically, at OC and PCC, the secondary reviewer did not require staff follow procedures in place for procurement. At PCC the secondary reviewer also did not ensure that staff searched the federal System of Award Management to verify that entities it contracted with were not suspended, debarred, or otherwise excluded from participating in a contract for federal funds. In addition, they did not provide training over grant processes related to state procurement rules, such as training on requirements for staff to maintain appropriate supporting documentation for procurement-related verifications and procurement decisions. Further, CCA and OC experienced staff turnover in key positions, and existing employees could not locate the supporting documentation. Why do these problems matter? It is important for CCA, OC, and PCC to ensure that they obtain and maintain appropriate documentation to support procurement decisions, especially when they are the basis for determining CCA, OC, and PCC?s compliance with specific HEERF program requirements. In addition, CCA and PCC?s failure to perform procedures to ensure an entity is not suspended or debarred could result in the System paying funds to an entity that is disallowed from receiving such funds, thereby exposing the State to increased business risk and potential federal disallowances. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-056 Community College of Aurora should strengthen their internal controls over suspension and debarment and ensure they comply with the Higher Education Emergency Relief Fund (HEERF) requirements by: A. Ensuring staff maintain supporting documentation of suspension and debarment checks. B. Providing training and cross-training to existing employees over suspension and debarment requirements. Response Community College of Aurora A. Agree Implementation Date: October 2022 Beginning in October 2022, the duty was moved from the Principal Investigator or instructional staff previously responsible for this step to the Director of Purchasing to ensure compliance for all grant transactions. B. Agree Implementation Date: October 2022 Training will be provided for identifying when suspension and debarment must be checked for vendors of federal programs, processes and websites to access, and methodology for documenting with the purchase, to fiscal and grant staff
Findings 2022-056, 2022-057, and 2022-058 Higher Education Emergency Relief Fund (HEERF) Procurement Compliance The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 and appropriated federal funds to provide economic aid to the American people negatively impacted by the COVID-19 pandemic. As part of the CARES Act, funds were given to the System under the Higher Education Emergency Relief Fund (HEERF) Program. The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), was signed into law on December 27, 2020, and authorized additional funding under the HEERF program (HEERF II). Finally, the American Rescue Plan Act of 2021 (ARP), enacted on March 11, 2021, authorized a third round of funding (HEERF III) in order for higher education institutions to serve students and ensure learning continues during the COVID-19 pandemic. The HEERF Program is one of the subprograms of the federal Education Stabilization Fund [ALN 84.425]. The HEERF program contains two portions: The Student Aid portion [ALN 84.425E] and the Institutional portion, which is made up of the following: ? HEERF Institutional Aid Portion (ALN 84.425F); ? HEERF Minority Serving Institutions (ALN 84.425L); ? HEERF Strengthening Institutions Program (ALN 84.425M); ? Institutional Resilience and Expanded Postsecondary Opportunity (ALN 84.425P); ? HEERF Supplemental Assistance to Institutions of Higher Education program (ALN 84.425S). Since April 2020, the System has been awarded a total of approximately $255.6 million in HEERF funding. From inception through June 30, 2022, the System spent a total of approximately $97.8 million for the HEERF program Student Aid portion and $113.9 million for the HEERF Institutional Portion. During Fiscal Year 2022, the System spent $71.9 million for the Student Aid portion and $45.1 million for the Institutional Portion; of this amount, $28.7 million represented the System?s procurement for goods and services. The System reports that it will spend the remaining amount of funding during Fiscal Year 2023 and beyond. Each of the System?s 13 campuses separately signed an agreement titled the ?Certification and Agreement? with the U.S. Department of Education (ED) to indicate each campus? acceptance of the HEERF funding and the applicable terms and requirements. Under the requirements, each campus is required to follow the State?s procurement policies and procedures. Federal procurement regulations also require that each campus include any clauses required by federal regulations in every HEERF-related purchase order or other contract. In addition, non-federal entities, including the System and its campuses, are prohibited from contracting with or making subawards under ?covered transactions? to parties that are suspended or debarred from doing business with the federal government. ?Covered transactions? include those procurement contracts for goods and services awarded under a grant or cooperative agreement. In order to comply with federal suspension and debarment requirements, the campuses can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. What was the purpose of our audit work and what work was performed? The purpose of the audit work was to determine whether the System?s campuses had effective internal controls in place over, and complied with, federal procurement and suspension and debarment requirements for the HEERF grant during Fiscal Year 2022. As part of our audit work, we reviewed the campuses? internal controls over the HEERF grant procurement requirements. In addition, we tested a sample of 60 of the campuses? HEERF-related 435 procurement transactions, totaling $18.8 million, to determine if the campuses were in compliance with federal procurement requirements, and whether the campuses? contractors were suspended, debarred, or otherwise excluded from participating in the contract by the federal government, through verification on the SAM website exclusions listing. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulation [2 CFR 180.220] states that a contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. Also, federal regulation [2 CFR 180.300] requires that when a non-federal entity enters into a covered transaction with another entity, the non-federal entity must verify that the person or entity they intend to do business with is not excluded or disqualified from receiving federal funds. This can be done by: (1) checking the SAM exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity. ? Federal regulation [2 CFR 200.303] states that the System and its campuses, as recipients of federal funds, must establish and maintain effective internal control over their federal awards that provides reasonable assurance that the System?s campuses are managing the federal awards in compliance with federal statutes, regulations, and the award terms and conditions. ? Federal regulation [2 CFR 200.318] states that the System must document procurement procedures. The System and its campuses utilize Colorado Revised Statute Section 24, Government -State, Procurement Code; Articles 101- 112, as their procurement policy. Relevant sections of the policy include: o R-24-103-201-01 Purchasing Thresholds - (b) Small purchases are goods and services purchases costing less than $150,000. Goods and services between $25,000 and $150,000 may be purchased using a documented quote process, described in rule R-24-103-204-01. o R-24-103-201-01 Purchasing Thresholds - (c) Invitation for bids, described in rule R-24-103-202-01, request for proposals, described in rule R-24-103-203, and invitations to negotiate, described in rule R-24-103-208-03, may be used for goods or services estimated to exceed the small purchase threshold of $150,000. o R-24-103-205 Sole Source Procurements -Contracts may be awarded by use of a sole source procurement only if the following conditions are met: (a) A sole source procurement is justified when there is only one good or service that can reasonably meet the need and there is only one vendor who can provide the good or service. A requirement for a particular proprietary item (i.e., a brand name specification) does not justify a sole source procurement if there is more than one potential bidder or offeror for that item; (b) The procurement official or his or her designee shall make a written determination that a procurement is sole source, setting forth the reasons. In cases of reasonable doubt, competition should be solicited. Any request by a using agency that a procurement be restricted to one potential contractor shall be accompanied by an explanation as to why no other contractors will be suitable or acceptable to meet the need. What problems did the audit work identify? We identified at least one issue with 34 of the 60 transactions tested (57 percent), which resulted in a total of $3,254,216 in known federal questioned costs. In total, we identified 43 errors within the 34 transactions tested. Specifically, we identified the following: ? Community College of Aurora (CCA) and Pueblo Community College (PCC) could not provide documentation to support that suspension and debarment verification procedures were performed for nine transactions we reviewed for CCA and for 21 transactions we reviewed for PCC. We confirmed through additional audit work that none of the vendors were suspended or debarred; as a result, we determined that these errors did not result in questioned costs. ? Otero College (OC) did not complete the required Sole Source justification for four transactions. These errors resulted in $1,535,455 of questioned costs. ? PCC did not perform a request for proposals for two transactions which exceeded $150,000 and did not obtain documented quotes for seven transactions which were between $25,000 and $150,000, as required. These errors resulted in questioned costs of $1,718,761. Why did these problems occur? OC and PCC did not have adequate internal controls in place to ensure they complied with HEERF procurement requirements. In addition, CCA and PCC did not have adequate internal controls in place to ensure they complied with HEERF suspension and debarment requirements. Specifically, at OC and PCC, the secondary reviewer did not require staff follow procedures in place for procurement. At PCC the secondary reviewer also did not ensure that staff searched the federal System of Award Management to verify that entities it contracted with were not suspended, debarred, or otherwise excluded from participating in a contract for federal funds. In addition, they did not provide training over grant processes related to state procurement rules, such as training on requirements for staff to maintain appropriate supporting documentation for procurement-related verifications and procurement decisions. Further, CCA and OC experienced staff turnover in key positions, and existing employees could not locate the supporting documentation. Why do these problems matter? It is important for CCA, OC, and PCC to ensure that they obtain and maintain appropriate documentation to support procurement decisions, especially when they are the basis for determining CCA, OC, and PCC?s compliance with specific HEERF program requirements. In addition, CCA and PCC?s failure to perform procedures to ensure an entity is not suspended or debarred could result in the System paying funds to an entity that is disallowed from receiving such funds, thereby exposing the State to increased business risk and potential federal disallowances. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-056 Community College of Aurora should strengthen their internal controls over suspension and debarment and ensure they comply with the Higher Education Emergency Relief Fund (HEERF) requirements by: A. Ensuring staff maintain supporting documentation of suspension and debarment checks. B. Providing training and cross-training to existing employees over suspension and debarment requirements. Response Community College of Aurora A. Agree Implementation Date: October 2022 Beginning in October 2022, the duty was moved from the Principal Investigator or instructional staff previously responsible for this step to the Director of Purchasing to ensure compliance for all grant transactions. B. Agree Implementation Date: October 2022 Training will be provided for identifying when suspension and debarment must be checked for vendors of federal programs, processes and websites to access, and methodology for documenting with the purchase, to fiscal and grant staff
Findings 2022-056, 2022-057, and 2022-058 Higher Education Emergency Relief Fund (HEERF) Procurement Compliance The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 and appropriated federal funds to provide economic aid to the American people negatively impacted by the COVID-19 pandemic. As part of the CARES Act, funds were given to the System under the Higher Education Emergency Relief Fund (HEERF) Program. The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), was signed into law on December 27, 2020, and authorized additional funding under the HEERF program (HEERF II). Finally, the American Rescue Plan Act of 2021 (ARP), enacted on March 11, 2021, authorized a third round of funding (HEERF III) in order for higher education institutions to serve students and ensure learning continues during the COVID-19 pandemic. The HEERF Program is one of the subprograms of the federal Education Stabilization Fund [ALN 84.425]. The HEERF program contains two portions: The Student Aid portion [ALN 84.425E] and the Institutional portion, which is made up of the following: ? HEERF Institutional Aid Portion (ALN 84.425F); ? HEERF Minority Serving Institutions (ALN 84.425L); ? HEERF Strengthening Institutions Program (ALN 84.425M); ? Institutional Resilience and Expanded Postsecondary Opportunity (ALN 84.425P); ? HEERF Supplemental Assistance to Institutions of Higher Education program (ALN 84.425S). Since April 2020, the System has been awarded a total of approximately $255.6 million in HEERF funding. From inception through June 30, 2022, the System spent a total of approximately $97.8 million for the HEERF program Student Aid portion and $113.9 million for the HEERF Institutional Portion. During Fiscal Year 2022, the System spent $71.9 million for the Student Aid portion and $45.1 million for the Institutional Portion; of this amount, $28.7 million represented the System?s procurement for goods and services. The System reports that it will spend the remaining amount of funding during Fiscal Year 2023 and beyond. Each of the System?s 13 campuses separately signed an agreement titled the ?Certification and Agreement? with the U.S. Department of Education (ED) to indicate each campus? acceptance of the HEERF funding and the applicable terms and requirements. Under the requirements, each campus is required to follow the State?s procurement policies and procedures. Federal procurement regulations also require that each campus include any clauses required by federal regulations in every HEERF-related purchase order or other contract. In addition, non-federal entities, including the System and its campuses, are prohibited from contracting with or making subawards under ?covered transactions? to parties that are suspended or debarred from doing business with the federal government. ?Covered transactions? include those procurement contracts for goods and services awarded under a grant or cooperative agreement. In order to comply with federal suspension and debarment requirements, the campuses can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. What was the purpose of our audit work and what work was performed? The purpose of the audit work was to determine whether the System?s campuses had effective internal controls in place over, and complied with, federal procurement and suspension and debarment requirements for the HEERF grant during Fiscal Year 2022. As part of our audit work, we reviewed the campuses? internal controls over the HEERF grant procurement requirements. In addition, we tested a sample of 60 of the campuses? HEERF-related 435 procurement transactions, totaling $18.8 million, to determine if the campuses were in compliance with federal procurement requirements, and whether the campuses? contractors were suspended, debarred, or otherwise excluded from participating in the contract by the federal government, through verification on the SAM website exclusions listing. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulation [2 CFR 180.220] states that a contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. Also, federal regulation [2 CFR 180.300] requires that when a non-federal entity enters into a covered transaction with another entity, the non-federal entity must verify that the person or entity they intend to do business with is not excluded or disqualified from receiving federal funds. This can be done by: (1) checking the SAM exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity. ? Federal regulation [2 CFR 200.303] states that the System and its campuses, as recipients of federal funds, must establish and maintain effective internal control over their federal awards that provides reasonable assurance that the System?s campuses are managing the federal awards in compliance with federal statutes, regulations, and the award terms and conditions. ? Federal regulation [2 CFR 200.318] states that the System must document procurement procedures. The System and its campuses utilize Colorado Revised Statute Section 24, Government -State, Procurement Code; Articles 101- 112, as their procurement policy. Relevant sections of the policy include: o R-24-103-201-01 Purchasing Thresholds - (b) Small purchases are goods and services purchases costing less than $150,000. Goods and services between $25,000 and $150,000 may be purchased using a documented quote process, described in rule R-24-103-204-01. o R-24-103-201-01 Purchasing Thresholds - (c) Invitation for bids, described in rule R-24-103-202-01, request for proposals, described in rule R-24-103-203, and invitations to negotiate, described in rule R-24-103-208-03, may be used for goods or services estimated to exceed the small purchase threshold of $150,000. o R-24-103-205 Sole Source Procurements -Contracts may be awarded by use of a sole source procurement only if the following conditions are met: (a) A sole source procurement is justified when there is only one good or service that can reasonably meet the need and there is only one vendor who can provide the good or service. A requirement for a particular proprietary item (i.e., a brand name specification) does not justify a sole source procurement if there is more than one potential bidder or offeror for that item; (b) The procurement official or his or her designee shall make a written determination that a procurement is sole source, setting forth the reasons. In cases of reasonable doubt, competition should be solicited. Any request by a using agency that a procurement be restricted to one potential contractor shall be accompanied by an explanation as to why no other contractors will be suitable or acceptable to meet the need. What problems did the audit work identify? We identified at least one issue with 34 of the 60 transactions tested (57 percent), which resulted in a total of $3,254,216 in known federal questioned costs. In total, we identified 43 errors within the 34 transactions tested. Specifically, we identified the following: ? Community College of Aurora (CCA) and Pueblo Community College (PCC) could not provide documentation to support that suspension and debarment verification procedures were performed for nine transactions we reviewed for CCA and for 21 transactions we reviewed for PCC. We confirmed through additional audit work that none of the vendors were suspended or debarred; as a result, we determined that these errors did not result in questioned costs. ? Otero College (OC) did not complete the required Sole Source justification for four transactions. These errors resulted in $1,535,455 of questioned costs. ? PCC did not perform a request for proposals for two transactions which exceeded $150,000 and did not obtain documented quotes for seven transactions which were between $25,000 and $150,000, as required. These errors resulted in questioned costs of $1,718,761. Why did these problems occur? OC and PCC did not have adequate internal controls in place to ensure they complied with HEERF procurement requirements. In addition, CCA and PCC did not have adequate internal controls in place to ensure they complied with HEERF suspension and debarment requirements. Specifically, at OC and PCC, the secondary reviewer did not require staff follow procedures in place for procurement. At PCC the secondary reviewer also did not ensure that staff searched the federal System of Award Management to verify that entities it contracted with were not suspended, debarred, or otherwise excluded from participating in a contract for federal funds. In addition, they did not provide training over grant processes related to state procurement rules, such as training on requirements for staff to maintain appropriate supporting documentation for procurement-related verifications and procurement decisions. Further, CCA and OC experienced staff turnover in key positions, and existing employees could not locate the supporting documentation. Why do these problems matter? It is important for CCA, OC, and PCC to ensure that they obtain and maintain appropriate documentation to support procurement decisions, especially when they are the basis for determining CCA, OC, and PCC?s compliance with specific HEERF program requirements. In addition, CCA and PCC?s failure to perform procedures to ensure an entity is not suspended or debarred could result in the System paying funds to an entity that is disallowed from receiving such funds, thereby exposing the State to increased business risk and potential federal disallowances. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-057 Otero College should strengthen their internal controls over procurement and ensure they comply with the Higher Education Emergency Relief Fund (HEERF) requirements and State procurement policies by: A. Ensuring the secondary reviewer enforces compliance with the Colorado Community College System?s (System) procurement procedures. B. Ensuring staff maintain supporting documentation for procurements. C. Providing training and cross-training to existing employees over procurement requirements. Response Otero College A. Agree Implementation Date: August 2022 Otero College has adopted the system offices Sole Source justification form that will be posted to the State procurement site, requires supervisory approval, and has put that into place as of August 2022. B. Agree Implementation Date: August 2022 Otero College will ensure they maintain supporting documentation for procurements. C. Agree Implementation Date: August 2022 Otero College has a new procurement official that has attended various trainings regarding procurement rules.
Findings 2022-056, 2022-057, and 2022-058 Higher Education Emergency Relief Fund (HEERF) Procurement Compliance The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 and appropriated federal funds to provide economic aid to the American people negatively impacted by the COVID-19 pandemic. As part of the CARES Act, funds were given to the System under the Higher Education Emergency Relief Fund (HEERF) Program. The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), was signed into law on December 27, 2020, and authorized additional funding under the HEERF program (HEERF II). Finally, the American Rescue Plan Act of 2021 (ARP), enacted on March 11, 2021, authorized a third round of funding (HEERF III) in order for higher education institutions to serve students and ensure learning continues during the COVID-19 pandemic. The HEERF Program is one of the subprograms of the federal Education Stabilization Fund [ALN 84.425]. The HEERF program contains two portions: The Student Aid portion [ALN 84.425E] and the Institutional portion, which is made up of the following: ? HEERF Institutional Aid Portion (ALN 84.425F); ? HEERF Minority Serving Institutions (ALN 84.425L); ? HEERF Strengthening Institutions Program (ALN 84.425M); ? Institutional Resilience and Expanded Postsecondary Opportunity (ALN 84.425P); ? HEERF Supplemental Assistance to Institutions of Higher Education program (ALN 84.425S). Since April 2020, the System has been awarded a total of approximately $255.6 million in HEERF funding. From inception through June 30, 2022, the System spent a total of approximately $97.8 million for the HEERF program Student Aid portion and $113.9 million for the HEERF Institutional Portion. During Fiscal Year 2022, the System spent $71.9 million for the Student Aid portion and $45.1 million for the Institutional Portion; of this amount, $28.7 million represented the System?s procurement for goods and services. The System reports that it will spend the remaining amount of funding during Fiscal Year 2023 and beyond. Each of the System?s 13 campuses separately signed an agreement titled the ?Certification and Agreement? with the U.S. Department of Education (ED) to indicate each campus? acceptance of the HEERF funding and the applicable terms and requirements. Under the requirements, each campus is required to follow the State?s procurement policies and procedures. Federal procurement regulations also require that each campus include any clauses required by federal regulations in every HEERF-related purchase order or other contract. In addition, non-federal entities, including the System and its campuses, are prohibited from contracting with or making subawards under ?covered transactions? to parties that are suspended or debarred from doing business with the federal government. ?Covered transactions? include those procurement contracts for goods and services awarded under a grant or cooperative agreement. In order to comply with federal suspension and debarment requirements, the campuses can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. What was the purpose of our audit work and what work was performed? The purpose of the audit work was to determine whether the System?s campuses had effective internal controls in place over, and complied with, federal procurement and suspension and debarment requirements for the HEERF grant during Fiscal Year 2022. As part of our audit work, we reviewed the campuses? internal controls over the HEERF grant procurement requirements. In addition, we tested a sample of 60 of the campuses? HEERF-related 435 procurement transactions, totaling $18.8 million, to determine if the campuses were in compliance with federal procurement requirements, and whether the campuses? contractors were suspended, debarred, or otherwise excluded from participating in the contract by the federal government, through verification on the SAM website exclusions listing. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulation [2 CFR 180.220] states that a contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. Also, federal regulation [2 CFR 180.300] requires that when a non-federal entity enters into a covered transaction with another entity, the non-federal entity must verify that the person or entity they intend to do business with is not excluded or disqualified from receiving federal funds. This can be done by: (1) checking the SAM exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity. ? Federal regulation [2 CFR 200.303] states that the System and its campuses, as recipients of federal funds, must establish and maintain effective internal control over their federal awards that provides reasonable assurance that the System?s campuses are managing the federal awards in compliance with federal statutes, regulations, and the award terms and conditions. ? Federal regulation [2 CFR 200.318] states that the System must document procurement procedures. The System and its campuses utilize Colorado Revised Statute Section 24, Government -State, Procurement Code; Articles 101- 112, as their procurement policy. Relevant sections of the policy include: o R-24-103-201-01 Purchasing Thresholds - (b) Small purchases are goods and services purchases costing less than $150,000. Goods and services between $25,000 and $150,000 may be purchased using a documented quote process, described in rule R-24-103-204-01. o R-24-103-201-01 Purchasing Thresholds - (c) Invitation for bids, described in rule R-24-103-202-01, request for proposals, described in rule R-24-103-203, and invitations to negotiate, described in rule R-24-103-208-03, may be used for goods or services estimated to exceed the small purchase threshold of $150,000. o R-24-103-205 Sole Source Procurements -Contracts may be awarded by use of a sole source procurement only if the following conditions are met: (a) A sole source procurement is justified when there is only one good or service that can reasonably meet the need and there is only one vendor who can provide the good or service. A requirement for a particular proprietary item (i.e., a brand name specification) does not justify a sole source procurement if there is more than one potential bidder or offeror for that item; (b) The procurement official or his or her designee shall make a written determination that a procurement is sole source, setting forth the reasons. In cases of reasonable doubt, competition should be solicited. Any request by a using agency that a procurement be restricted to one potential contractor shall be accompanied by an explanation as to why no other contractors will be suitable or acceptable to meet the need. What problems did the audit work identify? We identified at least one issue with 34 of the 60 transactions tested (57 percent), which resulted in a total of $3,254,216 in known federal questioned costs. In total, we identified 43 errors within the 34 transactions tested. Specifically, we identified the following: ? Community College of Aurora (CCA) and Pueblo Community College (PCC) could not provide documentation to support that suspension and debarment verification procedures were performed for nine transactions we reviewed for CCA and for 21 transactions we reviewed for PCC. We confirmed through additional audit work that none of the vendors were suspended or debarred; as a result, we determined that these errors did not result in questioned costs. ? Otero College (OC) did not complete the required Sole Source justification for four transactions. These errors resulted in $1,535,455 of questioned costs. ? PCC did not perform a request for proposals for two transactions which exceeded $150,000 and did not obtain documented quotes for seven transactions which were between $25,000 and $150,000, as required. These errors resulted in questioned costs of $1,718,761. Why did these problems occur? OC and PCC did not have adequate internal controls in place to ensure they complied with HEERF procurement requirements. In addition, CCA and PCC did not have adequate internal controls in place to ensure they complied with HEERF suspension and debarment requirements. Specifically, at OC and PCC, the secondary reviewer did not require staff follow procedures in place for procurement. At PCC the secondary reviewer also did not ensure that staff searched the federal System of Award Management to verify that entities it contracted with were not suspended, debarred, or otherwise excluded from participating in a contract for federal funds. In addition, they did not provide training over grant processes related to state procurement rules, such as training on requirements for staff to maintain appropriate supporting documentation for procurement-related verifications and procurement decisions. Further, CCA and OC experienced staff turnover in key positions, and existing employees could not locate the supporting documentation. Why do these problems matter? It is important for CCA, OC, and PCC to ensure that they obtain and maintain appropriate documentation to support procurement decisions, especially when they are the basis for determining CCA, OC, and PCC?s compliance with specific HEERF program requirements. In addition, CCA and PCC?s failure to perform procedures to ensure an entity is not suspended or debarred could result in the System paying funds to an entity that is disallowed from receiving such funds, thereby exposing the State to increased business risk and potential federal disallowances. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-058 Pueblo Community College should strengthen their internal controls over procurement, suspension and debarment and ensure they comply with the Higher Education Emergency Relief Fund (HEERF) requirements and State procurement policies by: A. Ensuring the secondary reviewer enforces compliance with the Colorado Community College System?s (System) procurement procedures and that staff perform procedures to verify contracted entities are not excluded or disqualified from receiving federal funds. B. Ensuring staff maintain supporting documentation for procurements and suspension and debarment checks. C. Providing training and cross-training to existing employees over procurement, suspension and debarment requirements. Response Pueblo Community College A. Agree Implementation Date: September 2022 Going forward, the Director of Purchasing will perform all Sam.Gov searches. The secondary reviews to ensure compliance for the System's procurement and suspension and debarment procedures will be conducted by the Vice President of Administration and Finance. B. Agree Implementation Date: September 2022 The corresponding documents supporting procurement transactions and suspension and debarment checks will be scanned and filed along with the Purchase order. C. Agree Implementation Date: September 2022 Training will be provided to fiscal and grant staff for identifying when suspension and debarment must be checked for vendors of federal programs, processes and websites to access, and methodology for documenting with the purchase documentation.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Findings 2022-056, 2022-057, and 2022-058 Higher Education Emergency Relief Fund (HEERF) Procurement Compliance The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 and appropriated federal funds to provide economic aid to the American people negatively impacted by the COVID-19 pandemic. As part of the CARES Act, funds were given to the System under the Higher Education Emergency Relief Fund (HEERF) Program. The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), was signed into law on December 27, 2020, and authorized additional funding under the HEERF program (HEERF II). Finally, the American Rescue Plan Act of 2021 (ARP), enacted on March 11, 2021, authorized a third round of funding (HEERF III) in order for higher education institutions to serve students and ensure learning continues during the COVID-19 pandemic. The HEERF Program is one of the subprograms of the federal Education Stabilization Fund [ALN 84.425]. The HEERF program contains two portions: The Student Aid portion [ALN 84.425E] and the Institutional portion, which is made up of the following: ? HEERF Institutional Aid Portion (ALN 84.425F); ? HEERF Minority Serving Institutions (ALN 84.425L); ? HEERF Strengthening Institutions Program (ALN 84.425M); ? Institutional Resilience and Expanded Postsecondary Opportunity (ALN 84.425P); ? HEERF Supplemental Assistance to Institutions of Higher Education program (ALN 84.425S). Since April 2020, the System has been awarded a total of approximately $255.6 million in HEERF funding. From inception through June 30, 2022, the System spent a total of approximately $97.8 million for the HEERF program Student Aid portion and $113.9 million for the HEERF Institutional Portion. During Fiscal Year 2022, the System spent $71.9 million for the Student Aid portion and $45.1 million for the Institutional Portion; of this amount, $28.7 million represented the System?s procurement for goods and services. The System reports that it will spend the remaining amount of funding during Fiscal Year 2023 and beyond. Each of the System?s 13 campuses separately signed an agreement titled the ?Certification and Agreement? with the U.S. Department of Education (ED) to indicate each campus? acceptance of the HEERF funding and the applicable terms and requirements. Under the requirements, each campus is required to follow the State?s procurement policies and procedures. Federal procurement regulations also require that each campus include any clauses required by federal regulations in every HEERF-related purchase order or other contract. In addition, non-federal entities, including the System and its campuses, are prohibited from contracting with or making subawards under ?covered transactions? to parties that are suspended or debarred from doing business with the federal government. ?Covered transactions? include those procurement contracts for goods and services awarded under a grant or cooperative agreement. In order to comply with federal suspension and debarment requirements, the campuses can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. What was the purpose of our audit work and what work was performed? The purpose of the audit work was to determine whether the System?s campuses had effective internal controls in place over, and complied with, federal procurement and suspension and debarment requirements for the HEERF grant during Fiscal Year 2022. As part of our audit work, we reviewed the campuses? internal controls over the HEERF grant procurement requirements. In addition, we tested a sample of 60 of the campuses? HEERF-related 435 procurement transactions, totaling $18.8 million, to determine if the campuses were in compliance with federal procurement requirements, and whether the campuses? contractors were suspended, debarred, or otherwise excluded from participating in the contract by the federal government, through verification on the SAM website exclusions listing. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulation [2 CFR 180.220] states that a contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. Also, federal regulation [2 CFR 180.300] requires that when a non-federal entity enters into a covered transaction with another entity, the non-federal entity must verify that the person or entity they intend to do business with is not excluded or disqualified from receiving federal funds. This can be done by: (1) checking the SAM exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity. ? Federal regulation [2 CFR 200.303] states that the System and its campuses, as recipients of federal funds, must establish and maintain effective internal control over their federal awards that provides reasonable assurance that the System?s campuses are managing the federal awards in compliance with federal statutes, regulations, and the award terms and conditions. ? Federal regulation [2 CFR 200.318] states that the System must document procurement procedures. The System and its campuses utilize Colorado Revised Statute Section 24, Government -State, Procurement Code; Articles 101- 112, as their procurement policy. Relevant sections of the policy include: o R-24-103-201-01 Purchasing Thresholds - (b) Small purchases are goods and services purchases costing less than $150,000. Goods and services between $25,000 and $150,000 may be purchased using a documented quote process, described in rule R-24-103-204-01. o R-24-103-201-01 Purchasing Thresholds - (c) Invitation for bids, described in rule R-24-103-202-01, request for proposals, described in rule R-24-103-203, and invitations to negotiate, described in rule R-24-103-208-03, may be used for goods or services estimated to exceed the small purchase threshold of $150,000. o R-24-103-205 Sole Source Procurements -Contracts may be awarded by use of a sole source procurement only if the following conditions are met: (a) A sole source procurement is justified when there is only one good or service that can reasonably meet the need and there is only one vendor who can provide the good or service. A requirement for a particular proprietary item (i.e., a brand name specification) does not justify a sole source procurement if there is more than one potential bidder or offeror for that item; (b) The procurement official or his or her designee shall make a written determination that a procurement is sole source, setting forth the reasons. In cases of reasonable doubt, competition should be solicited. Any request by a using agency that a procurement be restricted to one potential contractor shall be accompanied by an explanation as to why no other contractors will be suitable or acceptable to meet the need. What problems did the audit work identify? We identified at least one issue with 34 of the 60 transactions tested (57 percent), which resulted in a total of $3,254,216 in known federal questioned costs. In total, we identified 43 errors within the 34 transactions tested. Specifically, we identified the following: ? Community College of Aurora (CCA) and Pueblo Community College (PCC) could not provide documentation to support that suspension and debarment verification procedures were performed for nine transactions we reviewed for CCA and for 21 transactions we reviewed for PCC. We confirmed through additional audit work that none of the vendors were suspended or debarred; as a result, we determined that these errors did not result in questioned costs. ? Otero College (OC) did not complete the required Sole Source justification for four transactions. These errors resulted in $1,535,455 of questioned costs. ? PCC did not perform a request for proposals for two transactions which exceeded $150,000 and did not obtain documented quotes for seven transactions which were between $25,000 and $150,000, as required. These errors resulted in questioned costs of $1,718,761. Why did these problems occur? OC and PCC did not have adequate internal controls in place to ensure they complied with HEERF procurement requirements. In addition, CCA and PCC did not have adequate internal controls in place to ensure they complied with HEERF suspension and debarment requirements. Specifically, at OC and PCC, the secondary reviewer did not require staff follow procedures in place for procurement. At PCC the secondary reviewer also did not ensure that staff searched the federal System of Award Management to verify that entities it contracted with were not suspended, debarred, or otherwise excluded from participating in a contract for federal funds. In addition, they did not provide training over grant processes related to state procurement rules, such as training on requirements for staff to maintain appropriate supporting documentation for procurement-related verifications and procurement decisions. Further, CCA and OC experienced staff turnover in key positions, and existing employees could not locate the supporting documentation. Why do these problems matter? It is important for CCA, OC, and PCC to ensure that they obtain and maintain appropriate documentation to support procurement decisions, especially when they are the basis for determining CCA, OC, and PCC?s compliance with specific HEERF program requirements. In addition, CCA and PCC?s failure to perform procedures to ensure an entity is not suspended or debarred could result in the System paying funds to an entity that is disallowed from receiving such funds, thereby exposing the State to increased business risk and potential federal disallowances. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-056 Community College of Aurora should strengthen their internal controls over suspension and debarment and ensure they comply with the Higher Education Emergency Relief Fund (HEERF) requirements by: A. Ensuring staff maintain supporting documentation of suspension and debarment checks. B. Providing training and cross-training to existing employees over suspension and debarment requirements. Response Community College of Aurora A. Agree Implementation Date: October 2022 Beginning in October 2022, the duty was moved from the Principal Investigator or instructional staff previously responsible for this step to the Director of Purchasing to ensure compliance for all grant transactions. B. Agree Implementation Date: October 2022 Training will be provided for identifying when suspension and debarment must be checked for vendors of federal programs, processes and websites to access, and methodology for documenting with the purchase, to fiscal and grant staff
Findings 2022-056, 2022-057, and 2022-058 Higher Education Emergency Relief Fund (HEERF) Procurement Compliance The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 and appropriated federal funds to provide economic aid to the American people negatively impacted by the COVID-19 pandemic. As part of the CARES Act, funds were given to the System under the Higher Education Emergency Relief Fund (HEERF) Program. The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), was signed into law on December 27, 2020, and authorized additional funding under the HEERF program (HEERF II). Finally, the American Rescue Plan Act of 2021 (ARP), enacted on March 11, 2021, authorized a third round of funding (HEERF III) in order for higher education institutions to serve students and ensure learning continues during the COVID-19 pandemic. The HEERF Program is one of the subprograms of the federal Education Stabilization Fund [ALN 84.425]. The HEERF program contains two portions: The Student Aid portion [ALN 84.425E] and the Institutional portion, which is made up of the following: ? HEERF Institutional Aid Portion (ALN 84.425F); ? HEERF Minority Serving Institutions (ALN 84.425L); ? HEERF Strengthening Institutions Program (ALN 84.425M); ? Institutional Resilience and Expanded Postsecondary Opportunity (ALN 84.425P); ? HEERF Supplemental Assistance to Institutions of Higher Education program (ALN 84.425S). Since April 2020, the System has been awarded a total of approximately $255.6 million in HEERF funding. From inception through June 30, 2022, the System spent a total of approximately $97.8 million for the HEERF program Student Aid portion and $113.9 million for the HEERF Institutional Portion. During Fiscal Year 2022, the System spent $71.9 million for the Student Aid portion and $45.1 million for the Institutional Portion; of this amount, $28.7 million represented the System?s procurement for goods and services. The System reports that it will spend the remaining amount of funding during Fiscal Year 2023 and beyond. Each of the System?s 13 campuses separately signed an agreement titled the ?Certification and Agreement? with the U.S. Department of Education (ED) to indicate each campus? acceptance of the HEERF funding and the applicable terms and requirements. Under the requirements, each campus is required to follow the State?s procurement policies and procedures. Federal procurement regulations also require that each campus include any clauses required by federal regulations in every HEERF-related purchase order or other contract. In addition, non-federal entities, including the System and its campuses, are prohibited from contracting with or making subawards under ?covered transactions? to parties that are suspended or debarred from doing business with the federal government. ?Covered transactions? include those procurement contracts for goods and services awarded under a grant or cooperative agreement. In order to comply with federal suspension and debarment requirements, the campuses can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. What was the purpose of our audit work and what work was performed? The purpose of the audit work was to determine whether the System?s campuses had effective internal controls in place over, and complied with, federal procurement and suspension and debarment requirements for the HEERF grant during Fiscal Year 2022. As part of our audit work, we reviewed the campuses? internal controls over the HEERF grant procurement requirements. In addition, we tested a sample of 60 of the campuses? HEERF-related 435 procurement transactions, totaling $18.8 million, to determine if the campuses were in compliance with federal procurement requirements, and whether the campuses? contractors were suspended, debarred, or otherwise excluded from participating in the contract by the federal government, through verification on the SAM website exclusions listing. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulation [2 CFR 180.220] states that a contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. Also, federal regulation [2 CFR 180.300] requires that when a non-federal entity enters into a covered transaction with another entity, the non-federal entity must verify that the person or entity they intend to do business with is not excluded or disqualified from receiving federal funds. This can be done by: (1) checking the SAM exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity. ? Federal regulation [2 CFR 200.303] states that the System and its campuses, as recipients of federal funds, must establish and maintain effective internal control over their federal awards that provides reasonable assurance that the System?s campuses are managing the federal awards in compliance with federal statutes, regulations, and the award terms and conditions. ? Federal regulation [2 CFR 200.318] states that the System must document procurement procedures. The System and its campuses utilize Colorado Revised Statute Section 24, Government -State, Procurement Code; Articles 101- 112, as their procurement policy. Relevant sections of the policy include: o R-24-103-201-01 Purchasing Thresholds - (b) Small purchases are goods and services purchases costing less than $150,000. Goods and services between $25,000 and $150,000 may be purchased using a documented quote process, described in rule R-24-103-204-01. o R-24-103-201-01 Purchasing Thresholds - (c) Invitation for bids, described in rule R-24-103-202-01, request for proposals, described in rule R-24-103-203, and invitations to negotiate, described in rule R-24-103-208-03, may be used for goods or services estimated to exceed the small purchase threshold of $150,000. o R-24-103-205 Sole Source Procurements -Contracts may be awarded by use of a sole source procurement only if the following conditions are met: (a) A sole source procurement is justified when there is only one good or service that can reasonably meet the need and there is only one vendor who can provide the good or service. A requirement for a particular proprietary item (i.e., a brand name specification) does not justify a sole source procurement if there is more than one potential bidder or offeror for that item; (b) The procurement official or his or her designee shall make a written determination that a procurement is sole source, setting forth the reasons. In cases of reasonable doubt, competition should be solicited. Any request by a using agency that a procurement be restricted to one potential contractor shall be accompanied by an explanation as to why no other contractors will be suitable or acceptable to meet the need. What problems did the audit work identify? We identified at least one issue with 34 of the 60 transactions tested (57 percent), which resulted in a total of $3,254,216 in known federal questioned costs. In total, we identified 43 errors within the 34 transactions tested. Specifically, we identified the following: ? Community College of Aurora (CCA) and Pueblo Community College (PCC) could not provide documentation to support that suspension and debarment verification procedures were performed for nine transactions we reviewed for CCA and for 21 transactions we reviewed for PCC. We confirmed through additional audit work that none of the vendors were suspended or debarred; as a result, we determined that these errors did not result in questioned costs. ? Otero College (OC) did not complete the required Sole Source justification for four transactions. These errors resulted in $1,535,455 of questioned costs. ? PCC did not perform a request for proposals for two transactions which exceeded $150,000 and did not obtain documented quotes for seven transactions which were between $25,000 and $150,000, as required. These errors resulted in questioned costs of $1,718,761. Why did these problems occur? OC and PCC did not have adequate internal controls in place to ensure they complied with HEERF procurement requirements. In addition, CCA and PCC did not have adequate internal controls in place to ensure they complied with HEERF suspension and debarment requirements. Specifically, at OC and PCC, the secondary reviewer did not require staff follow procedures in place for procurement. At PCC the secondary reviewer also did not ensure that staff searched the federal System of Award Management to verify that entities it contracted with were not suspended, debarred, or otherwise excluded from participating in a contract for federal funds. In addition, they did not provide training over grant processes related to state procurement rules, such as training on requirements for staff to maintain appropriate supporting documentation for procurement-related verifications and procurement decisions. Further, CCA and OC experienced staff turnover in key positions, and existing employees could not locate the supporting documentation. Why do these problems matter? It is important for CCA, OC, and PCC to ensure that they obtain and maintain appropriate documentation to support procurement decisions, especially when they are the basis for determining CCA, OC, and PCC?s compliance with specific HEERF program requirements. In addition, CCA and PCC?s failure to perform procedures to ensure an entity is not suspended or debarred could result in the System paying funds to an entity that is disallowed from receiving such funds, thereby exposing the State to increased business risk and potential federal disallowances. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-057 Otero College should strengthen their internal controls over procurement and ensure they comply with the Higher Education Emergency Relief Fund (HEERF) requirements and State procurement policies by: A. Ensuring the secondary reviewer enforces compliance with the Colorado Community College System?s (System) procurement procedures. B. Ensuring staff maintain supporting documentation for procurements. C. Providing training and cross-training to existing employees over procurement requirements. Response Otero College A. Agree Implementation Date: August 2022 Otero College has adopted the system offices Sole Source justification form that will be posted to the State procurement site, requires supervisory approval, and has put that into place as of August 2022. B. Agree Implementation Date: August 2022 Otero College will ensure they maintain supporting documentation for procurements. C. Agree Implementation Date: August 2022 Otero College has a new procurement official that has attended various trainings regarding procurement rules.
Findings 2022-056, 2022-057, and 2022-058 Higher Education Emergency Relief Fund (HEERF) Procurement Compliance The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 and appropriated federal funds to provide economic aid to the American people negatively impacted by the COVID-19 pandemic. As part of the CARES Act, funds were given to the System under the Higher Education Emergency Relief Fund (HEERF) Program. The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), was signed into law on December 27, 2020, and authorized additional funding under the HEERF program (HEERF II). Finally, the American Rescue Plan Act of 2021 (ARP), enacted on March 11, 2021, authorized a third round of funding (HEERF III) in order for higher education institutions to serve students and ensure learning continues during the COVID-19 pandemic. The HEERF Program is one of the subprograms of the federal Education Stabilization Fund [ALN 84.425]. The HEERF program contains two portions: The Student Aid portion [ALN 84.425E] and the Institutional portion, which is made up of the following: ? HEERF Institutional Aid Portion (ALN 84.425F); ? HEERF Minority Serving Institutions (ALN 84.425L); ? HEERF Strengthening Institutions Program (ALN 84.425M); ? Institutional Resilience and Expanded Postsecondary Opportunity (ALN 84.425P); ? HEERF Supplemental Assistance to Institutions of Higher Education program (ALN 84.425S). Since April 2020, the System has been awarded a total of approximately $255.6 million in HEERF funding. From inception through June 30, 2022, the System spent a total of approximately $97.8 million for the HEERF program Student Aid portion and $113.9 million for the HEERF Institutional Portion. During Fiscal Year 2022, the System spent $71.9 million for the Student Aid portion and $45.1 million for the Institutional Portion; of this amount, $28.7 million represented the System?s procurement for goods and services. The System reports that it will spend the remaining amount of funding during Fiscal Year 2023 and beyond. Each of the System?s 13 campuses separately signed an agreement titled the ?Certification and Agreement? with the U.S. Department of Education (ED) to indicate each campus? acceptance of the HEERF funding and the applicable terms and requirements. Under the requirements, each campus is required to follow the State?s procurement policies and procedures. Federal procurement regulations also require that each campus include any clauses required by federal regulations in every HEERF-related purchase order or other contract. In addition, non-federal entities, including the System and its campuses, are prohibited from contracting with or making subawards under ?covered transactions? to parties that are suspended or debarred from doing business with the federal government. ?Covered transactions? include those procurement contracts for goods and services awarded under a grant or cooperative agreement. In order to comply with federal suspension and debarment requirements, the campuses can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. What was the purpose of our audit work and what work was performed? The purpose of the audit work was to determine whether the System?s campuses had effective internal controls in place over, and complied with, federal procurement and suspension and debarment requirements for the HEERF grant during Fiscal Year 2022. As part of our audit work, we reviewed the campuses? internal controls over the HEERF grant procurement requirements. In addition, we tested a sample of 60 of the campuses? HEERF-related 435 procurement transactions, totaling $18.8 million, to determine if the campuses were in compliance with federal procurement requirements, and whether the campuses? contractors were suspended, debarred, or otherwise excluded from participating in the contract by the federal government, through verification on the SAM website exclusions listing. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulation [2 CFR 180.220] states that a contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. Also, federal regulation [2 CFR 180.300] requires that when a non-federal entity enters into a covered transaction with another entity, the non-federal entity must verify that the person or entity they intend to do business with is not excluded or disqualified from receiving federal funds. This can be done by: (1) checking the SAM exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity. ? Federal regulation [2 CFR 200.303] states that the System and its campuses, as recipients of federal funds, must establish and maintain effective internal control over their federal awards that provides reasonable assurance that the System?s campuses are managing the federal awards in compliance with federal statutes, regulations, and the award terms and conditions. ? Federal regulation [2 CFR 200.318] states that the System must document procurement procedures. The System and its campuses utilize Colorado Revised Statute Section 24, Government -State, Procurement Code; Articles 101- 112, as their procurement policy. Relevant sections of the policy include: o R-24-103-201-01 Purchasing Thresholds - (b) Small purchases are goods and services purchases costing less than $150,000. Goods and services between $25,000 and $150,000 may be purchased using a documented quote process, described in rule R-24-103-204-01. o R-24-103-201-01 Purchasing Thresholds - (c) Invitation for bids, described in rule R-24-103-202-01, request for proposals, described in rule R-24-103-203, and invitations to negotiate, described in rule R-24-103-208-03, may be used for goods or services estimated to exceed the small purchase threshold of $150,000. o R-24-103-205 Sole Source Procurements -Contracts may be awarded by use of a sole source procurement only if the following conditions are met: (a) A sole source procurement is justified when there is only one good or service that can reasonably meet the need and there is only one vendor who can provide the good or service. A requirement for a particular proprietary item (i.e., a brand name specification) does not justify a sole source procurement if there is more than one potential bidder or offeror for that item; (b) The procurement official or his or her designee shall make a written determination that a procurement is sole source, setting forth the reasons. In cases of reasonable doubt, competition should be solicited. Any request by a using agency that a procurement be restricted to one potential contractor shall be accompanied by an explanation as to why no other contractors will be suitable or acceptable to meet the need. What problems did the audit work identify? We identified at least one issue with 34 of the 60 transactions tested (57 percent), which resulted in a total of $3,254,216 in known federal questioned costs. In total, we identified 43 errors within the 34 transactions tested. Specifically, we identified the following: ? Community College of Aurora (CCA) and Pueblo Community College (PCC) could not provide documentation to support that suspension and debarment verification procedures were performed for nine transactions we reviewed for CCA and for 21 transactions we reviewed for PCC. We confirmed through additional audit work that none of the vendors were suspended or debarred; as a result, we determined that these errors did not result in questioned costs. ? Otero College (OC) did not complete the required Sole Source justification for four transactions. These errors resulted in $1,535,455 of questioned costs. ? PCC did not perform a request for proposals for two transactions which exceeded $150,000 and did not obtain documented quotes for seven transactions which were between $25,000 and $150,000, as required. These errors resulted in questioned costs of $1,718,761. Why did these problems occur? OC and PCC did not have adequate internal controls in place to ensure they complied with HEERF procurement requirements. In addition, CCA and PCC did not have adequate internal controls in place to ensure they complied with HEERF suspension and debarment requirements. Specifically, at OC and PCC, the secondary reviewer did not require staff follow procedures in place for procurement. At PCC the secondary reviewer also did not ensure that staff searched the federal System of Award Management to verify that entities it contracted with were not suspended, debarred, or otherwise excluded from participating in a contract for federal funds. In addition, they did not provide training over grant processes related to state procurement rules, such as training on requirements for staff to maintain appropriate supporting documentation for procurement-related verifications and procurement decisions. Further, CCA and OC experienced staff turnover in key positions, and existing employees could not locate the supporting documentation. Why do these problems matter? It is important for CCA, OC, and PCC to ensure that they obtain and maintain appropriate documentation to support procurement decisions, especially when they are the basis for determining CCA, OC, and PCC?s compliance with specific HEERF program requirements. In addition, CCA and PCC?s failure to perform procedures to ensure an entity is not suspended or debarred could result in the System paying funds to an entity that is disallowed from receiving such funds, thereby exposing the State to increased business risk and potential federal disallowances. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-058 Pueblo Community College should strengthen their internal controls over procurement, suspension and debarment and ensure they comply with the Higher Education Emergency Relief Fund (HEERF) requirements and State procurement policies by: A. Ensuring the secondary reviewer enforces compliance with the Colorado Community College System?s (System) procurement procedures and that staff perform procedures to verify contracted entities are not excluded or disqualified from receiving federal funds. B. Ensuring staff maintain supporting documentation for procurements and suspension and debarment checks. C. Providing training and cross-training to existing employees over procurement, suspension and debarment requirements. Response Pueblo Community College A. Agree Implementation Date: September 2022 Going forward, the Director of Purchasing will perform all Sam.Gov searches. The secondary reviews to ensure compliance for the System's procurement and suspension and debarment procedures will be conducted by the Vice President of Administration and Finance. B. Agree Implementation Date: September 2022 The corresponding documents supporting procurement transactions and suspension and debarment checks will be scanned and filed along with the Purchase order. C. Agree Implementation Date: September 2022 Training will be provided to fiscal and grant staff for identifying when suspension and debarment must be checked for vendors of federal programs, processes and websites to access, and methodology for documenting with the purchase documentation.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Finding 2022-061 Internal Controls and Compliance Over Research and Development Cluster Period of Performance and Procurement The federal government sponsors Research and Development (R&D) activities under a variety of types of awards, most commonly grants, cooperative agreements, and contracts, to achieve objectives agreed upon between the federal awarding agency and the non-federal grantee entity. The types of R&D conducted under these awards vary greatly. The objective of an individual project is explained in the federal award. R&D activities at the Colorado School of Mines are subject to federal period of performance and procurement requirements. Period of performance is the time in which the School may incur new obligations to carry out the work authorized by the federal award. Procurement is the process that the School follows to purchase goods and services. The School has established a process to review expenditures charged to federal awards during the federal award?s period of performance period to ensure that any costs incurred outside of the allowable timeframe are reversed out and not charged to the federal award. Per the Colorado School of Mines policies and procedures, the School pre-audits travel, equipment, personal disbursements, and participant support expenses prior to recording the transaction to ensure allowability of the expense. The School also post-audits salary, fringe benefits, tuition, and credit card expenses to ensure allowability. The School?s procurement process includes a policy that establishes levels of approval for purchase orders (PO) based on the dollar amount of the PO. Based on the dollar amount of the PO, the School will also attach the vendor contract to the PO. The School?s Controller?s Office sends the contracts with the attached PO to the assigned individual for signature and approval. During Fiscal Year 2022, the School expended approximately $65 million in federal R&D grant funds. What was the purpose of our audit work and what work was performed? The purpose of our audit work was to determine whether the School had adequate internal controls in place over, and complied with, the Procurement and Period of Performance requirements within the R&D Cluster during Fiscal Year 2022. Period of Performance. We reviewed a random sample of 40 costs that were incurred prior to or within the first month of the grant start date to determine whether the School only charged the allowable cost to a federal award during the period of performance. Procurement. We reviewed a random sample of 16 procurement transactions that were over the micro-purchase threshold of $10,000 to determine whether School staff complied with the School?s internal procurement policy. All transactions over the micro-purchase threshold are subject to the procurement policy approval thresholds. We also compared the original PO issued against the School?s procurement policy to determine if the appropriate approval was obtained. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulations [2 CFR 200.303(a)] states that a non-federal entity should establish and maintain effective internal control over Federal awards that provide reasonable assurance that non-federal entities are managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a part of maintaining internal controls, the School should maintain evidence of such controls occurring to show that the School Mines has internal controls in place as required by the Uniform Guidance and that it is evaluating and monitoring its compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. ? Federal regulations [2 CFR 200.77 and 2 CFR 200.458] state that a non-Federal entity may only charge allowable costs to a federal award during the period of performance. According to the grant agreement, pre-award costs may be charged up to 90 days prior to the start date. Therefore, the pre-award cost period for the School?s R&D grant for Federal Fiscal Year 2022 began on October 19, 2021. ? Federal regulation [2 CFR 200.318] states that the School must document procurement procedures. The Schools procurement policy provides approval limits for purchase orders. According to this policy, certain individuals can approve POs up to $500,000, and others can approve POs up to $5 million. What problems did the audit work identify? During our Fiscal Year 2022 audit, we identified exceptions with period of performance and procurement requirements for the R&D grant. Specifically, we identified the following issues: Period of Performance. We found that the School incurred expenses prior to the period of performance start date related to 2 of the 40 disbursements (5 percent) tested. Specifically, School spent $2,593 between October 1, 2021 and October 16, 2021, or 3 to 18 days before the allowable period. Procurement. We found that the School did not obtain the appropriate approval for 1 of the 16 (6 percent) transactions tested. Specifically, the individual who signed the PO for $706,660 only had authority to sign PO?s up to a threshold of $ $500,000, which was $206,660 less than the amount of the PO. Why did these problems occur? The School did not have adequate internal controls over period of performance and procurement requirements for its R&D grant during Fiscal Year 2022. Specifically: Period of Performance. The School?s reviewer misunderstood the period of performance requirements related to the transaction and related federal award. Specifically, according to the School, the reviewer confused the period of performance start date of October 19, 2021 with the payroll period of October 1, 2021 through October 15, 2021, which was prior to the period of performance start date and resulted in the expenditures erroneously being charged to the grant. Procurement. We found that there was inconsistency with the Schools internal process and its published procurement policy regarding the approval process for POs. Specifically, the verbally approved internal process allowed the individual we noted as an exception to approve POs up to $2.5 million; however, this had not been updated in the published procurement policy. Why do these problems matter? By charging expenditures to federal awards outside of the period of performance, the School is not complying with the requirements of the federal awards. In addition, by not obtaining documented evidence of approval from the appropriate individuals, the School is not complying with its internal procurement procedures. This could result in procuring a service or product for an unreasonable amount and there is an increased risk of fictitious or fraudulent POs if the charge does not align with the Schools mission. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-061 The Colorado School of Mines should strengthen its internal controls over and ensure it complies with period of performance and procurement requirements for its Research and Development (R&D) grants by: A. Instituting an appropriate review of expenditures to ensure they are within the period of performance for the federal award, and ensuring that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Updating its published procurement policy to ensure it contains the current approval process and thresholds. Response Colorado School of Mines A. Agree Implementation Date: July 1, 2022 Colorado School of Mines will ensure appropriate reviews of expenditures occur to ensure they are within the period of performance for the federal award, and ensure that staff have an appropriate understanding of the related period of performance requirements or obtain clarification from the federal grantor, as appropriate. B. Agree Implementation Date: June 30, 2023 Mines did not update published Procurement Policies specific to approval limits by position to accurately reflect the delegated approval authority. Mines will update the published policies to accurately reflect delegated approval limits and review the procurement approval process.
Findings 2022-056, 2022-057, and 2022-058 Higher Education Emergency Relief Fund (HEERF) Procurement Compliance The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 and appropriated federal funds to provide economic aid to the American people negatively impacted by the COVID-19 pandemic. As part of the CARES Act, funds were given to the System under the Higher Education Emergency Relief Fund (HEERF) Program. The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), was signed into law on December 27, 2020, and authorized additional funding under the HEERF program (HEERF II). Finally, the American Rescue Plan Act of 2021 (ARP), enacted on March 11, 2021, authorized a third round of funding (HEERF III) in order for higher education institutions to serve students and ensure learning continues during the COVID-19 pandemic. The HEERF Program is one of the subprograms of the federal Education Stabilization Fund [ALN 84.425]. The HEERF program contains two portions: The Student Aid portion [ALN 84.425E] and the Institutional portion, which is made up of the following: ? HEERF Institutional Aid Portion (ALN 84.425F); ? HEERF Minority Serving Institutions (ALN 84.425L); ? HEERF Strengthening Institutions Program (ALN 84.425M); ? Institutional Resilience and Expanded Postsecondary Opportunity (ALN 84.425P); ? HEERF Supplemental Assistance to Institutions of Higher Education program (ALN 84.425S). Since April 2020, the System has been awarded a total of approximately $255.6 million in HEERF funding. From inception through June 30, 2022, the System spent a total of approximately $97.8 million for the HEERF program Student Aid portion and $113.9 million for the HEERF Institutional Portion. During Fiscal Year 2022, the System spent $71.9 million for the Student Aid portion and $45.1 million for the Institutional Portion; of this amount, $28.7 million represented the System?s procurement for goods and services. The System reports that it will spend the remaining amount of funding during Fiscal Year 2023 and beyond. Each of the System?s 13 campuses separately signed an agreement titled the ?Certification and Agreement? with the U.S. Department of Education (ED) to indicate each campus? acceptance of the HEERF funding and the applicable terms and requirements. Under the requirements, each campus is required to follow the State?s procurement policies and procedures. Federal procurement regulations also require that each campus include any clauses required by federal regulations in every HEERF-related purchase order or other contract. In addition, non-federal entities, including the System and its campuses, are prohibited from contracting with or making subawards under ?covered transactions? to parties that are suspended or debarred from doing business with the federal government. ?Covered transactions? include those procurement contracts for goods and services awarded under a grant or cooperative agreement. In order to comply with federal suspension and debarment requirements, the campuses can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. What was the purpose of our audit work and what work was performed? The purpose of the audit work was to determine whether the System?s campuses had effective internal controls in place over, and complied with, federal procurement and suspension and debarment requirements for the HEERF grant during Fiscal Year 2022. As part of our audit work, we reviewed the campuses? internal controls over the HEERF grant procurement requirements. In addition, we tested a sample of 60 of the campuses? HEERF-related 435 procurement transactions, totaling $18.8 million, to determine if the campuses were in compliance with federal procurement requirements, and whether the campuses? contractors were suspended, debarred, or otherwise excluded from participating in the contract by the federal government, through verification on the SAM website exclusions listing. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulation [2 CFR 180.220] states that a contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. Also, federal regulation [2 CFR 180.300] requires that when a non-federal entity enters into a covered transaction with another entity, the non-federal entity must verify that the person or entity they intend to do business with is not excluded or disqualified from receiving federal funds. This can be done by: (1) checking the SAM exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity. ? Federal regulation [2 CFR 200.303] states that the System and its campuses, as recipients of federal funds, must establish and maintain effective internal control over their federal awards that provides reasonable assurance that the System?s campuses are managing the federal awards in compliance with federal statutes, regulations, and the award terms and conditions. ? Federal regulation [2 CFR 200.318] states that the System must document procurement procedures. The System and its campuses utilize Colorado Revised Statute Section 24, Government -State, Procurement Code; Articles 101- 112, as their procurement policy. Relevant sections of the policy include: o R-24-103-201-01 Purchasing Thresholds - (b) Small purchases are goods and services purchases costing less than $150,000. Goods and services between $25,000 and $150,000 may be purchased using a documented quote process, described in rule R-24-103-204-01. o R-24-103-201-01 Purchasing Thresholds - (c) Invitation for bids, described in rule R-24-103-202-01, request for proposals, described in rule R-24-103-203, and invitations to negotiate, described in rule R-24-103-208-03, may be used for goods or services estimated to exceed the small purchase threshold of $150,000. o R-24-103-205 Sole Source Procurements -Contracts may be awarded by use of a sole source procurement only if the following conditions are met: (a) A sole source procurement is justified when there is only one good or service that can reasonably meet the need and there is only one vendor who can provide the good or service. A requirement for a particular proprietary item (i.e., a brand name specification) does not justify a sole source procurement if there is more than one potential bidder or offeror for that item; (b) The procurement official or his or her designee shall make a written determination that a procurement is sole source, setting forth the reasons. In cases of reasonable doubt, competition should be solicited. Any request by a using agency that a procurement be restricted to one potential contractor shall be accompanied by an explanation as to why no other contractors will be suitable or acceptable to meet the need. What problems did the audit work identify? We identified at least one issue with 34 of the 60 transactions tested (57 percent), which resulted in a total of $3,254,216 in known federal questioned costs. In total, we identified 43 errors within the 34 transactions tested. Specifically, we identified the following: ? Community College of Aurora (CCA) and Pueblo Community College (PCC) could not provide documentation to support that suspension and debarment verification procedures were performed for nine transactions we reviewed for CCA and for 21 transactions we reviewed for PCC. We confirmed through additional audit work that none of the vendors were suspended or debarred; as a result, we determined that these errors did not result in questioned costs. ? Otero College (OC) did not complete the required Sole Source justification for four transactions. These errors resulted in $1,535,455 of questioned costs. ? PCC did not perform a request for proposals for two transactions which exceeded $150,000 and did not obtain documented quotes for seven transactions which were between $25,000 and $150,000, as required. These errors resulted in questioned costs of $1,718,761. Why did these problems occur? OC and PCC did not have adequate internal controls in place to ensure they complied with HEERF procurement requirements. In addition, CCA and PCC did not have adequate internal controls in place to ensure they complied with HEERF suspension and debarment requirements. Specifically, at OC and PCC, the secondary reviewer did not require staff follow procedures in place for procurement. At PCC the secondary reviewer also did not ensure that staff searched the federal System of Award Management to verify that entities it contracted with were not suspended, debarred, or otherwise excluded from participating in a contract for federal funds. In addition, they did not provide training over grant processes related to state procurement rules, such as training on requirements for staff to maintain appropriate supporting documentation for procurement-related verifications and procurement decisions. Further, CCA and OC experienced staff turnover in key positions, and existing employees could not locate the supporting documentation. Why do these problems matter? It is important for CCA, OC, and PCC to ensure that they obtain and maintain appropriate documentation to support procurement decisions, especially when they are the basis for determining CCA, OC, and PCC?s compliance with specific HEERF program requirements. In addition, CCA and PCC?s failure to perform procedures to ensure an entity is not suspended or debarred could result in the System paying funds to an entity that is disallowed from receiving such funds, thereby exposing the State to increased business risk and potential federal disallowances. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-056 Community College of Aurora should strengthen their internal controls over suspension and debarment and ensure they comply with the Higher Education Emergency Relief Fund (HEERF) requirements by: A. Ensuring staff maintain supporting documentation of suspension and debarment checks. B. Providing training and cross-training to existing employees over suspension and debarment requirements. Response Community College of Aurora A. Agree Implementation Date: October 2022 Beginning in October 2022, the duty was moved from the Principal Investigator or instructional staff previously responsible for this step to the Director of Purchasing to ensure compliance for all grant transactions. B. Agree Implementation Date: October 2022 Training will be provided for identifying when suspension and debarment must be checked for vendors of federal programs, processes and websites to access, and methodology for documenting with the purchase, to fiscal and grant staff
Findings 2022-056, 2022-057, and 2022-058 Higher Education Emergency Relief Fund (HEERF) Procurement Compliance The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 and appropriated federal funds to provide economic aid to the American people negatively impacted by the COVID-19 pandemic. As part of the CARES Act, funds were given to the System under the Higher Education Emergency Relief Fund (HEERF) Program. The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), was signed into law on December 27, 2020, and authorized additional funding under the HEERF program (HEERF II). Finally, the American Rescue Plan Act of 2021 (ARP), enacted on March 11, 2021, authorized a third round of funding (HEERF III) in order for higher education institutions to serve students and ensure learning continues during the COVID-19 pandemic. The HEERF Program is one of the subprograms of the federal Education Stabilization Fund [ALN 84.425]. The HEERF program contains two portions: The Student Aid portion [ALN 84.425E] and the Institutional portion, which is made up of the following: ? HEERF Institutional Aid Portion (ALN 84.425F); ? HEERF Minority Serving Institutions (ALN 84.425L); ? HEERF Strengthening Institutions Program (ALN 84.425M); ? Institutional Resilience and Expanded Postsecondary Opportunity (ALN 84.425P); ? HEERF Supplemental Assistance to Institutions of Higher Education program (ALN 84.425S). Since April 2020, the System has been awarded a total of approximately $255.6 million in HEERF funding. From inception through June 30, 2022, the System spent a total of approximately $97.8 million for the HEERF program Student Aid portion and $113.9 million for the HEERF Institutional Portion. During Fiscal Year 2022, the System spent $71.9 million for the Student Aid portion and $45.1 million for the Institutional Portion; of this amount, $28.7 million represented the System?s procurement for goods and services. The System reports that it will spend the remaining amount of funding during Fiscal Year 2023 and beyond. Each of the System?s 13 campuses separately signed an agreement titled the ?Certification and Agreement? with the U.S. Department of Education (ED) to indicate each campus? acceptance of the HEERF funding and the applicable terms and requirements. Under the requirements, each campus is required to follow the State?s procurement policies and procedures. Federal procurement regulations also require that each campus include any clauses required by federal regulations in every HEERF-related purchase order or other contract. In addition, non-federal entities, including the System and its campuses, are prohibited from contracting with or making subawards under ?covered transactions? to parties that are suspended or debarred from doing business with the federal government. ?Covered transactions? include those procurement contracts for goods and services awarded under a grant or cooperative agreement. In order to comply with federal suspension and debarment requirements, the campuses can perform a search in the federal System of Award Management (SAM) website, which tracks the entities that the federal government has determined are ineligible to receive federal funding; collect a certification from the entity; or add a clause or condition to the contract. What was the purpose of our audit work and what work was performed? The purpose of the audit work was to determine whether the System?s campuses had effective internal controls in place over, and complied with, federal procurement and suspension and debarment requirements for the HEERF grant during Fiscal Year 2022. As part of our audit work, we reviewed the campuses? internal controls over the HEERF grant procurement requirements. In addition, we tested a sample of 60 of the campuses? HEERF-related 435 procurement transactions, totaling $18.8 million, to determine if the campuses were in compliance with federal procurement requirements, and whether the campuses? contractors were suspended, debarred, or otherwise excluded from participating in the contract by the federal government, through verification on the SAM website exclusions listing. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: ? Federal regulation [2 CFR 180.220] states that a contract for goods or services is a covered transaction if awarded as a grant or payment for specified use and if the amount of the contract is expected to equal or exceed $25,000. Also, federal regulation [2 CFR 180.300] requires that when a non-federal entity enters into a covered transaction with another entity, the non-federal entity must verify that the person or entity they intend to do business with is not excluded or disqualified from receiving federal funds. This can be done by: (1) checking the SAM exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity. ? Federal regulation [2 CFR 200.303] states that the System and its campuses, as recipients of federal funds, must establish and maintain effective internal control over their federal awards that provides reasonable assurance that the System?s campuses are managing the federal awards in compliance with federal statutes, regulations, and the award terms and conditions. ? Federal regulation [2 CFR 200.318] states that the System must document procurement procedures. The System and its campuses utilize Colorado Revised Statute Section 24, Government -State, Procurement Code; Articles 101- 112, as their procurement policy. Relevant sections of the policy include: o R-24-103-201-01 Purchasing Thresholds - (b) Small purchases are goods and services purchases costing less than $150,000. Goods and services between $25,000 and $150,000 may be purchased using a documented quote process, described in rule R-24-103-204-01. o R-24-103-201-01 Purchasing Thresholds - (c) Invitation for bids, described in rule R-24-103-202-01, request for proposals, described in rule R-24-103-203, and invitations to negotiate, described in rule R-24-103-208-03, may be used for goods or services estimated to exceed the small purchase threshold of $150,000. o R-24-103-205 Sole Source Procurements -Contracts may be awarded by use of a sole source procurement only if the following conditions are met: (a) A sole source procurement is justified when there is only one good or service that can reasonably meet the need and there is only one vendor who can provide the good or service. A requirement for a particular proprietary item (i.e., a brand name specification) does not justify a sole source procurement if there is more than one potential bidder or offeror for that item; (b) The procurement official or his or her designee shall make a written determination that a procurement is sole source, setting forth the reasons. In cases of reasonable doubt, competition should be solicited. Any request by a using agency that a procurement be restricted to one potential contractor shall be accompanied by an explanation as to why no other contractors will be suitable or acceptable to meet the need. What problems did the audit work identify? We identified at least one issue with 34 of the 60 transactions tested (57 percent), which resulted in a total of $3,254,216 in known federal questioned costs. In total, we identified 43 errors within the 34 transactions tested. Specifically, we identified the following: ? Community College of Aurora (CCA) and Pueblo Community College (PCC) could not provide documentation to support that suspension and debarment verification procedures were performed for nine transactions we reviewed for CCA and for 21 transactions we reviewed for PCC. We confirmed through additional audit work that none of the vendors were suspended or debarred; as a result, we determined that these errors did not result in questioned costs. ? Otero College (OC) did not complete the required Sole Source justification for four transactions. These errors resulted in $1,535,455 of questioned costs. ? PCC did not perform a request for proposals for two transactions which exceeded $150,000 and did not obtain documented quotes for seven transactions which were between $25,000 and $150,000, as required. These errors resulted in questioned costs of $1,718,761. Why did these problems occur? OC and PCC did not have adequate internal controls in place to ensure they complied with HEERF procurement requirements. In addition, CCA and PCC did not have adequate internal controls in place to ensure they complied with HEERF suspension and debarment requirements. Specifically, at OC and PCC, the secondary reviewer did not require staff follow procedures in place for procurement. At PCC the secondary reviewer also did not ensure that staff searched the federal System of Award Management to verify that entities it contracted with were not suspended, debarred, or otherwise excluded from participating in a contract for federal funds. In addition, they did not provide training over grant processes related to state procurement rules, such as training on requirements for staff to maintain appropriate supporting documentation for procurement-related verifications and procurement decisions. Further, CCA and OC experienced staff turnover in key positions, and existing employees could not locate the supporting documentation. Why do these problems matter? It is important for CCA, OC, and PCC to ensure that they obtain and maintain appropriate documentation to support procurement decisions, especially when they are the basis for determining CCA, OC, and PCC?s compliance with specific HEERF program requirements. In addition, CCA and PCC?s failure to perform procedures to ensure an entity is not suspended or debarred could result in the System paying funds to an entity that is disallowed from receiving such funds, thereby exposing the State to increased business risk and potential federal disallowances. See Schedule of Findings and Questioned Costs for chart/table Recommendation 2022-057 Otero College should strengthen their internal controls over procurement and ensure they comply with the Higher Education Emergency Relief Fund (HEERF) requirements and State procurement policies by: A. Ensuring the secondary reviewer enforces compliance with the Colorado Community College System?s (System) procurement procedures. B. Ensuring staff maintain supporting documentation for procurements. C. Providing training and cross-training to existing employees over procurement requirements. Response Otero College A. Agree Implementation Date: August 2022 Otero College has adopted the system offices Sole Source justification form that will be posted to the State procurement site, requires supervisory approval, and has put that into place as of August 2022. B. Agree Implementation Date: August 2022 Otero College will ensure they maintain supporting documentation for procurements. C. Agree Implementation Date: August 2022 Otero College has a new procurement official that has attended various trainings regarding procurement rules.