Finding No. 2021-020 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: Retention of Procurement Records: (a) All procurement records shall be retained by the Procurement and Supply (P&S) Director for a period of 5 years after completion of construction, or full delivery of the goods or services under the contract. The official with expenditure authority shall also keep copies of all procurement records for their respective agencies. Requirements for Competition: Officials with expenditure authority shall provide for full and open competition through use of the competitive procedure that is best suited to the circumstances of the contract action. The competitive procedures available for use in fulfilling the requirement for full and open competition are as follows: (a) Competitive sealed bidding (§ 70-30.3-205) (b) Competitive sealed proposals (§ 70-30.3-210) (c) Architect-engineer services (§ 70-30.3-305); and (d) Competitive selection procedures for professional services (§ 70-30.3-310). § 70-30.3-201 Competitive sealed bidding: If there is no adequate local competition, the invitation for bids shall also be advertised in at least one regional newspaper or at least one national publication or on the internet; in such case, the P&S Director shall consider extending the bidding period. Small Purchases: Bidding is not required but is encouraged for procurement over $2,500 and under $10,000. The official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality for procurement valued at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition: Of forty-five expenditures tested, aggregating $4.5M of a total population of $6.4M in nonpayroll expenditures subject to procurement, the following were noted: 1. For two (or 4%), purchase order, purchase requisitions and contracts were not on file. 2. For five (or 11%), bid submissions and invitation-to-bid publications were not on file. No questioned costs are presented for Business Unit 5122 as no reimbursement were received in FY 2021. 3. For two (or 4%), no price quotations were written, documented, or submitted with the purchase order. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Condition, continued: 4. For two or (4%), written justifications and the P&S Director’s written approvals of the emergency procurement method used were not provided. In addition, the contracts indicated the procurement used were for competitive sealed proposals; however, the procurement files support emergency procurement. Cause: CNMI did not enforce compliance with established procurement regulations over procurement. Effect: CNMI is in noncompliance with applicable procurement regulations and questioned costs of $1,240,465 result. Identification as a Repeat Finding: Finding No. 2020-032 Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials: Condition 1 – CNMI Corrective Action Plan statements agreement. Condition 2 - The CIP Office disagrees with this finding. The Capital Improvement Program provided information regarding these questioned costs. For 703-OS/32200344 - RFQ20-GOV-084 was provided to the Auditor for their review. Three (3) proposers submitted a proposal. For 702-OS/32200912 - The procurement method for this was processed through a Sole Source. For CUC-WW-18-C032 - Lower Base Sewer Phase 1 - Lift Station and Focemain - This contract was executed by the Commonwealth Utilities Corporation on July 12, 2018. Procurement Services was able to obtain a copy of the contract from CUC to satisfy the audit testing. For 712727-OC (ITB20-DLNR/DOA-098) - Purchase of One (1) 13" Chipper Machine. Two bidders responded to this ITB; Boyer Trading Company & J. & J Company. Boyer Trading was selected as the lowest and responsive bidder. Condition 3 - The Office of Grants Management disagrees with these findings because these are Open Accounts, and this would mean that no price quotations were required during the purchase requisition process in order to obtain the purchase orders. As confirmed by Financial Services and Procurement Services, quotations were not required on an open account. Open accounts were allowed during the JD Edwards period and were discontinued after September 30, 2021. MUNIS was implemented in October 2021. Finding No. 2021-020, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00026, D18AP00130, D18AP00140 D19AP00090, D20AP00064, D20AP00049 Area: Procurement and Suspension and Debarment Questioned Costs: $1,240,465 Views of responsible officials, continued: Condition 4 - The Office of Grants Management (assisting DHSEM) disagrees with the finding because assigned personnel were not made aware of the documents needed; however, OGM is more than happy to provide the following documents to substantiate the purchase of a mobile Covid-19 Biological Safety Lab for the Commonwealth Healthcare Center and for the Alternate Care Site at Kanoa Resort. Per the documentation, the Public Assistance Office and DHSEM followed competitive procurement processing and invoked the Public Health Emergency Executive Order#2020-04 and to which the CNMI Attorney General’s Office approved the purchase. Purchase Order # 708019 was used by the Department of Homeland Security and Emergency Management and the Covid-19 Task Force. Contract number Covid19-0-0626 was provided. Expenses were later transferred to Department of the Interior CARES Act Funds under D20AP00049 per OGM Memo Number 2021-013. Auditor Response: Condition 2 – The bid documents, bid submissions and advertisements were not provided. Condition 3 – Per §70-30.3-220 of the CNMI Procurement Regulations that was in effect prior to May 28, 2021, the official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval. Condition 4 – The supporting documents were requested on January 25, 2024 and were not provided.
Finding No. 2021-032 Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Area: Procurement and Suspension and Debarment Questioned Costs: $2,775,965 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: • All government procurement shall be awarded by competitive sealed bidding except under certain circumstances permitting other than full and open competition. • Bidding is not required but is encouraged for procurement of $2,500 and under $10,000. The individual with the expenditure authority must obtain price quotations from at least three vendors and should base the selection on competitive price and quality for procurement valued at $2,500 to $10,000. Any price quotations must be written, documented, and submitted to the Procurement and Supply (P&S) Director for approval. • For purchases that exceed $10,000 but which are less than or equal to $50,000, a minimum of three vendors shall be solicited to submit written or electronic quotations. If there are fewer than three vendors, the expenditure authority shall certify, in writing, to the P&S Director that fewer than three vendors responded and shall provide written proof of the request. Condition: Of fifty-one nonpayroll expenditures tested, aggregating $3.1M of a total population of $6.7M expenditures subject to procurement, the following were noted: 1. For thirty-four (or 67%), no procurement documents were provided. Finding No. 2021-032, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Area: Procurement and Suspension and Debarment Questioned Costs: $2,775,965 Condition, continued: Condition 1, continued: 2. For one (or 2%) (document no. 1718052 dated 08/10/21 amounting to $26,100), the contract and underlying procurement files were not provided, for which the amount is questioned. 3. For four (or 8%), vendor quotations were not provided. Finding No. 2021-032, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Area: Procurement and Suspension and Debarment Questioned Costs: $2,775,965 Condition, continued: 4. For one (or 2%) (document no. 1719396 dated 08/17/21 amounting $764,345), the procurement method used was not specified and the P&S Director’s written determination were not provided, for which the amount is questioned. Cause: CNMI did not enforce compliance with established procurement regulations. Effect: CNMI is in noncompliance with established procurement regulations and questioned costs of $2,775,965 result. Recommendation: Responsible personnel should monitor and enforce compliance with applicable procurement regulations, including the review of procurement files for completeness as to written rationale for deviations from applicable procurement requirements. Further, responsible personnel should maintain procurement documents to substantiate compliance. Views of Responsible Officials: Condition 2, 3 for Doc No. 263066 and 4 – The CNMI Corrective Action Plan states agreement. Condition 1 – The Department of Finance – Procurement Services disagrees with this finding. No procurement documents were provided because these thirty-four transactions were for payments made out for Travel, Medical Referral Patients, etc. Finding No. 2021-032, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Area: Procurement and Suspension and Debarment Questioned Costs: $2,775,965 Views of responsible officials: Condition 3 - The Department of Finance – Procurement Services disagrees with these findings. For 732176-000 OP $13,440 - No other quotes provided as it was the PS Acting Director's (FC Aguon) discretion, and the purchase requisition was approved by the former SOF (D. Atalig). For 724870-000 OP $8,789 - No other quotes provided as it was the PS Acting Director's (FC Aguon) discretion, and the purchase requisition was approved by the former SOF (D. Atalig). The Emergency Declaration suspended the procurement regulations and authorized the Expenditure Authority to procure any items/procure services exceeding the threshold without obtaining any price quotes. For PO #732176 & 728470, these are not part of the Gov’s Executive Order #2022-04. The Division of Procurement Services will accept the findings as noncompliance with the CNMI Procurement Regulations. Auditor Response: Condition 1 – No supporting documentation were provided to substantiate that the transactions pertain to travel and medical referral patients. In addition, based on the general ledger descriptions, Document Nos. 921922, 1727770, 1727772, 1735047, 1721009, 1717349, 261094, 1722328, 1722338, 261528, 1666323, 1665777 and 1732183 pertain to legal professional fees, Tourism Resumption Investment Plan (TRIP) program, professional services, postage meter, lease rental, air condition service, fuel, office supplies, Pelican LED rechargeable, project improvements, tents and picnic tables rental and vacuum purchases. Further, we were not able to determine the type of expenditure for document no. 1674103 as the only description stated was "JUN 2021". Condition 3 – Pursuant to § 70-30.3-220, if fewer than three vendors submit quotations, the expenditure authority shall certify, in writing, to the Director that fewer than three vendors responded and shall provide written proof of the request. If fewer than three of the solicited vendors submit quotes, the Director may either approve the request or instruct the expenditure authority to solicit additional quotes.
Finding No. 2021-037 Federal Agency: U.S. Department of Homeland Security AL Program: 97.030 Community Disaster Loans Federal Award No.: EMO-2020-LF-4404MP01 Area: Procurement and Suspension and Debarment Questioned Costs: $18,353,963 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CNMI’s procurement regulations state the following: • Officials with expenditure authority shall provide for full and open competition through use of the competitive procedure that is best suited to the circumstances of the contract action. The competitive procedures available for use in fulfilling the requirement for full and open competition are as follows: (a) Competitive sealed bidding; (b) Competitive sealed proposals; (c) Architect-engineer services; and (d) Competitive selection procedures for professional services. • Emergency Procurement. o Notwithstanding any other provision of the regulations in this subchapter, the government may make emergency procurement when there exists a threat to public health, safety or welfare under emergency conditions. An emergency procurement must be as competitive as practicable under the circumstances. o A written justification of the basis for the emergency and for the selection of the particular contractor must be made by the official with expenditure authority. o If the Procurement and Supply (P&S) Director is satisfied, he shall state his approval in writing. Condition: Of fourteen expenditures tested, aggregating $18.4M of a total population of $20.2M in nonpayroll expenditures subject to procurement, the following were noted: 1. For eleven (or 79%, either the procurement files, written justifications, and the P&S Director’s written approvals of the Emergency Procurement method used were not provided. In addition, the contracts for Document Nos. 904160, 912446, 922508 and 907725 indicated procurement methods used were for competitive sealed proposals; however, the procurement files support emergency procurement. Further, the procurement information page that specifies the procurement method used for Document Nos. 912931 and 913016 were left blank but were initialed by the Legal reviewer. Finding No. 2021-037, continued Federal Agency: U.S. Department of Homeland Security AL Program: 97.030 Community Disaster Loans Federal Award No.: EMO-2020-LF-4404MP01 Area: Procurement and Suspension and Debarment Questioned Costs: $18,353,963 Condition, continued: Condition 1, continued: 2. For three (or 21%), purchase orders do not specify the procurement methods used. Finding No. 2021-037, continued Federal Agency: U.S. Department of Homeland Security AL Program: 97.030 Community Disaster Loans Federal Award No.: EMO-2020-LF-4404MP01 Area: Procurement and Suspension and Debarment Questioned Costs: $18,353,963 Cause: CNMI did not enforce compliance with applicable procurement requirements. Effect: CNMI is in noncompliance with applicable procurement requirements and questioned costs of $18,353,963 result. Recommendation: Responsible personnel should monitor and enforce compliance with applicable procurement requirements, including the review of procurement files for completeness as to written rationale for deviations from applicable procurement requirements. Further, responsible personnel should maintain procurement documents to substantiate compliance. Views of Responsible Officials: Condition 1 – The CNMI Corrective Action Plan states agreement. Condition 2 - The Department of Finance – Procurement Services disagrees with this finding. For 715112-000 OP / 727492-000 OP / 730942-000 OP. These three purchase orders were provided in the list for ALN 97.030 and were available for testing during auditor’s fieldwork. Auditors failed to perform the required testing. Auditor Response: Condition 2 – Purchase orders do not demonstrate compliance with procurement regulations.
Finding 2021-008 – Noncompliance with Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Reporting – Disaster Grants – Public Assistance (Presidentially Declared Disasters) PASS THROUGH GRANTOR: Oklahoma Department of Emergency Management FEDERAL AGENCY: U.S. Department of Homeland Security ASSISTANCE LISTING: 97.036 FEDERAL PROGRAM NAME: Disaster Grants - Public Assistance (Presidentially Declared Disasters) FEDERAL AWARD NUMBER: DR 4438 and DR 4453 FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Reporting QUESTIONED COSTS: $289,739 Condition: During inquiry, review, and a test of 100% FEMA expenditures, the following was noted: Project Worksheet 88 Questioned Cost - $9,981 The County was unable to produce the following: • Personnel records for labor that detailed employee hours spent on each site for the project totaling $180. • Personnel records for labor that subsequently resulted in equipment costs that could not be traced to an employee totaling $8,645. • Daily Activity Reports for material costs totaling $1,156. • One (1) quarterly report to Oklahoma Department of Emergency Management (OEM) was not timely submitted. Project Worksheet 607 Questioned Cost - $4,808 • The County was unable to produce activity sheets to confirm the reimbursement from OEM totaling $4,808. Project Worksheet 660 Questioned Cost - $274,950 • The County was unable to produce records or documentation totaling $274,950 for material costs. • One (1) quarterly report to OEM was not timely submitted. In addition, the County was unable to produce records or documentation totaling $55,147 for work performed and reported as complete for the state and local shares: • Project Worksheet 88 totaling $3,327. • Project Worksheet 660 totaling $51,820. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements. Effect of Condition: These conditions resulted in noncompliance to grant requirements and could result in loss of federal fund to the County. Recommendation: OSAI recommends the County gain an understanding of the compliance requirements for federal programs and implement internal control procedures to ensure compliance with all requirements. We further recommend that all documentation be properly maintained for inspection. Management Response: Chairman of the Board of County Commissioners: Responsible personnel will attend training classes by OSAI, OEM, and Muskogee Creek Nation to stay updated on allowable expenditures and recordkeeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time. County Commissioner District 1: Documentation for Project Worksheet 660 was reported incorrectly to OEM. I have contacted OEM to request an amended audit. Responsible personnel will attend training classes by OSAI office and OEM to stay updated on allowable expenditures and record keeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time. County Commissioner District 2: Project Worksheet 88 was completed by the prior administration. Responsible personnel will attend training classes by OSAI office and OEM to stay updated on allowable expenditures and record keeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time. Criteria: 2 CFR § 200.303(a) Internal Controls reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2 CFR § 200.318 (a), General procurement standards, reads as follows: a) The Non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. [….] Title 2 CFR § 200.84 Questioned Cost reads as follows: Questioned cost means a cost that is questioned by the auditor because of an audit finding: (a) Which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for fund used to match Federal funds; (b) Where the costs, at the time of the audit, are not supported by adequate documentation; or (c) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. Further, GAO Standards – Section 2 – Objectives of an Entity - OV2.23 states in part: Compliance Objectives Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements. [….]
Finding 2021-008 – Noncompliance with Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Reporting – Disaster Grants – Public Assistance (Presidentially Declared Disasters) PASS THROUGH GRANTOR: Oklahoma Department of Emergency Management FEDERAL AGENCY: U.S. Department of Homeland Security ASSISTANCE LISTING: 97.036 FEDERAL PROGRAM NAME: Disaster Grants - Public Assistance (Presidentially Declared Disasters) FEDERAL AWARD NUMBER: DR 4438 and DR 4453 FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Reporting QUESTIONED COSTS: $289,739 Condition: During inquiry, review, and a test of 100% FEMA expenditures, the following was noted: Project Worksheet 88 Questioned Cost - $9,981 The County was unable to produce the following: • Personnel records for labor that detailed employee hours spent on each site for the project totaling $180. • Personnel records for labor that subsequently resulted in equipment costs that could not be traced to an employee totaling $8,645. • Daily Activity Reports for material costs totaling $1,156. • One (1) quarterly report to Oklahoma Department of Emergency Management (OEM) was not timely submitted. Project Worksheet 607 Questioned Cost - $4,808 • The County was unable to produce activity sheets to confirm the reimbursement from OEM totaling $4,808. Project Worksheet 660 Questioned Cost - $274,950 • The County was unable to produce records or documentation totaling $274,950 for material costs. • One (1) quarterly report to OEM was not timely submitted. In addition, the County was unable to produce records or documentation totaling $55,147 for work performed and reported as complete for the state and local shares: • Project Worksheet 88 totaling $3,327. • Project Worksheet 660 totaling $51,820. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements. Effect of Condition: These conditions resulted in noncompliance to grant requirements and could result in loss of federal fund to the County. Recommendation: OSAI recommends the County gain an understanding of the compliance requirements for federal programs and implement internal control procedures to ensure compliance with all requirements. We further recommend that all documentation be properly maintained for inspection. Management Response: Chairman of the Board of County Commissioners: Responsible personnel will attend training classes by OSAI, OEM, and Muskogee Creek Nation to stay updated on allowable expenditures and recordkeeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time. County Commissioner District 1: Documentation for Project Worksheet 660 was reported incorrectly to OEM. I have contacted OEM to request an amended audit. Responsible personnel will attend training classes by OSAI office and OEM to stay updated on allowable expenditures and record keeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time. County Commissioner District 2: Project Worksheet 88 was completed by the prior administration. Responsible personnel will attend training classes by OSAI office and OEM to stay updated on allowable expenditures and record keeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time. Criteria: 2 CFR § 200.303(a) Internal Controls reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2 CFR § 200.318 (a), General procurement standards, reads as follows: a) The Non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. [….] Title 2 CFR § 200.84 Questioned Cost reads as follows: Questioned cost means a cost that is questioned by the auditor because of an audit finding: (a) Which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for fund used to match Federal funds; (b) Where the costs, at the time of the audit, are not supported by adequate documentation; or (c) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. Further, GAO Standards – Section 2 – Objectives of an Entity - OV2.23 states in part: Compliance Objectives Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements. [….]
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Federal Award Findings and Questioned Costs June 30, 2021 Comment # 2021-005 INTERNAL CONTROLS OVER DISBURSEMENTS OF FEDERAL FUNDS MUST BE IMPROVED HEAD START AND EARLY HEAD START PROGRAMS Federal Assistance Listing # 93.600 (Questioned Costs - Undetermined) Condition: In connection with audit of the Authority, we performed risk assessment of the Authority’s significant financial transactions, material account balances, and other significant risk areas and each applicable relevant assertion of each area, and we designed and perform substantive procedures and test of internal controls to determine what level of reliance that could be placed on the system of internal control of the Authority. Using auditor’s judgment, we selected various transactions for testings the system of internal control and the appropriateness and reasonableness of the expenditures. During our audit, we performed the following procedures: We selected twenty- five (25) transactions using auditor’s judgement with the following exceptions noted as respects to the Head Start and Early Head Start Programs: 1. There were fifteen (15) transactions with missing check request documents and\or purchase orders to support the disbursements. 2 Four (4) transactions with only one signature on the cancelled checks. 3. There were fourteen (14) transactions missing evidence of support as required by the procurement policies and procedures of the Authority. 4. There was one (1) transaction for the purchase of a truck that was not in agreement with bid documentation provided by the Authority. Further, we noted no specific authorization of such transaction in the notice of award for the purchase during the budget period of the acquisition. We selected fifteen (15) transactions using auditor’s judgement with the following exceptions noted as respect to the indirect cost pool: 1. There were fourteen (14) transactions with missing check request documents and\or purchase orders to support the disbursements. 2 Two (2) transactions with only one signature on the cancelled checks. 3. There were one (1) transactions missing evidence of support as required by the procurement policies and procedures of the Authority. The aforementioned exceptions were not resolved as of the date the audit report, September 8, 2023. Context: We selected 25 transactions haphazardly from the disbursement records of the Head Start and Early Head Start Programs. We selected 15 transactions haphazardly from the disbursement records of the indirect cost pool Criteria: Internal policy of the Authority, generally accepted accounting principles, Government Auditing Standards and the Uniform Guidance. The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of the Uniform Guidance (UG), 2 CFR §200.318 General procurement standards for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in 2 CFR §200.317 through 200.327. Effect: The transaction could result in cost not allowed under federal and state regulations and the provisions of the grant agreement. Cause: The failure of the Authority to follow its written procurement policies and procedures and to update the existing procedures to conform to federal and state laws. Management and the board of directors must have proper oversight and governance of the purchase and procurement procedures. Recommendation: We recommend that the board of directors and management immediately review all the transactions outlined in this finding and determine if the exceptions noted can be resolved and corrected. Further action should be taken to prevent, eliminate and properly remediate other exceptions similar in nature as those described in this finding. Policies and procedures should be reviewed and updated to conform to 2 CFR §200.318 General procurement standards. The Authority should add additional staff with the proper accounting skills, knowledge and experience with grant accounting. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and takes exception to several of the items listed. For example, some of the transactions listed that were missing check requests (both Head Start/Early Head Start and Indirect Cost Pool) were for monthly expenditures like utility bills, insurance, rent and other contractual obligations. Management has not in the past issued a check request each month for these transactions as they are part of the ongoing operation of the programs listed. Transactions listed with only one signature occurred as an oversight as the banking authority only requires one signature while our policy may indicate two signatures. Management feels the purchase of the truck was procured in agreement with approvals from the funding agency and board as required. Proper documentation was provided and is currently available for further review. Management continues to follow the proper guidelines regarding procurement and purchases related to the policies and procedures of the agency as well as micro purchase guidelines set forth by the Federal awarding agency. The Board of Directors also approved a revision to the policies and procedures requiring two “live” signatures on all checks issued by the agency. There is also an ongoing review of the current policies and procedures and recommendations for changes and updates are forthcoming. Management reserves the right for further review of these findings with the audit firm for additional documentation and resolution.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Federal Award Findings and Questioned Costs June 30, 2021 Comment # 2021-005 INTERNAL CONTROLS OVER DISBURSEMENTS OF FEDERAL FUNDS MUST BE IMPROVED HEAD START AND EARLY HEAD START PROGRAMS Federal Assistance Listing # 93.600 (Questioned Costs - Undetermined) Condition: In connection with audit of the Authority, we performed risk assessment of the Authority’s significant financial transactions, material account balances, and other significant risk areas and each applicable relevant assertion of each area, and we designed and perform substantive procedures and test of internal controls to determine what level of reliance that could be placed on the system of internal control of the Authority. Using auditor’s judgment, we selected various transactions for testings the system of internal control and the appropriateness and reasonableness of the expenditures. During our audit, we performed the following procedures: We selected twenty- five (25) transactions using auditor’s judgement with the following exceptions noted as respects to the Head Start and Early Head Start Programs: 1. There were fifteen (15) transactions with missing check request documents and\or purchase orders to support the disbursements. 2 Four (4) transactions with only one signature on the cancelled checks. 3. There were fourteen (14) transactions missing evidence of support as required by the procurement policies and procedures of the Authority. 4. There was one (1) transaction for the purchase of a truck that was not in agreement with bid documentation provided by the Authority. Further, we noted no specific authorization of such transaction in the notice of award for the purchase during the budget period of the acquisition. We selected fifteen (15) transactions using auditor’s judgement with the following exceptions noted as respect to the indirect cost pool: 1. There were fourteen (14) transactions with missing check request documents and\or purchase orders to support the disbursements. 2 Two (2) transactions with only one signature on the cancelled checks. 3. There were one (1) transactions missing evidence of support as required by the procurement policies and procedures of the Authority. The aforementioned exceptions were not resolved as of the date the audit report, September 8, 2023. Context: We selected 25 transactions haphazardly from the disbursement records of the Head Start and Early Head Start Programs. We selected 15 transactions haphazardly from the disbursement records of the indirect cost pool Criteria: Internal policy of the Authority, generally accepted accounting principles, Government Auditing Standards and the Uniform Guidance. The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of the Uniform Guidance (UG), 2 CFR §200.318 General procurement standards for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in 2 CFR §200.317 through 200.327. Effect: The transaction could result in cost not allowed under federal and state regulations and the provisions of the grant agreement. Cause: The failure of the Authority to follow its written procurement policies and procedures and to update the existing procedures to conform to federal and state laws. Management and the board of directors must have proper oversight and governance of the purchase and procurement procedures. Recommendation: We recommend that the board of directors and management immediately review all the transactions outlined in this finding and determine if the exceptions noted can be resolved and corrected. Further action should be taken to prevent, eliminate and properly remediate other exceptions similar in nature as those described in this finding. Policies and procedures should be reviewed and updated to conform to 2 CFR §200.318 General procurement standards. The Authority should add additional staff with the proper accounting skills, knowledge and experience with grant accounting. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and takes exception to several of the items listed. For example, some of the transactions listed that were missing check requests (both Head Start/Early Head Start and Indirect Cost Pool) were for monthly expenditures like utility bills, insurance, rent and other contractual obligations. Management has not in the past issued a check request each month for these transactions as they are part of the ongoing operation of the programs listed. Transactions listed with only one signature occurred as an oversight as the banking authority only requires one signature while our policy may indicate two signatures. Management feels the purchase of the truck was procured in agreement with approvals from the funding agency and board as required. Proper documentation was provided and is currently available for further review. Management continues to follow the proper guidelines regarding procurement and purchases related to the policies and procedures of the agency as well as micro purchase guidelines set forth by the Federal awarding agency. The Board of Directors also approved a revision to the policies and procedures requiring two “live” signatures on all checks issued by the agency. There is also an ongoing review of the current policies and procedures and recommendations for changes and updates are forthcoming. Management reserves the right for further review of these findings with the audit firm for additional documentation and resolution.
2021-006 Compliance with Uniform Guidance - Procurement; Information on Federal Program: Unaccompanied Alien Children (Assistance Listing No. 93.676) provided by the Department of Health and Human Services.; Criteria: 2 CFR Sections 200.212, 200.318(h), and 180.300 and 48 CFR Section 52.209-6 state that a non-Federal entity must review that an entity with which it plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded from participation in federal award programs.; Condition: During our testing for procurement compliance, it was determined that the Agency did not verify that vendors charged to the major program are not debarred, suspended, or otherwise excluded from participation in federal award programs.; Questioned Cost: None; Cause: The Agency was not aware of the requirement to review an entity’s status.; Effect: The Agency is not in compliance with 2 CFR Sections 200.212, 200.318(h), and 180.300 and 48 CFR Section 52.209-6. As a result, the Agency could enter into covered transactions with entities that are debarred, suspended, or otherwise excluded from participation in federal award programs.; Perspective Information: Vendors in excess of the $25,000 threshold were reviewed to determine if they are debarred, suspended, or otherwise excluded from participation in federal award programs. None were noted to be ineligible for participation.; Repeat Finding: Yes; Recommendation: We recommend the Agency develop a purchasing policy which encompasses the requirements of the Uniform Guidance, including the requirement to review and document the verification that vendors are not debarred, suspended, or otherwise excluded from participation in federal award programs.; Views of the Responsible Officials and Planned Corrective Actions: The Agency’s management agrees with this finding and during the 21/22 fiscal year the Payables Accountant (Jarri Melton) completed a review of the Agency’s vendor list to ensure that the Agency was in compliance with 2 CFR Sections 200.212, 200.318(h), and 180.300 and 48 CFR Section 52.209-6. A hard copy of this review was signed off by the Payables Accountant (Jarri Melton) and the CFO (Jeni Rodriguez), then filed. The Payables Accountant (Jarri Melton) and the CFO (Jeni Rodriguez) will perform this review going forward for any new vendors. Additionally, the Agency’s purchasing policy was updated in fiscal year 21-22, with purchase orders, a purchase order numbering system and tracking. There are monthly closings / reconciling of outstanding purchase orders from the prior month done by the Payables Accountant (Jarri Melton). The Revenue Accountant (Valerie Myers) or the Managed Care Liaison (Ms. Gray McCaffrey) are the team that are able to assign purchase order numbers to the purchase orders and the originals are kept in a folder for the Payables Accountant (Jarri Melton) to retrieve when closing out the month.
2021-006 Compliance with Uniform Guidance - Procurement; Information on Federal Program: Unaccompanied Alien Children (Assistance Listing No. 93.676) provided by the Department of Health and Human Services.; Criteria: 2 CFR Sections 200.212, 200.318(h), and 180.300 and 48 CFR Section 52.209-6 state that a non-Federal entity must review that an entity with which it plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded from participation in federal award programs.; Condition: During our testing for procurement compliance, it was determined that the Agency did not verify that vendors charged to the major program are not debarred, suspended, or otherwise excluded from participation in federal award programs.; Questioned Cost: None; Cause: The Agency was not aware of the requirement to review an entity’s status.; Effect: The Agency is not in compliance with 2 CFR Sections 200.212, 200.318(h), and 180.300 and 48 CFR Section 52.209-6. As a result, the Agency could enter into covered transactions with entities that are debarred, suspended, or otherwise excluded from participation in federal award programs.; Perspective Information: Vendors in excess of the $25,000 threshold were reviewed to determine if they are debarred, suspended, or otherwise excluded from participation in federal award programs. None were noted to be ineligible for participation.; Repeat Finding: Yes; Recommendation: We recommend the Agency develop a purchasing policy which encompasses the requirements of the Uniform Guidance, including the requirement to review and document the verification that vendors are not debarred, suspended, or otherwise excluded from participation in federal award programs.; Views of the Responsible Officials and Planned Corrective Actions: The Agency’s management agrees with this finding and during the 21/22 fiscal year the Payables Accountant (Jarri Melton) completed a review of the Agency’s vendor list to ensure that the Agency was in compliance with 2 CFR Sections 200.212, 200.318(h), and 180.300 and 48 CFR Section 52.209-6. A hard copy of this review was signed off by the Payables Accountant (Jarri Melton) and the CFO (Jeni Rodriguez), then filed. The Payables Accountant (Jarri Melton) and the CFO (Jeni Rodriguez) will perform this review going forward for any new vendors. Additionally, the Agency’s purchasing policy was updated in fiscal year 21-22, with purchase orders, a purchase order numbering system and tracking. There are monthly closings / reconciling of outstanding purchase orders from the prior month done by the Payables Accountant (Jarri Melton). The Revenue Accountant (Valerie Myers) or the Managed Care Liaison (Ms. Gray McCaffrey) are the team that are able to assign purchase order numbers to the purchase orders and the originals are kept in a folder for the Payables Accountant (Jarri Melton) to retrieve when closing out the month.
Finding 2021-009 – Noncompliance with Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Reporting; and Special Tests and Provisions – Disaster Grants – Public Assistance (Presidentially Declared Disasters) PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management FEDERAL AGENCY: U.S. Department of Homeland Security ASSISTANCE LISTING: 97.036 FEDERAL PROGRAM NAME: Disaster Grants – Public Assistance (Presidentially Declared Disasters) FEDERAL AWARD NUMBER: DR-4438 FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Reporting; Special Tests and Provisions QUESTIONED COSTS: $105,935 Condition: Upon inquiry of county personnel, review of documentation and procedures, and a test of five (5) out of seventeen (17) project worksheets, the following weaknesses were noted: Project Worksheet 365 (D3) Questioned Cost – $1,257: • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. • Project expense documentation was not adequately retained to verify costs of the equipment used and FEMA equipment rates were not consistently used by the district. Total unsupported county equipment costs $402. • Project expense documentation was not adequately retained to verify costs of the materials used. Total material costs reported exceeded documentation by $855. Project Worksheet 872 (D2) Questioned Cost – $15,152: • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. • Project expense documentation was not adequately retained to verify costs of the labor used and correct labor rates were not consistently used by the District. Total unsupported County labor costs $939. • Project expense documentation was not adequately retained to verify costs of the equipment used and FEMA equipment rates were not consistently used by the District. Total unsupported County equipment costs $9,946. • Project expense documentation was not adequately retained to verify costs of the materials used. Total material costs reported did not exceed the total County documentation. • Unallowed management costs were included in total project expenditures totaling $4,267. Project Worksheet 888 (D2) Questioned Cost – $19,885: • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. • Project expense documentation was not adequately retained to verify costs of the labor used and correct labor rates were not consistently used by the District. Total unsupported County labor costs $2,298. • Project expense documentation was not adequately retained to verify costs of the equipment used and FEMA equipment rates were not consistently used by the District. Total unsupported County equipment costs $10,551. • Project expense documentation was not adequately retained to verify costs of the materials used. Total material costs reported exceeded documentation by $640. • Unallowed management costs were included in total project expenditures totaling $6,396. Project Worksheet 967 (D2) Questioned Cost – $4,137: • Project expense documentation was not adequately retained to verify costs of the labor used and correct labor rates were not consistently used by the District. Total unsupported County labor costs $940. • Project expense documentation was not adequately retained to verify costs of the equipment used and FEMA equipment rates were not consistently used by the District. Total unsupported County equipment costs $2,408. • Project expense documentation was not adequately retained to verify costs of the materials used. Total material costs reported exceeded documentation by $180. • Unallowed management costs were included in total project expenditures totaling $609. Further, upon additional inquiry of staff and review of documentation over 100% of federal expenditures the following was noted: Project Worksheet 365 (D3): • One (1) Quarterly Report was not submitted within 30 days of the end of a calendar quarter. Project Worksheet 756 (D2) Questioned Cost – $41,417: • Project expenditures totaling $41,417 occurred after the period of performance deadline. Project Worksheet 986 (D3) Questioned Cost – $24,087: • Project expenditures totaling $24,087 occurred after the period of performance deadline. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements. Effect of Condition: These conditions resulted in noncompliance to federal grant requirements and could result in loss of federal funds to the County. Recommendation: OSAI recommends the County gain an understanding of the compliance requirements for federal programs and implement internal control procedures to ensure compliance with all requirements. We further recommend all documentation be properly maintained for inspection. Management Response: County Commissioner District 2: I was not in office at this time, but I will discuss with my Administrative Assistant and determine the best way to track all project costs. County Commissioners District 3: I will have my Administrative Assistant double check her numbers and I also will review the documentation. Criteria: 2 CFR § 200.303(a) Internal Controls reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2 CFR § 200.318 (a) General procurement standards reads as follows: The Non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. [….] Title 2 CFR § 200.84 Questioned Cost reads as follows: Questioned cost means a cost that is questioned by the auditor because of an audit finding: (a) Which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for fund used to match Federal funds; (b) Where the costs, at the time of the audit, are not supported by adequate documentation; or (c) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. Further, GAO Standards – Section 2 – Objectives of an Entity – OV2.23 states in part: Compliance Objectives Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements. [….]
CONDITION: During my review of the District’s compliance with the requirements for noncompetitive procurement, I noted the District did not document its rationale for purchases made from ‘CJAWS, Inc.’ totaling $140,389. CRITERIA: In accordance with Section 2 CFR 200.318(i) of the Uniform Guidance, the District must maintain records sufficient to detail the history of procurement. These records include but are not limited to the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Furthermore, Section 2 CFR 200.320(c’) of the Uniform Guidance details five (5) circumstances in which noncompetitive procurement can be used. EFFECT: The District did not comply with Section 2 CFR 200.318(i) and Section 2 CFR 200.320(c’) of the Uniform Guidance regarding the proper documentation required for noncompetitive procurement. QUESTIONED COST: $140,389 CAUSE: From a review of the School District’s policies as published on the District’s website, the District has not updated their policies to include those related to ‘federal fiscal compliance’ in accordance with the Uniform Guidance, in particular, procurement policies to address the requirements of Section 2 CFR 200.318(i) and 320(c). RECOMMENDATION: I recommend that the School District update their policies to include those most recent related to ‘federal fiscal compliance’ in accordance with the Uniform Guidance, in particular, procurement policies to address the requirements of Section 2 CFR 200.318(i) and 320(c). In addition, I would recommend that District personnel responsible for expenditures related to federal funding receive updated training related to ‘procurement’ policies and procedures as they relate to federal funding. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: The Cambria Heights School District contracted with a third-party vendor (Trafera) for the purchase of technology equipment. The contract with Trafera was procured through a cooperative purchasing group (COSTARS). The District did not obtain an adequate number of price or rate quotations for the technology equipment as required by the Uniform Guidance and 24 PS 8.807.1. CRITERIA: As specified in Section 2 CFR 200. 318(i) of the Uniform Guidance, the District must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. In addition, small purchase procedures per Section 2 CFR 200.320(a)(2)(i) for acquisitions between the micro-purchase threshold (currently $10,000) and the simplified acquisition threshold (current $250,000), price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate. Per 24 PS 8.807.1, there should be three quotes that are either written or well documented. The use of COSTARS only constitutes one quotation. CAUSE: School District personnel directly responsible for the acquisition of the technology equipment through COSTARS interpreted that the requirements specified by Section 2 CFR 200.318(i) and Section 2 CFR 200.320(a)(2)(i), would be met by using this cooperative purchasing organization. EFFECT: The School District did not comply with the requirements of 2 CFR 200.318(i) and 2 CFR 200.320(a)(2)(i) of the Uniform Guidance, and 24 PS 8.807.1, regarding maintaining records sufficient to detail the history of procurement for the technology equipment to ensure that an adequate number of price quotations were solicited for this purchase. QUESTIONED COST: $106,250 RECOMMENDATION: I recommend that the School District update their policies to include those most recent related to ‘federal fiscal compliance’ in accordance with the Uniform Guidance, in particular, procurement policies to address the requirements of Section 2 CFR 200.318(i) and 2 CFR.320(a)(2)(i). In addition, I would recommend that District personnel responsible for expenditures related to federal funding receive updated training related to ‘procurement’ policies and procedures as they relate to federal funding. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: During my review of the District’s compliance with the requirements for noncompetitive procurement, I noted the District did not document its rationale for purchases made from ‘CJAWS, Inc.’ totaling $140,389. CRITERIA: In accordance with Section 2 CFR 200.318(i) of the Uniform Guidance, the District must maintain records sufficient to detail the history of procurement. These records include but are not limited to the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Furthermore, Section 2 CFR 200.320(c’) of the Uniform Guidance details five (5) circumstances in which noncompetitive procurement can be used. EFFECT: The District did not comply with Section 2 CFR 200.318(i) and Section 2 CFR 200.320(c’) of the Uniform Guidance regarding the proper documentation required for noncompetitive procurement. QUESTIONED COST: $140,389 CAUSE: From a review of the School District’s policies as published on the District’s website, the District has not updated their policies to include those related to ‘federal fiscal compliance’ in accordance with the Uniform Guidance, in particular, procurement policies to address the requirements of Section 2 CFR 200.318(i) and 320(c). RECOMMENDATION: I recommend that the School District update their policies to include those most recent related to ‘federal fiscal compliance’ in accordance with the Uniform Guidance, in particular, procurement policies to address the requirements of Section 2 CFR 200.318(i) and 320(c). In addition, I would recommend that District personnel responsible for expenditures related to federal funding receive updated training related to ‘procurement’ policies and procedures as they relate to federal funding. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: The Cambria Heights School District contracted with a third-party vendor (Trafera) for the purchase of technology equipment. The contract with Trafera was procured through a cooperative purchasing group (COSTARS). The District did not obtain an adequate number of price or rate quotations for the technology equipment as required by the Uniform Guidance and 24 PS 8.807.1. CRITERIA: As specified in Section 2 CFR 200. 318(i) of the Uniform Guidance, the District must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. In addition, small purchase procedures per Section 2 CFR 200.320(a)(2)(i) for acquisitions between the micro-purchase threshold (currently $10,000) and the simplified acquisition threshold (current $250,000), price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate. Per 24 PS 8.807.1, there should be three quotes that are either written or well documented. The use of COSTARS only constitutes one quotation. CAUSE: School District personnel directly responsible for the acquisition of the technology equipment through COSTARS interpreted that the requirements specified by Section 2 CFR 200.318(i) and Section 2 CFR 200.320(a)(2)(i), would be met by using this cooperative purchasing organization. EFFECT: The School District did not comply with the requirements of 2 CFR 200.318(i) and 2 CFR 200.320(a)(2)(i) of the Uniform Guidance, and 24 PS 8.807.1, regarding maintaining records sufficient to detail the history of procurement for the technology equipment to ensure that an adequate number of price quotations were solicited for this purchase. QUESTIONED COST: $106,250 RECOMMENDATION: I recommend that the School District update their policies to include those most recent related to ‘federal fiscal compliance’ in accordance with the Uniform Guidance, in particular, procurement policies to address the requirements of Section 2 CFR 200.318(i) and 2 CFR.320(a)(2)(i). In addition, I would recommend that District personnel responsible for expenditures related to federal funding receive updated training related to ‘procurement’ policies and procedures as they relate to federal funding. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: During my review of the District’s compliance with the requirements for noncompetitive procurement, I noted the District did not document its rationale for purchases made from ‘CJAWS, Inc.’ totaling $140,389. CRITERIA: In accordance with Section 2 CFR 200.318(i) of the Uniform Guidance, the District must maintain records sufficient to detail the history of procurement. These records include but are not limited to the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Furthermore, Section 2 CFR 200.320(c’) of the Uniform Guidance details five (5) circumstances in which noncompetitive procurement can be used. EFFECT: The District did not comply with Section 2 CFR 200.318(i) and Section 2 CFR 200.320(c’) of the Uniform Guidance regarding the proper documentation required for noncompetitive procurement. QUESTIONED COST: $140,389 CAUSE: From a review of the School District’s policies as published on the District’s website, the District has not updated their policies to include those related to ‘federal fiscal compliance’ in accordance with the Uniform Guidance, in particular, procurement policies to address the requirements of Section 2 CFR 200.318(i) and 320(c). RECOMMENDATION: I recommend that the School District update their policies to include those most recent related to ‘federal fiscal compliance’ in accordance with the Uniform Guidance, in particular, procurement policies to address the requirements of Section 2 CFR 200.318(i) and 320(c). In addition, I would recommend that District personnel responsible for expenditures related to federal funding receive updated training related to ‘procurement’ policies and procedures as they relate to federal funding. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: The Cambria Heights School District contracted with a third-party vendor (Trafera) for the purchase of technology equipment. The contract with Trafera was procured through a cooperative purchasing group (COSTARS). The District did not obtain an adequate number of price or rate quotations for the technology equipment as required by the Uniform Guidance and 24 PS 8.807.1. CRITERIA: As specified in Section 2 CFR 200. 318(i) of the Uniform Guidance, the District must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. In addition, small purchase procedures per Section 2 CFR 200.320(a)(2)(i) for acquisitions between the micro-purchase threshold (currently $10,000) and the simplified acquisition threshold (current $250,000), price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate. Per 24 PS 8.807.1, there should be three quotes that are either written or well documented. The use of COSTARS only constitutes one quotation. CAUSE: School District personnel directly responsible for the acquisition of the technology equipment through COSTARS interpreted that the requirements specified by Section 2 CFR 200.318(i) and Section 2 CFR 200.320(a)(2)(i), would be met by using this cooperative purchasing organization. EFFECT: The School District did not comply with the requirements of 2 CFR 200.318(i) and 2 CFR 200.320(a)(2)(i) of the Uniform Guidance, and 24 PS 8.807.1, regarding maintaining records sufficient to detail the history of procurement for the technology equipment to ensure that an adequate number of price quotations were solicited for this purchase. QUESTIONED COST: $106,250 RECOMMENDATION: I recommend that the School District update their policies to include those most recent related to ‘federal fiscal compliance’ in accordance with the Uniform Guidance, in particular, procurement policies to address the requirements of Section 2 CFR 200.318(i) and 2 CFR.320(a)(2)(i). In addition, I would recommend that District personnel responsible for expenditures related to federal funding receive updated training related to ‘procurement’ policies and procedures as they relate to federal funding. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
Finding 2021-007 – Noncompliance with Compliance Requirements: Allowable Costs/Cost Principles; Period of Performance; Reporting – Disaster Grants – Public Assistance (Presidentially Declared Disasters) PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management FEDERAL AGENCY: U.S. Department of Home Security ASSISTANCE LISTING NO: 97.036 FEDERAL PROGRAM NAME: Disaster Grants – Public Assistance (Presidentially Declared Disasters) FEDERAL AWARD NUMBER: DR-4438 FEDERAL AWARD YEAR: 2020 and 2021 CONTROL CATEGORY: Allowable Costs/Cost Principals; Period of Performance; Reporting QUESTIONED COSTS: $67,742 Condition: Upon inquiry of county personnel, review of documentation and procedures, and a test of 100% of federal expenditures totaling $592,062, the following weaknesses were noted: Project Worksheet 274 (D3) Questioned Cost - $1,019 • Equipment costs were not calculated with correct Federal Emergency Management Agency (FEMA) rates resulting in $1,019 of unsupported costs. • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. Project Worksheet 419 (D2) Questioned Costs - $6,223 (Activities Allowed/Allowable Costs - $6,223 Period of Performance - $5,467) • One (1) Daily Activity Report in the amount of $5,467 accrued expenditures that occurred after the performance deadline. Additionally, the work performed was not listed on the approved project worksheet. • One (1) Daily Activity Report in the amount of $5,467 contained costs that were not described on the approved project worksheet. • Equipment costs were not calculated with correct FEMA rates resulting in $708 of unsupported costs. • Labor costs were not calculated with appropriate rates resulting in $48 of unsupported costs. • Four (4) Daily Activity Reports were not signed by the preparer. • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. Project Worksheet 420 (D2) Questioned Costs - $5,278 • Equipment costs were not calculated with correct FEMA rates resulting in $4,981 of unsupported costs. • The labor hours reported on the Daily Activity Reports totaling $274 do not agree to the total hours worked reported on the employee timesheet. • Material costs were not calculated with accurate unit prices resulting in $23 of unsupported costs. • Three (3) Daily Activity Reports were not signed by the preparer. • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. Project Worksheet 810 (D1) Questioned Costs - $11,987 • The labor hours reported on the Daily Activity Reports totaling $11,987 do not agree to the total hours worked reported on the employee timesheet. • Three (3) Daily Activity Reports were not signed by the preparer. • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. Project Worksheet 843 (D1) Questioned Costs - $11,482 • Equipment costs were not calculated with correct FEMA rates resulting in $9,106 of unsupported costs. • The labor hours reported on the Daily Activity Reports totaling $2,160 do not agree to the total hours worked reported on the employee timesheet. • Material costs were not calculated with accurate unit prices resulting in $216 of unsupported costs. • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. Project Worksheet 889 (D1) Questioned Costs - $1,870 • The labor hours reported on the Daily Activity Reports totaling $1,680 do not agree to the total hours worked reported on the employee timesheet. • Equipment costs were not calculated with correct FEMA rates resulting in $190 of unsupported costs. • Four (4) Daily Activity Reports were not signed by the preparer. • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. Project Worksheet 995 (D1) Questioned Costs - $8,993 • The labor hours reported on the Daily Activity Reports totaling $8,019 do not agree to the total hours worked reported on the employee timesheet. • Material costs were not calculated with accurate unit prices resulting in $564 of unsupported costs. • Total project costs were not met resulting in $410 unsubstantiated costs. • Three (3) daily activity reports were not signed by the preparer. • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. • One (1) quarterly report was not submitted timely. Project Worksheet 1023 (D1) Questioned Costs - $134 • The labor hours reported on the Daily Activity Reports totaling $134 do not agree to the total hours worked reported on the employee timesheet. • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. Project Worksheet 1024 (D1) Questioned Costs - $3,238 • Equipment costs were not calculated with correct FEMA rates resulting in $1,544 of unsupported costs. • The labor hours reported on the Daily Activity Reports totaling $1,362 do not agree to the total hours worked reported on the employee timesheet. • Material costs were not calculated with accurate unit prices resulting in $332 of unsupported costs. • One (1) Daily Activity Report was not signed by the preparer. • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. Project Worksheet 1066 (D1) Questioned Costs - $4,266 • The labor hours reported on the Daily Activity Reports totaling $4,266 do not agree to the total hours worked reported on the employee timesheet. • Three (3) Daily Activity Reports were not signed by the preparer. • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. Project Worksheet 1073 (D1) Questioned Costs - $3,701 • The labor hours reported on the Daily Activity Reports totaling $3,589 do not agree to the total hours worked reported on the employee timesheet. • Material costs were not calculated with accurate unit prices resulting in $112 of unsupported costs. • One (1) Daily Activity Report was not signed by the preparer. • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. Project Worksheet 1077 (D1) Questioned Costs - $5,035 • Equipment costs were not calculated with correct FEMA rates resulting in $2,856 of unsupported costs. • The labor hours reported on the Daily Activity Reports totaling $2,161 do not agree to the total hours worked reported on the employee timesheet. • Material costs were not calculated with accurate unit prices resulting in $18 of unsupported costs. • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. Project Worksheet 1098 (D1) Questioned Costs - $2,934 • The labor hours reported on the Daily Activity Reports totaling $1,680 do not agree to the total hours worked reported on the employee timesheet. • One (1) Daily Activity Report in the amount of $912 contained costs that were not described on the approved project worksheet. • Material costs were not calculated with accurate unit prices resulting in $235 of unsupported costs. • Equipment costs were not calculated with correct FEMA rates resulting in $107 of unsupported costs. • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. Project Worksheet 1101 (D1) Questioned Costs - $1,582 • The labor hours reported on the Daily Activity Reports totaling $1,582 do not agree to the total hours worked reported on the employee timesheet. • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements. Effect of Condition: These conditions resulted in noncompliance to grant requirements and could result in loss of federal funds to the County. Recommendation: OSAI recommends the County gain an understanding of the compliance requirements for federal programs and implement internal control procedures to ensure compliance with all requirements. We further recommend all documentation be properly maintained for inspection. Management Response: Chairman of the Board of County Commissioners: Because I was not in office during this period, I am not able to say for certain what transpired. I will practice oversight and be involved in the documentation of federal grant expenditures. County Commissioner District 2: I did not take office until January 2021; therefore, I was not in office during FEMA disaster #4438 declared in 2019. In any future FEMA declared emergencies, I will exercise due diligence and oversee any and all documents relative to the disaster. County Commissioner District 3: I will make sure we use the correct FEMA equipment rates. I will review the documents prepared by my administrative assistant. Criteria: 2 CFR § 200.303(a) Internal Controls reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2 CFR § 200.318 (a), General procurement standards, reads as follows: The Non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. [….] Title 2 CFR § 200.84 Questioned Cost reads as follows: Questioned cost means a cost that is questioned by the auditor because of an audit finding: (a) Which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for fund used to match Federal funds; (b) Where the costs, at the time of the audit, are not supported by adequate documentation; or (c) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. Further, GAO Standards – Section 2 – Objectives of an Entity – OV2.23 states in part: Compliance Objectives Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements. […]
Federal agency: U.S. Department of Education Federal program title: Special Education Cluster CFDA Number: 84.027, 84.173 Pass-Through Agency: Massachusetts Department of Elementary and Secondary Education and Massachusetts Department of Early Education and Care Pass-Through Number(s): Various (see Schedule of Expenditures of Federal Awards) Award Period: July 1, 2020 – June 30, 2021 Type of Finding: • Material Weakness in Internal Control over Compliance • Material Noncompliance (Modified Opinion) Compliance Requirement: Procurement Criteria or Specific Requirement: 2 CFR section 200.318, part (i) requires that the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition and Context: For all five contracts selected for testing, records sufficient to detail the history of procurement were not maintained. The sample was a statistically valid sample. Questioned Costs: Cannot be determined Cause: Procedures to maintain records sufficient to detail the history of all procurements related to federal funds needs to be strengthened. Effect: Noncompliance with the federal program occurred. Repeat Finding: Yes Recommendation: We recommend procedures to maintain records sufficient to detail the history of all procurements be strengthened. Views of Responsible Officials: Management agrees with the finding.
Federal agency: U.S. Department of Education Federal program title: Special Education Cluster CFDA Number: 84.027, 84.173 Pass-Through Agency: Massachusetts Department of Elementary and Secondary Education and Massachusetts Department of Early Education and Care Pass-Through Number(s): Various (see Schedule of Expenditures of Federal Awards) Award Period: July 1, 2020 – June 30, 2021 Type of Finding: • Material Weakness in Internal Control over Compliance • Material Noncompliance (Modified Opinion) Compliance Requirement: Procurement Criteria or Specific Requirement: 2 CFR section 200.318, part (i) requires that the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition and Context: For all five contracts selected for testing, records sufficient to detail the history of procurement were not maintained. The sample was a statistically valid sample. Questioned Costs: Cannot be determined Cause: Procedures to maintain records sufficient to detail the history of all procurements related to federal funds needs to be strengthened. Effect: Noncompliance with the federal program occurred. Repeat Finding: Yes Recommendation: We recommend procedures to maintain records sufficient to detail the history of all procurements be strengthened. Views of Responsible Officials: Management agrees with the finding.
Federal agency: U.S. Department of Education Federal program title: Special Education Cluster CFDA Number: 84.027, 84.173 Pass-Through Agency: Massachusetts Department of Elementary and Secondary Education and Massachusetts Department of Early Education and Care Pass-Through Number(s): Various (see Schedule of Expenditures of Federal Awards) Award Period: July 1, 2020 – June 30, 2021 Type of Finding: • Material Weakness in Internal Control over Compliance • Material Noncompliance (Modified Opinion) Compliance Requirement: Procurement Criteria or Specific Requirement: 2 CFR section 200.318, part (i) requires that the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition and Context: For all five contracts selected for testing, records sufficient to detail the history of procurement were not maintained. The sample was a statistically valid sample. Questioned Costs: Cannot be determined Cause: Procedures to maintain records sufficient to detail the history of all procurements related to federal funds needs to be strengthened. Effect: Noncompliance with the federal program occurred. Repeat Finding: Yes Recommendation: We recommend procedures to maintain records sufficient to detail the history of all procurements be strengthened. Views of Responsible Officials: Management agrees with the finding.
Program Information: U.S. Department of the Interior AL # Award Number Award Period Program Name 15.042 A19AV00888 7/1/2020-6/30/2021 Indian School Equalization Program 15.046 A19AV00888 7/1/2020-6/30/2021 Administrative Cost Grants for Indian Schools Criteria: Non-Federal entities other than States, including those operating Federal programs as subrecipients of States, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR part 200. During the review of the School’s procurement policies, the following was noted: • Any purchase of materials, supplies, or equipment having a purchase price exceeding $5,000 shall be purchased only after having requested at least three bids or as needed, advertised for sealed bids for a period of not less than five (5) days. Non-Federal entities other than States, including those operating Federal programs as subrecipients of States, must follow the suspension and debarment standards set out at 2 CFR Part 180, which implements Executive Orders 12549 and 12689, “Debarment and Suspension”, federal awarding agency regulations in Title 2 of the CFR adopting/implementing the OMB guidance in 2 CFR Part 180; program legislation; and the terms and conditions of the award. 2 CFR § 200.303 - Internal controls states, the recipient and subrecipient must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition/Context: During the testing of 15.042, the following was noted: • 1 of 1 Individually Important Items tested did not have bidding documentation or sole source justification. • 1 of 1 samples tested did not have bidding documentation or sole source justification. During the testing of 15.046, the following was noted: • 2 of 2 Individually Important Items and 2 of 2 procurement samples did not have bidding documentation or sole source justification. • 1 of 1 Individually Important Items and 1 of 1 suspension and debarment samples did not have verification that a suspension and debarment search was performed. [ X ] Compliance Finding [ ] Significant Deficiency [ X ] Material Weakness Cause: The School was not following its policies for purchases that exceed $5,000. For suspension and debarment, there were ineffective controls in place during the period, along with management oversight. Effect: The School could be overpaying for services or items that could be obtained elsewhere for less. The School could also be engaging with vendors who are suspended or debarred. Questioned Costs: Procurement: 15.042 – None reported as known and likely questioned costs did not exceed $25,000; 15.046 – Known – $75,425. Suspension and debarment: 15.042 and 15.046 – no questioned costs. Repeat Finding: Procurement – Yes, 2020-002 for 15.042; Suspension and Debarment – No Recommendation: We recommend that the School follow its written procurement policies and maintain proper supporting documentation. Additionally, we recommend the School develop procedures to ensure that before contracting with a vendor, a search is performed on https://www.sam.gov, a screen print of the search results is performed, and the results filed in the vendor’s file. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and has prepared corrective action as detailed in its Corrective Action Plan.
Program Information: U.S. Department of the Interior AL # Award Number Award Period Program Name 15.042 A19AV00888 7/1/2020-6/30/2021 Indian School Equalization Program 15.046 A19AV00888 7/1/2020-6/30/2021 Administrative Cost Grants for Indian Schools Criteria: Non-Federal entities other than States, including those operating Federal programs as subrecipients of States, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR part 200. During the review of the School’s procurement policies, the following was noted: • Any purchase of materials, supplies, or equipment having a purchase price exceeding $5,000 shall be purchased only after having requested at least three bids or as needed, advertised for sealed bids for a period of not less than five (5) days. Non-Federal entities other than States, including those operating Federal programs as subrecipients of States, must follow the suspension and debarment standards set out at 2 CFR Part 180, which implements Executive Orders 12549 and 12689, “Debarment and Suspension”, federal awarding agency regulations in Title 2 of the CFR adopting/implementing the OMB guidance in 2 CFR Part 180; program legislation; and the terms and conditions of the award. 2 CFR § 200.303 - Internal controls states, the recipient and subrecipient must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition/Context: During the testing of 15.042, the following was noted: • 1 of 1 Individually Important Items tested did not have bidding documentation or sole source justification. • 1 of 1 samples tested did not have bidding documentation or sole source justification. During the testing of 15.046, the following was noted: • 2 of 2 Individually Important Items and 2 of 2 procurement samples did not have bidding documentation or sole source justification. • 1 of 1 Individually Important Items and 1 of 1 suspension and debarment samples did not have verification that a suspension and debarment search was performed. [ X ] Compliance Finding [ ] Significant Deficiency [ X ] Material Weakness Cause: The School was not following its policies for purchases that exceed $5,000. For suspension and debarment, there were ineffective controls in place during the period, along with management oversight. Effect: The School could be overpaying for services or items that could be obtained elsewhere for less. The School could also be engaging with vendors who are suspended or debarred. Questioned Costs: Procurement: 15.042 – None reported as known and likely questioned costs did not exceed $25,000; 15.046 – Known – $75,425. Suspension and debarment: 15.042 and 15.046 – no questioned costs. Repeat Finding: Procurement – Yes, 2020-002 for 15.042; Suspension and Debarment – No Recommendation: We recommend that the School follow its written procurement policies and maintain proper supporting documentation. Additionally, we recommend the School develop procedures to ensure that before contracting with a vendor, a search is performed on https://www.sam.gov, a screen print of the search results is performed, and the results filed in the vendor’s file. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and has prepared corrective action as detailed in its Corrective Action Plan.
Finding 2021-008 – Noncompliance with Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Reporting – Disaster Grants – Public Assistance (Presidentially Declared Disasters) PASS THROUGH GRANTOR: Oklahoma Department of Emergency Management FEDERAL AGENCY: U.S. Department of Homeland Security ASSISTANCE LISTING: 97.036 FEDERAL PROGRAM NAME: Disaster Grants - Public Assistance (Presidentially Declared Disasters) FEDERAL AWARD NUMBER: DR 4438 and DR 4453 FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Reporting QUESTIONED COSTS: $289,739 Condition: During inquiry, review, and a test of 100% FEMA expenditures, the following was noted: Project Worksheet 88 Questioned Cost - $9,981 The County was unable to produce the following: • Personnel records for labor that detailed employee hours spent on each site for the project totaling $180. • Personnel records for labor that subsequently resulted in equipment costs that could not be traced to an employee totaling $8,645. • Daily Activity Reports for material costs totaling $1,156. • One (1) quarterly report to Oklahoma Department of Emergency Management (OEM) was not timely submitted. Project Worksheet 607 Questioned Cost - $4,808 • The County was unable to produce activity sheets to confirm the reimbursement from OEM totaling $4,808. Project Worksheet 660 Questioned Cost - $274,950 • The County was unable to produce records or documentation totaling $274,950 for material costs. • One (1) quarterly report to OEM was not timely submitted. In addition, the County was unable to produce records or documentation totaling $55,147 for work performed and reported as complete for the state and local shares: • Project Worksheet 88 totaling $3,327. • Project Worksheet 660 totaling $51,820. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements. Effect of Condition: These conditions resulted in noncompliance to grant requirements and could result in loss of federal fund to the County. Recommendation: OSAI recommends the County gain an understanding of the compliance requirements for federal programs and implement internal control procedures to ensure compliance with all requirements. We further recommend that all documentation be properly maintained for inspection. Management Response: Chairman of the Board of County Commissioners: Responsible personnel will attend training classes by OSAI, OEM, and Muskogee Creek Nation to stay updated on allowable expenditures and recordkeeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time. County Commissioner District 1: Documentation for Project Worksheet 660 was reported incorrectly to OEM. I have contacted OEM to request an amended audit. Responsible personnel will attend training classes by OSAI office and OEM to stay updated on allowable expenditures and record keeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time. County Commissioner District 2: Project Worksheet 88 was completed by the prior administration. Responsible personnel will attend training classes by OSAI office and OEM to stay updated on allowable expenditures and record keeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time. Criteria: 2 CFR § 200.303(a) Internal Controls reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2 CFR § 200.318 (a), General procurement standards, reads as follows: a) The Non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. [….] Title 2 CFR § 200.84 Questioned Cost reads as follows: Questioned cost means a cost that is questioned by the auditor because of an audit finding: (a) Which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for fund used to match Federal funds; (b) Where the costs, at the time of the audit, are not supported by adequate documentation; or (c) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. Further, GAO Standards – Section 2 – Objectives of an Entity - OV2.23 states in part: Compliance Objectives Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements. [….]
Finding 2021-008 – Noncompliance with Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Reporting – Disaster Grants – Public Assistance (Presidentially Declared Disasters) PASS THROUGH GRANTOR: Oklahoma Department of Emergency Management FEDERAL AGENCY: U.S. Department of Homeland Security ASSISTANCE LISTING: 97.036 FEDERAL PROGRAM NAME: Disaster Grants - Public Assistance (Presidentially Declared Disasters) FEDERAL AWARD NUMBER: DR 4438 and DR 4453 FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Reporting QUESTIONED COSTS: $289,739 Condition: During inquiry, review, and a test of 100% FEMA expenditures, the following was noted: Project Worksheet 88 Questioned Cost - $9,981 The County was unable to produce the following: • Personnel records for labor that detailed employee hours spent on each site for the project totaling $180. • Personnel records for labor that subsequently resulted in equipment costs that could not be traced to an employee totaling $8,645. • Daily Activity Reports for material costs totaling $1,156. • One (1) quarterly report to Oklahoma Department of Emergency Management (OEM) was not timely submitted. Project Worksheet 607 Questioned Cost - $4,808 • The County was unable to produce activity sheets to confirm the reimbursement from OEM totaling $4,808. Project Worksheet 660 Questioned Cost - $274,950 • The County was unable to produce records or documentation totaling $274,950 for material costs. • One (1) quarterly report to OEM was not timely submitted. In addition, the County was unable to produce records or documentation totaling $55,147 for work performed and reported as complete for the state and local shares: • Project Worksheet 88 totaling $3,327. • Project Worksheet 660 totaling $51,820. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements. Effect of Condition: These conditions resulted in noncompliance to grant requirements and could result in loss of federal fund to the County. Recommendation: OSAI recommends the County gain an understanding of the compliance requirements for federal programs and implement internal control procedures to ensure compliance with all requirements. We further recommend that all documentation be properly maintained for inspection. Management Response: Chairman of the Board of County Commissioners: Responsible personnel will attend training classes by OSAI, OEM, and Muskogee Creek Nation to stay updated on allowable expenditures and recordkeeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time. County Commissioner District 1: Documentation for Project Worksheet 660 was reported incorrectly to OEM. I have contacted OEM to request an amended audit. Responsible personnel will attend training classes by OSAI office and OEM to stay updated on allowable expenditures and record keeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time. County Commissioner District 2: Project Worksheet 88 was completed by the prior administration. Responsible personnel will attend training classes by OSAI office and OEM to stay updated on allowable expenditures and record keeping techniques to allow for more accurate reporting. I will work with the County Emergency Management Coordinator to ensure quarterly reports are filed on time. Criteria: 2 CFR § 200.303(a) Internal Controls reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2 CFR § 200.318 (a), General procurement standards, reads as follows: a) The Non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. [….] Title 2 CFR § 200.84 Questioned Cost reads as follows: Questioned cost means a cost that is questioned by the auditor because of an audit finding: (a) Which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for fund used to match Federal funds; (b) Where the costs, at the time of the audit, are not supported by adequate documentation; or (c) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. Further, GAO Standards – Section 2 – Objectives of an Entity - OV2.23 states in part: Compliance Objectives Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements. [….]
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Federal Award Findings and Questioned Costs June 30, 2021 Comment # 2021-005 INTERNAL CONTROLS OVER DISBURSEMENTS OF FEDERAL FUNDS MUST BE IMPROVED HEAD START AND EARLY HEAD START PROGRAMS Federal Assistance Listing # 93.600 (Questioned Costs - Undetermined) Condition: In connection with audit of the Authority, we performed risk assessment of the Authority’s significant financial transactions, material account balances, and other significant risk areas and each applicable relevant assertion of each area, and we designed and perform substantive procedures and test of internal controls to determine what level of reliance that could be placed on the system of internal control of the Authority. Using auditor’s judgment, we selected various transactions for testings the system of internal control and the appropriateness and reasonableness of the expenditures. During our audit, we performed the following procedures: We selected twenty- five (25) transactions using auditor’s judgement with the following exceptions noted as respects to the Head Start and Early Head Start Programs: 1. There were fifteen (15) transactions with missing check request documents and\or purchase orders to support the disbursements. 2 Four (4) transactions with only one signature on the cancelled checks. 3. There were fourteen (14) transactions missing evidence of support as required by the procurement policies and procedures of the Authority. 4. There was one (1) transaction for the purchase of a truck that was not in agreement with bid documentation provided by the Authority. Further, we noted no specific authorization of such transaction in the notice of award for the purchase during the budget period of the acquisition. We selected fifteen (15) transactions using auditor’s judgement with the following exceptions noted as respect to the indirect cost pool: 1. There were fourteen (14) transactions with missing check request documents and\or purchase orders to support the disbursements. 2 Two (2) transactions with only one signature on the cancelled checks. 3. There were one (1) transactions missing evidence of support as required by the procurement policies and procedures of the Authority. The aforementioned exceptions were not resolved as of the date the audit report, September 8, 2023. Context: We selected 25 transactions haphazardly from the disbursement records of the Head Start and Early Head Start Programs. We selected 15 transactions haphazardly from the disbursement records of the indirect cost pool Criteria: Internal policy of the Authority, generally accepted accounting principles, Government Auditing Standards and the Uniform Guidance. The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of the Uniform Guidance (UG), 2 CFR §200.318 General procurement standards for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in 2 CFR §200.317 through 200.327. Effect: The transaction could result in cost not allowed under federal and state regulations and the provisions of the grant agreement. Cause: The failure of the Authority to follow its written procurement policies and procedures and to update the existing procedures to conform to federal and state laws. Management and the board of directors must have proper oversight and governance of the purchase and procurement procedures. Recommendation: We recommend that the board of directors and management immediately review all the transactions outlined in this finding and determine if the exceptions noted can be resolved and corrected. Further action should be taken to prevent, eliminate and properly remediate other exceptions similar in nature as those described in this finding. Policies and procedures should be reviewed and updated to conform to 2 CFR §200.318 General procurement standards. The Authority should add additional staff with the proper accounting skills, knowledge and experience with grant accounting. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and takes exception to several of the items listed. For example, some of the transactions listed that were missing check requests (both Head Start/Early Head Start and Indirect Cost Pool) were for monthly expenditures like utility bills, insurance, rent and other contractual obligations. Management has not in the past issued a check request each month for these transactions as they are part of the ongoing operation of the programs listed. Transactions listed with only one signature occurred as an oversight as the banking authority only requires one signature while our policy may indicate two signatures. Management feels the purchase of the truck was procured in agreement with approvals from the funding agency and board as required. Proper documentation was provided and is currently available for further review. Management continues to follow the proper guidelines regarding procurement and purchases related to the policies and procedures of the agency as well as micro purchase guidelines set forth by the Federal awarding agency. The Board of Directors also approved a revision to the policies and procedures requiring two “live” signatures on all checks issued by the agency. There is also an ongoing review of the current policies and procedures and recommendations for changes and updates are forthcoming. Management reserves the right for further review of these findings with the audit firm for additional documentation and resolution.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Federal Award Findings and Questioned Costs June 30, 2021 Comment # 2021-005 INTERNAL CONTROLS OVER DISBURSEMENTS OF FEDERAL FUNDS MUST BE IMPROVED HEAD START AND EARLY HEAD START PROGRAMS Federal Assistance Listing # 93.600 (Questioned Costs - Undetermined) Condition: In connection with audit of the Authority, we performed risk assessment of the Authority’s significant financial transactions, material account balances, and other significant risk areas and each applicable relevant assertion of each area, and we designed and perform substantive procedures and test of internal controls to determine what level of reliance that could be placed on the system of internal control of the Authority. Using auditor’s judgment, we selected various transactions for testings the system of internal control and the appropriateness and reasonableness of the expenditures. During our audit, we performed the following procedures: We selected twenty- five (25) transactions using auditor’s judgement with the following exceptions noted as respects to the Head Start and Early Head Start Programs: 1. There were fifteen (15) transactions with missing check request documents and\or purchase orders to support the disbursements. 2 Four (4) transactions with only one signature on the cancelled checks. 3. There were fourteen (14) transactions missing evidence of support as required by the procurement policies and procedures of the Authority. 4. There was one (1) transaction for the purchase of a truck that was not in agreement with bid documentation provided by the Authority. Further, we noted no specific authorization of such transaction in the notice of award for the purchase during the budget period of the acquisition. We selected fifteen (15) transactions using auditor’s judgement with the following exceptions noted as respect to the indirect cost pool: 1. There were fourteen (14) transactions with missing check request documents and\or purchase orders to support the disbursements. 2 Two (2) transactions with only one signature on the cancelled checks. 3. There were one (1) transactions missing evidence of support as required by the procurement policies and procedures of the Authority. The aforementioned exceptions were not resolved as of the date the audit report, September 8, 2023. Context: We selected 25 transactions haphazardly from the disbursement records of the Head Start and Early Head Start Programs. We selected 15 transactions haphazardly from the disbursement records of the indirect cost pool Criteria: Internal policy of the Authority, generally accepted accounting principles, Government Auditing Standards and the Uniform Guidance. The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of the Uniform Guidance (UG), 2 CFR §200.318 General procurement standards for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in 2 CFR §200.317 through 200.327. Effect: The transaction could result in cost not allowed under federal and state regulations and the provisions of the grant agreement. Cause: The failure of the Authority to follow its written procurement policies and procedures and to update the existing procedures to conform to federal and state laws. Management and the board of directors must have proper oversight and governance of the purchase and procurement procedures. Recommendation: We recommend that the board of directors and management immediately review all the transactions outlined in this finding and determine if the exceptions noted can be resolved and corrected. Further action should be taken to prevent, eliminate and properly remediate other exceptions similar in nature as those described in this finding. Policies and procedures should be reviewed and updated to conform to 2 CFR §200.318 General procurement standards. The Authority should add additional staff with the proper accounting skills, knowledge and experience with grant accounting. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and takes exception to several of the items listed. For example, some of the transactions listed that were missing check requests (both Head Start/Early Head Start and Indirect Cost Pool) were for monthly expenditures like utility bills, insurance, rent and other contractual obligations. Management has not in the past issued a check request each month for these transactions as they are part of the ongoing operation of the programs listed. Transactions listed with only one signature occurred as an oversight as the banking authority only requires one signature while our policy may indicate two signatures. Management feels the purchase of the truck was procured in agreement with approvals from the funding agency and board as required. Proper documentation was provided and is currently available for further review. Management continues to follow the proper guidelines regarding procurement and purchases related to the policies and procedures of the agency as well as micro purchase guidelines set forth by the Federal awarding agency. The Board of Directors also approved a revision to the policies and procedures requiring two “live” signatures on all checks issued by the agency. There is also an ongoing review of the current policies and procedures and recommendations for changes and updates are forthcoming. Management reserves the right for further review of these findings with the audit firm for additional documentation and resolution.
2021-006 Compliance with Uniform Guidance - Procurement; Information on Federal Program: Unaccompanied Alien Children (Assistance Listing No. 93.676) provided by the Department of Health and Human Services.; Criteria: 2 CFR Sections 200.212, 200.318(h), and 180.300 and 48 CFR Section 52.209-6 state that a non-Federal entity must review that an entity with which it plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded from participation in federal award programs.; Condition: During our testing for procurement compliance, it was determined that the Agency did not verify that vendors charged to the major program are not debarred, suspended, or otherwise excluded from participation in federal award programs.; Questioned Cost: None; Cause: The Agency was not aware of the requirement to review an entity’s status.; Effect: The Agency is not in compliance with 2 CFR Sections 200.212, 200.318(h), and 180.300 and 48 CFR Section 52.209-6. As a result, the Agency could enter into covered transactions with entities that are debarred, suspended, or otherwise excluded from participation in federal award programs.; Perspective Information: Vendors in excess of the $25,000 threshold were reviewed to determine if they are debarred, suspended, or otherwise excluded from participation in federal award programs. None were noted to be ineligible for participation.; Repeat Finding: Yes; Recommendation: We recommend the Agency develop a purchasing policy which encompasses the requirements of the Uniform Guidance, including the requirement to review and document the verification that vendors are not debarred, suspended, or otherwise excluded from participation in federal award programs.; Views of the Responsible Officials and Planned Corrective Actions: The Agency’s management agrees with this finding and during the 21/22 fiscal year the Payables Accountant (Jarri Melton) completed a review of the Agency’s vendor list to ensure that the Agency was in compliance with 2 CFR Sections 200.212, 200.318(h), and 180.300 and 48 CFR Section 52.209-6. A hard copy of this review was signed off by the Payables Accountant (Jarri Melton) and the CFO (Jeni Rodriguez), then filed. The Payables Accountant (Jarri Melton) and the CFO (Jeni Rodriguez) will perform this review going forward for any new vendors. Additionally, the Agency’s purchasing policy was updated in fiscal year 21-22, with purchase orders, a purchase order numbering system and tracking. There are monthly closings / reconciling of outstanding purchase orders from the prior month done by the Payables Accountant (Jarri Melton). The Revenue Accountant (Valerie Myers) or the Managed Care Liaison (Ms. Gray McCaffrey) are the team that are able to assign purchase order numbers to the purchase orders and the originals are kept in a folder for the Payables Accountant (Jarri Melton) to retrieve when closing out the month.
2021-006 Compliance with Uniform Guidance - Procurement; Information on Federal Program: Unaccompanied Alien Children (Assistance Listing No. 93.676) provided by the Department of Health and Human Services.; Criteria: 2 CFR Sections 200.212, 200.318(h), and 180.300 and 48 CFR Section 52.209-6 state that a non-Federal entity must review that an entity with which it plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded from participation in federal award programs.; Condition: During our testing for procurement compliance, it was determined that the Agency did not verify that vendors charged to the major program are not debarred, suspended, or otherwise excluded from participation in federal award programs.; Questioned Cost: None; Cause: The Agency was not aware of the requirement to review an entity’s status.; Effect: The Agency is not in compliance with 2 CFR Sections 200.212, 200.318(h), and 180.300 and 48 CFR Section 52.209-6. As a result, the Agency could enter into covered transactions with entities that are debarred, suspended, or otherwise excluded from participation in federal award programs.; Perspective Information: Vendors in excess of the $25,000 threshold were reviewed to determine if they are debarred, suspended, or otherwise excluded from participation in federal award programs. None were noted to be ineligible for participation.; Repeat Finding: Yes; Recommendation: We recommend the Agency develop a purchasing policy which encompasses the requirements of the Uniform Guidance, including the requirement to review and document the verification that vendors are not debarred, suspended, or otherwise excluded from participation in federal award programs.; Views of the Responsible Officials and Planned Corrective Actions: The Agency’s management agrees with this finding and during the 21/22 fiscal year the Payables Accountant (Jarri Melton) completed a review of the Agency’s vendor list to ensure that the Agency was in compliance with 2 CFR Sections 200.212, 200.318(h), and 180.300 and 48 CFR Section 52.209-6. A hard copy of this review was signed off by the Payables Accountant (Jarri Melton) and the CFO (Jeni Rodriguez), then filed. The Payables Accountant (Jarri Melton) and the CFO (Jeni Rodriguez) will perform this review going forward for any new vendors. Additionally, the Agency’s purchasing policy was updated in fiscal year 21-22, with purchase orders, a purchase order numbering system and tracking. There are monthly closings / reconciling of outstanding purchase orders from the prior month done by the Payables Accountant (Jarri Melton). The Revenue Accountant (Valerie Myers) or the Managed Care Liaison (Ms. Gray McCaffrey) are the team that are able to assign purchase order numbers to the purchase orders and the originals are kept in a folder for the Payables Accountant (Jarri Melton) to retrieve when closing out the month.
Finding 2021-009 – Noncompliance with Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Reporting; and Special Tests and Provisions – Disaster Grants – Public Assistance (Presidentially Declared Disasters) PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management FEDERAL AGENCY: U.S. Department of Homeland Security ASSISTANCE LISTING: 97.036 FEDERAL PROGRAM NAME: Disaster Grants – Public Assistance (Presidentially Declared Disasters) FEDERAL AWARD NUMBER: DR-4438 FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Reporting; Special Tests and Provisions QUESTIONED COSTS: $105,935 Condition: Upon inquiry of county personnel, review of documentation and procedures, and a test of five (5) out of seventeen (17) project worksheets, the following weaknesses were noted: Project Worksheet 365 (D3) Questioned Cost – $1,257: • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. • Project expense documentation was not adequately retained to verify costs of the equipment used and FEMA equipment rates were not consistently used by the district. Total unsupported county equipment costs $402. • Project expense documentation was not adequately retained to verify costs of the materials used. Total material costs reported exceeded documentation by $855. Project Worksheet 872 (D2) Questioned Cost – $15,152: • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. • Project expense documentation was not adequately retained to verify costs of the labor used and correct labor rates were not consistently used by the District. Total unsupported County labor costs $939. • Project expense documentation was not adequately retained to verify costs of the equipment used and FEMA equipment rates were not consistently used by the District. Total unsupported County equipment costs $9,946. • Project expense documentation was not adequately retained to verify costs of the materials used. Total material costs reported did not exceed the total County documentation. • Unallowed management costs were included in total project expenditures totaling $4,267. Project Worksheet 888 (D2) Questioned Cost – $19,885: • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. • Project expense documentation was not adequately retained to verify costs of the labor used and correct labor rates were not consistently used by the District. Total unsupported County labor costs $2,298. • Project expense documentation was not adequately retained to verify costs of the equipment used and FEMA equipment rates were not consistently used by the District. Total unsupported County equipment costs $10,551. • Project expense documentation was not adequately retained to verify costs of the materials used. Total material costs reported exceeded documentation by $640. • Unallowed management costs were included in total project expenditures totaling $6,396. Project Worksheet 967 (D2) Questioned Cost – $4,137: • Project expense documentation was not adequately retained to verify costs of the labor used and correct labor rates were not consistently used by the District. Total unsupported County labor costs $940. • Project expense documentation was not adequately retained to verify costs of the equipment used and FEMA equipment rates were not consistently used by the District. Total unsupported County equipment costs $2,408. • Project expense documentation was not adequately retained to verify costs of the materials used. Total material costs reported exceeded documentation by $180. • Unallowed management costs were included in total project expenditures totaling $609. Further, upon additional inquiry of staff and review of documentation over 100% of federal expenditures the following was noted: Project Worksheet 365 (D3): • One (1) Quarterly Report was not submitted within 30 days of the end of a calendar quarter. Project Worksheet 756 (D2) Questioned Cost – $41,417: • Project expenditures totaling $41,417 occurred after the period of performance deadline. Project Worksheet 986 (D3) Questioned Cost – $24,087: • Project expenditures totaling $24,087 occurred after the period of performance deadline. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements. Effect of Condition: These conditions resulted in noncompliance to federal grant requirements and could result in loss of federal funds to the County. Recommendation: OSAI recommends the County gain an understanding of the compliance requirements for federal programs and implement internal control procedures to ensure compliance with all requirements. We further recommend all documentation be properly maintained for inspection. Management Response: County Commissioner District 2: I was not in office at this time, but I will discuss with my Administrative Assistant and determine the best way to track all project costs. County Commissioners District 3: I will have my Administrative Assistant double check her numbers and I also will review the documentation. Criteria: 2 CFR § 200.303(a) Internal Controls reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2 CFR § 200.318 (a) General procurement standards reads as follows: The Non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. [….] Title 2 CFR § 200.84 Questioned Cost reads as follows: Questioned cost means a cost that is questioned by the auditor because of an audit finding: (a) Which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for fund used to match Federal funds; (b) Where the costs, at the time of the audit, are not supported by adequate documentation; or (c) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. Further, GAO Standards – Section 2 – Objectives of an Entity – OV2.23 states in part: Compliance Objectives Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements. [….]
CONDITION: During my review of the District’s compliance with the requirements for noncompetitive procurement, I noted the District did not document its rationale for purchases made from ‘CJAWS, Inc.’ totaling $140,389. CRITERIA: In accordance with Section 2 CFR 200.318(i) of the Uniform Guidance, the District must maintain records sufficient to detail the history of procurement. These records include but are not limited to the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Furthermore, Section 2 CFR 200.320(c’) of the Uniform Guidance details five (5) circumstances in which noncompetitive procurement can be used. EFFECT: The District did not comply with Section 2 CFR 200.318(i) and Section 2 CFR 200.320(c’) of the Uniform Guidance regarding the proper documentation required for noncompetitive procurement. QUESTIONED COST: $140,389 CAUSE: From a review of the School District’s policies as published on the District’s website, the District has not updated their policies to include those related to ‘federal fiscal compliance’ in accordance with the Uniform Guidance, in particular, procurement policies to address the requirements of Section 2 CFR 200.318(i) and 320(c). RECOMMENDATION: I recommend that the School District update their policies to include those most recent related to ‘federal fiscal compliance’ in accordance with the Uniform Guidance, in particular, procurement policies to address the requirements of Section 2 CFR 200.318(i) and 320(c). In addition, I would recommend that District personnel responsible for expenditures related to federal funding receive updated training related to ‘procurement’ policies and procedures as they relate to federal funding. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: The Cambria Heights School District contracted with a third-party vendor (Trafera) for the purchase of technology equipment. The contract with Trafera was procured through a cooperative purchasing group (COSTARS). The District did not obtain an adequate number of price or rate quotations for the technology equipment as required by the Uniform Guidance and 24 PS 8.807.1. CRITERIA: As specified in Section 2 CFR 200. 318(i) of the Uniform Guidance, the District must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. In addition, small purchase procedures per Section 2 CFR 200.320(a)(2)(i) for acquisitions between the micro-purchase threshold (currently $10,000) and the simplified acquisition threshold (current $250,000), price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate. Per 24 PS 8.807.1, there should be three quotes that are either written or well documented. The use of COSTARS only constitutes one quotation. CAUSE: School District personnel directly responsible for the acquisition of the technology equipment through COSTARS interpreted that the requirements specified by Section 2 CFR 200.318(i) and Section 2 CFR 200.320(a)(2)(i), would be met by using this cooperative purchasing organization. EFFECT: The School District did not comply with the requirements of 2 CFR 200.318(i) and 2 CFR 200.320(a)(2)(i) of the Uniform Guidance, and 24 PS 8.807.1, regarding maintaining records sufficient to detail the history of procurement for the technology equipment to ensure that an adequate number of price quotations were solicited for this purchase. QUESTIONED COST: $106,250 RECOMMENDATION: I recommend that the School District update their policies to include those most recent related to ‘federal fiscal compliance’ in accordance with the Uniform Guidance, in particular, procurement policies to address the requirements of Section 2 CFR 200.318(i) and 2 CFR.320(a)(2)(i). In addition, I would recommend that District personnel responsible for expenditures related to federal funding receive updated training related to ‘procurement’ policies and procedures as they relate to federal funding. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: During my review of the District’s compliance with the requirements for noncompetitive procurement, I noted the District did not document its rationale for purchases made from ‘CJAWS, Inc.’ totaling $140,389. CRITERIA: In accordance with Section 2 CFR 200.318(i) of the Uniform Guidance, the District must maintain records sufficient to detail the history of procurement. These records include but are not limited to the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Furthermore, Section 2 CFR 200.320(c’) of the Uniform Guidance details five (5) circumstances in which noncompetitive procurement can be used. EFFECT: The District did not comply with Section 2 CFR 200.318(i) and Section 2 CFR 200.320(c’) of the Uniform Guidance regarding the proper documentation required for noncompetitive procurement. QUESTIONED COST: $140,389 CAUSE: From a review of the School District’s policies as published on the District’s website, the District has not updated their policies to include those related to ‘federal fiscal compliance’ in accordance with the Uniform Guidance, in particular, procurement policies to address the requirements of Section 2 CFR 200.318(i) and 320(c). RECOMMENDATION: I recommend that the School District update their policies to include those most recent related to ‘federal fiscal compliance’ in accordance with the Uniform Guidance, in particular, procurement policies to address the requirements of Section 2 CFR 200.318(i) and 320(c). In addition, I would recommend that District personnel responsible for expenditures related to federal funding receive updated training related to ‘procurement’ policies and procedures as they relate to federal funding. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: The Cambria Heights School District contracted with a third-party vendor (Trafera) for the purchase of technology equipment. The contract with Trafera was procured through a cooperative purchasing group (COSTARS). The District did not obtain an adequate number of price or rate quotations for the technology equipment as required by the Uniform Guidance and 24 PS 8.807.1. CRITERIA: As specified in Section 2 CFR 200. 318(i) of the Uniform Guidance, the District must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. In addition, small purchase procedures per Section 2 CFR 200.320(a)(2)(i) for acquisitions between the micro-purchase threshold (currently $10,000) and the simplified acquisition threshold (current $250,000), price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate. Per 24 PS 8.807.1, there should be three quotes that are either written or well documented. The use of COSTARS only constitutes one quotation. CAUSE: School District personnel directly responsible for the acquisition of the technology equipment through COSTARS interpreted that the requirements specified by Section 2 CFR 200.318(i) and Section 2 CFR 200.320(a)(2)(i), would be met by using this cooperative purchasing organization. EFFECT: The School District did not comply with the requirements of 2 CFR 200.318(i) and 2 CFR 200.320(a)(2)(i) of the Uniform Guidance, and 24 PS 8.807.1, regarding maintaining records sufficient to detail the history of procurement for the technology equipment to ensure that an adequate number of price quotations were solicited for this purchase. QUESTIONED COST: $106,250 RECOMMENDATION: I recommend that the School District update their policies to include those most recent related to ‘federal fiscal compliance’ in accordance with the Uniform Guidance, in particular, procurement policies to address the requirements of Section 2 CFR 200.318(i) and 2 CFR.320(a)(2)(i). In addition, I would recommend that District personnel responsible for expenditures related to federal funding receive updated training related to ‘procurement’ policies and procedures as they relate to federal funding. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: During my review of the District’s compliance with the requirements for noncompetitive procurement, I noted the District did not document its rationale for purchases made from ‘CJAWS, Inc.’ totaling $140,389. CRITERIA: In accordance with Section 2 CFR 200.318(i) of the Uniform Guidance, the District must maintain records sufficient to detail the history of procurement. These records include but are not limited to the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Furthermore, Section 2 CFR 200.320(c’) of the Uniform Guidance details five (5) circumstances in which noncompetitive procurement can be used. EFFECT: The District did not comply with Section 2 CFR 200.318(i) and Section 2 CFR 200.320(c’) of the Uniform Guidance regarding the proper documentation required for noncompetitive procurement. QUESTIONED COST: $140,389 CAUSE: From a review of the School District’s policies as published on the District’s website, the District has not updated their policies to include those related to ‘federal fiscal compliance’ in accordance with the Uniform Guidance, in particular, procurement policies to address the requirements of Section 2 CFR 200.318(i) and 320(c). RECOMMENDATION: I recommend that the School District update their policies to include those most recent related to ‘federal fiscal compliance’ in accordance with the Uniform Guidance, in particular, procurement policies to address the requirements of Section 2 CFR 200.318(i) and 320(c). In addition, I would recommend that District personnel responsible for expenditures related to federal funding receive updated training related to ‘procurement’ policies and procedures as they relate to federal funding. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: The Cambria Heights School District contracted with a third-party vendor (Trafera) for the purchase of technology equipment. The contract with Trafera was procured through a cooperative purchasing group (COSTARS). The District did not obtain an adequate number of price or rate quotations for the technology equipment as required by the Uniform Guidance and 24 PS 8.807.1. CRITERIA: As specified in Section 2 CFR 200. 318(i) of the Uniform Guidance, the District must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. In addition, small purchase procedures per Section 2 CFR 200.320(a)(2)(i) for acquisitions between the micro-purchase threshold (currently $10,000) and the simplified acquisition threshold (current $250,000), price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate. Per 24 PS 8.807.1, there should be three quotes that are either written or well documented. The use of COSTARS only constitutes one quotation. CAUSE: School District personnel directly responsible for the acquisition of the technology equipment through COSTARS interpreted that the requirements specified by Section 2 CFR 200.318(i) and Section 2 CFR 200.320(a)(2)(i), would be met by using this cooperative purchasing organization. EFFECT: The School District did not comply with the requirements of 2 CFR 200.318(i) and 2 CFR 200.320(a)(2)(i) of the Uniform Guidance, and 24 PS 8.807.1, regarding maintaining records sufficient to detail the history of procurement for the technology equipment to ensure that an adequate number of price quotations were solicited for this purchase. QUESTIONED COST: $106,250 RECOMMENDATION: I recommend that the School District update their policies to include those most recent related to ‘federal fiscal compliance’ in accordance with the Uniform Guidance, in particular, procurement policies to address the requirements of Section 2 CFR 200.318(i) and 2 CFR.320(a)(2)(i). In addition, I would recommend that District personnel responsible for expenditures related to federal funding receive updated training related to ‘procurement’ policies and procedures as they relate to federal funding. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
Finding 2021-007 – Noncompliance with Compliance Requirements: Allowable Costs/Cost Principles; Period of Performance; Reporting – Disaster Grants – Public Assistance (Presidentially Declared Disasters) PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management FEDERAL AGENCY: U.S. Department of Home Security ASSISTANCE LISTING NO: 97.036 FEDERAL PROGRAM NAME: Disaster Grants – Public Assistance (Presidentially Declared Disasters) FEDERAL AWARD NUMBER: DR-4438 FEDERAL AWARD YEAR: 2020 and 2021 CONTROL CATEGORY: Allowable Costs/Cost Principals; Period of Performance; Reporting QUESTIONED COSTS: $67,742 Condition: Upon inquiry of county personnel, review of documentation and procedures, and a test of 100% of federal expenditures totaling $592,062, the following weaknesses were noted: Project Worksheet 274 (D3) Questioned Cost - $1,019 • Equipment costs were not calculated with correct Federal Emergency Management Agency (FEMA) rates resulting in $1,019 of unsupported costs. • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. Project Worksheet 419 (D2) Questioned Costs - $6,223 (Activities Allowed/Allowable Costs - $6,223 Period of Performance - $5,467) • One (1) Daily Activity Report in the amount of $5,467 accrued expenditures that occurred after the performance deadline. Additionally, the work performed was not listed on the approved project worksheet. • One (1) Daily Activity Report in the amount of $5,467 contained costs that were not described on the approved project worksheet. • Equipment costs were not calculated with correct FEMA rates resulting in $708 of unsupported costs. • Labor costs were not calculated with appropriate rates resulting in $48 of unsupported costs. • Four (4) Daily Activity Reports were not signed by the preparer. • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. Project Worksheet 420 (D2) Questioned Costs - $5,278 • Equipment costs were not calculated with correct FEMA rates resulting in $4,981 of unsupported costs. • The labor hours reported on the Daily Activity Reports totaling $274 do not agree to the total hours worked reported on the employee timesheet. • Material costs were not calculated with accurate unit prices resulting in $23 of unsupported costs. • Three (3) Daily Activity Reports were not signed by the preparer. • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. Project Worksheet 810 (D1) Questioned Costs - $11,987 • The labor hours reported on the Daily Activity Reports totaling $11,987 do not agree to the total hours worked reported on the employee timesheet. • Three (3) Daily Activity Reports were not signed by the preparer. • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. Project Worksheet 843 (D1) Questioned Costs - $11,482 • Equipment costs were not calculated with correct FEMA rates resulting in $9,106 of unsupported costs. • The labor hours reported on the Daily Activity Reports totaling $2,160 do not agree to the total hours worked reported on the employee timesheet. • Material costs were not calculated with accurate unit prices resulting in $216 of unsupported costs. • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. Project Worksheet 889 (D1) Questioned Costs - $1,870 • The labor hours reported on the Daily Activity Reports totaling $1,680 do not agree to the total hours worked reported on the employee timesheet. • Equipment costs were not calculated with correct FEMA rates resulting in $190 of unsupported costs. • Four (4) Daily Activity Reports were not signed by the preparer. • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. Project Worksheet 995 (D1) Questioned Costs - $8,993 • The labor hours reported on the Daily Activity Reports totaling $8,019 do not agree to the total hours worked reported on the employee timesheet. • Material costs were not calculated with accurate unit prices resulting in $564 of unsupported costs. • Total project costs were not met resulting in $410 unsubstantiated costs. • Three (3) daily activity reports were not signed by the preparer. • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. • One (1) quarterly report was not submitted timely. Project Worksheet 1023 (D1) Questioned Costs - $134 • The labor hours reported on the Daily Activity Reports totaling $134 do not agree to the total hours worked reported on the employee timesheet. • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. Project Worksheet 1024 (D1) Questioned Costs - $3,238 • Equipment costs were not calculated with correct FEMA rates resulting in $1,544 of unsupported costs. • The labor hours reported on the Daily Activity Reports totaling $1,362 do not agree to the total hours worked reported on the employee timesheet. • Material costs were not calculated with accurate unit prices resulting in $332 of unsupported costs. • One (1) Daily Activity Report was not signed by the preparer. • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. Project Worksheet 1066 (D1) Questioned Costs - $4,266 • The labor hours reported on the Daily Activity Reports totaling $4,266 do not agree to the total hours worked reported on the employee timesheet. • Three (3) Daily Activity Reports were not signed by the preparer. • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. Project Worksheet 1073 (D1) Questioned Costs - $3,701 • The labor hours reported on the Daily Activity Reports totaling $3,589 do not agree to the total hours worked reported on the employee timesheet. • Material costs were not calculated with accurate unit prices resulting in $112 of unsupported costs. • One (1) Daily Activity Report was not signed by the preparer. • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. Project Worksheet 1077 (D1) Questioned Costs - $5,035 • Equipment costs were not calculated with correct FEMA rates resulting in $2,856 of unsupported costs. • The labor hours reported on the Daily Activity Reports totaling $2,161 do not agree to the total hours worked reported on the employee timesheet. • Material costs were not calculated with accurate unit prices resulting in $18 of unsupported costs. • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. Project Worksheet 1098 (D1) Questioned Costs - $2,934 • The labor hours reported on the Daily Activity Reports totaling $1,680 do not agree to the total hours worked reported on the employee timesheet. • One (1) Daily Activity Report in the amount of $912 contained costs that were not described on the approved project worksheet. • Material costs were not calculated with accurate unit prices resulting in $235 of unsupported costs. • Equipment costs were not calculated with correct FEMA rates resulting in $107 of unsupported costs. • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. Project Worksheet 1101 (D1) Questioned Costs - $1,582 • The labor hours reported on the Daily Activity Reports totaling $1,582 do not agree to the total hours worked reported on the employee timesheet. • Supporting documentation retained from projects were not reviewed or approved by anyone other than the preparer. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements. Effect of Condition: These conditions resulted in noncompliance to grant requirements and could result in loss of federal funds to the County. Recommendation: OSAI recommends the County gain an understanding of the compliance requirements for federal programs and implement internal control procedures to ensure compliance with all requirements. We further recommend all documentation be properly maintained for inspection. Management Response: Chairman of the Board of County Commissioners: Because I was not in office during this period, I am not able to say for certain what transpired. I will practice oversight and be involved in the documentation of federal grant expenditures. County Commissioner District 2: I did not take office until January 2021; therefore, I was not in office during FEMA disaster #4438 declared in 2019. In any future FEMA declared emergencies, I will exercise due diligence and oversee any and all documents relative to the disaster. County Commissioner District 3: I will make sure we use the correct FEMA equipment rates. I will review the documents prepared by my administrative assistant. Criteria: 2 CFR § 200.303(a) Internal Controls reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2 CFR § 200.318 (a), General procurement standards, reads as follows: The Non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. [….] Title 2 CFR § 200.84 Questioned Cost reads as follows: Questioned cost means a cost that is questioned by the auditor because of an audit finding: (a) Which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for fund used to match Federal funds; (b) Where the costs, at the time of the audit, are not supported by adequate documentation; or (c) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. Further, GAO Standards – Section 2 – Objectives of an Entity – OV2.23 states in part: Compliance Objectives Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements. […]
Federal agency: U.S. Department of Education Federal program title: Special Education Cluster CFDA Number: 84.027, 84.173 Pass-Through Agency: Massachusetts Department of Elementary and Secondary Education and Massachusetts Department of Early Education and Care Pass-Through Number(s): Various (see Schedule of Expenditures of Federal Awards) Award Period: July 1, 2020 – June 30, 2021 Type of Finding: • Material Weakness in Internal Control over Compliance • Material Noncompliance (Modified Opinion) Compliance Requirement: Procurement Criteria or Specific Requirement: 2 CFR section 200.318, part (i) requires that the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition and Context: For all five contracts selected for testing, records sufficient to detail the history of procurement were not maintained. The sample was a statistically valid sample. Questioned Costs: Cannot be determined Cause: Procedures to maintain records sufficient to detail the history of all procurements related to federal funds needs to be strengthened. Effect: Noncompliance with the federal program occurred. Repeat Finding: Yes Recommendation: We recommend procedures to maintain records sufficient to detail the history of all procurements be strengthened. Views of Responsible Officials: Management agrees with the finding.
Federal agency: U.S. Department of Education Federal program title: Special Education Cluster CFDA Number: 84.027, 84.173 Pass-Through Agency: Massachusetts Department of Elementary and Secondary Education and Massachusetts Department of Early Education and Care Pass-Through Number(s): Various (see Schedule of Expenditures of Federal Awards) Award Period: July 1, 2020 – June 30, 2021 Type of Finding: • Material Weakness in Internal Control over Compliance • Material Noncompliance (Modified Opinion) Compliance Requirement: Procurement Criteria or Specific Requirement: 2 CFR section 200.318, part (i) requires that the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition and Context: For all five contracts selected for testing, records sufficient to detail the history of procurement were not maintained. The sample was a statistically valid sample. Questioned Costs: Cannot be determined Cause: Procedures to maintain records sufficient to detail the history of all procurements related to federal funds needs to be strengthened. Effect: Noncompliance with the federal program occurred. Repeat Finding: Yes Recommendation: We recommend procedures to maintain records sufficient to detail the history of all procurements be strengthened. Views of Responsible Officials: Management agrees with the finding.
Federal agency: U.S. Department of Education Federal program title: Special Education Cluster CFDA Number: 84.027, 84.173 Pass-Through Agency: Massachusetts Department of Elementary and Secondary Education and Massachusetts Department of Early Education and Care Pass-Through Number(s): Various (see Schedule of Expenditures of Federal Awards) Award Period: July 1, 2020 – June 30, 2021 Type of Finding: • Material Weakness in Internal Control over Compliance • Material Noncompliance (Modified Opinion) Compliance Requirement: Procurement Criteria or Specific Requirement: 2 CFR section 200.318, part (i) requires that the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition and Context: For all five contracts selected for testing, records sufficient to detail the history of procurement were not maintained. The sample was a statistically valid sample. Questioned Costs: Cannot be determined Cause: Procedures to maintain records sufficient to detail the history of all procurements related to federal funds needs to be strengthened. Effect: Noncompliance with the federal program occurred. Repeat Finding: Yes Recommendation: We recommend procedures to maintain records sufficient to detail the history of all procurements be strengthened. Views of Responsible Officials: Management agrees with the finding.
Program Information: U.S. Department of the Interior AL # Award Number Award Period Program Name 15.042 A19AV00888 7/1/2020-6/30/2021 Indian School Equalization Program 15.046 A19AV00888 7/1/2020-6/30/2021 Administrative Cost Grants for Indian Schools Criteria: Non-Federal entities other than States, including those operating Federal programs as subrecipients of States, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR part 200. During the review of the School’s procurement policies, the following was noted: • Any purchase of materials, supplies, or equipment having a purchase price exceeding $5,000 shall be purchased only after having requested at least three bids or as needed, advertised for sealed bids for a period of not less than five (5) days. Non-Federal entities other than States, including those operating Federal programs as subrecipients of States, must follow the suspension and debarment standards set out at 2 CFR Part 180, which implements Executive Orders 12549 and 12689, “Debarment and Suspension”, federal awarding agency regulations in Title 2 of the CFR adopting/implementing the OMB guidance in 2 CFR Part 180; program legislation; and the terms and conditions of the award. 2 CFR § 200.303 - Internal controls states, the recipient and subrecipient must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition/Context: During the testing of 15.042, the following was noted: • 1 of 1 Individually Important Items tested did not have bidding documentation or sole source justification. • 1 of 1 samples tested did not have bidding documentation or sole source justification. During the testing of 15.046, the following was noted: • 2 of 2 Individually Important Items and 2 of 2 procurement samples did not have bidding documentation or sole source justification. • 1 of 1 Individually Important Items and 1 of 1 suspension and debarment samples did not have verification that a suspension and debarment search was performed. [ X ] Compliance Finding [ ] Significant Deficiency [ X ] Material Weakness Cause: The School was not following its policies for purchases that exceed $5,000. For suspension and debarment, there were ineffective controls in place during the period, along with management oversight. Effect: The School could be overpaying for services or items that could be obtained elsewhere for less. The School could also be engaging with vendors who are suspended or debarred. Questioned Costs: Procurement: 15.042 – None reported as known and likely questioned costs did not exceed $25,000; 15.046 – Known – $75,425. Suspension and debarment: 15.042 and 15.046 – no questioned costs. Repeat Finding: Procurement – Yes, 2020-002 for 15.042; Suspension and Debarment – No Recommendation: We recommend that the School follow its written procurement policies and maintain proper supporting documentation. Additionally, we recommend the School develop procedures to ensure that before contracting with a vendor, a search is performed on https://www.sam.gov, a screen print of the search results is performed, and the results filed in the vendor’s file. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and has prepared corrective action as detailed in its Corrective Action Plan.
Program Information: U.S. Department of the Interior AL # Award Number Award Period Program Name 15.042 A19AV00888 7/1/2020-6/30/2021 Indian School Equalization Program 15.046 A19AV00888 7/1/2020-6/30/2021 Administrative Cost Grants for Indian Schools Criteria: Non-Federal entities other than States, including those operating Federal programs as subrecipients of States, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR part 200. During the review of the School’s procurement policies, the following was noted: • Any purchase of materials, supplies, or equipment having a purchase price exceeding $5,000 shall be purchased only after having requested at least three bids or as needed, advertised for sealed bids for a period of not less than five (5) days. Non-Federal entities other than States, including those operating Federal programs as subrecipients of States, must follow the suspension and debarment standards set out at 2 CFR Part 180, which implements Executive Orders 12549 and 12689, “Debarment and Suspension”, federal awarding agency regulations in Title 2 of the CFR adopting/implementing the OMB guidance in 2 CFR Part 180; program legislation; and the terms and conditions of the award. 2 CFR § 200.303 - Internal controls states, the recipient and subrecipient must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition/Context: During the testing of 15.042, the following was noted: • 1 of 1 Individually Important Items tested did not have bidding documentation or sole source justification. • 1 of 1 samples tested did not have bidding documentation or sole source justification. During the testing of 15.046, the following was noted: • 2 of 2 Individually Important Items and 2 of 2 procurement samples did not have bidding documentation or sole source justification. • 1 of 1 Individually Important Items and 1 of 1 suspension and debarment samples did not have verification that a suspension and debarment search was performed. [ X ] Compliance Finding [ ] Significant Deficiency [ X ] Material Weakness Cause: The School was not following its policies for purchases that exceed $5,000. For suspension and debarment, there were ineffective controls in place during the period, along with management oversight. Effect: The School could be overpaying for services or items that could be obtained elsewhere for less. The School could also be engaging with vendors who are suspended or debarred. Questioned Costs: Procurement: 15.042 – None reported as known and likely questioned costs did not exceed $25,000; 15.046 – Known – $75,425. Suspension and debarment: 15.042 and 15.046 – no questioned costs. Repeat Finding: Procurement – Yes, 2020-002 for 15.042; Suspension and Debarment – No Recommendation: We recommend that the School follow its written procurement policies and maintain proper supporting documentation. Additionally, we recommend the School develop procedures to ensure that before contracting with a vendor, a search is performed on https://www.sam.gov, a screen print of the search results is performed, and the results filed in the vendor’s file. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and has prepared corrective action as detailed in its Corrective Action Plan.
SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Town of Twisp January 1, 2020 through December 31, 2020 2020-002 The Town did not have adequate internal controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 10.760 – Waste and Water Disposal Systems for Rural Communities Federal Grantor Name: U.S. Department of Agriculture Federal Award/Contract Number: N/A Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Description of Condition During fiscal year 2020, the Town spent $2,168,707 in loan and grant funds from the Water and Waste Disposal Systems for Rural Communities program. The objective of this program is to assist rural communities in obtaining safe drinking water and adequate waste disposal facilities. The Town used these funds primarily for a water line project. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations for procurements standards in 2 CFR § 200.318 require award recipients to have written standards of conduct that cover conflicts of interest and expectations for their employees who are involved in selecting, awarding, and administrating contracts and purchases. Our audit found the Town’s internal controls were ineffective for ensuring compliance with federal procurement requirements. Specifically, the Town did not establish written standards of conduct covering these required elements: • Officers, employees, and agents may not participate in selecting, awarding, or administrating a contract supported by a federal award if they have a real or apparent conflict of interest. • Officers, employees, and agents may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. • Disciplinary actions for violating these standards We consider this deficiency in internal controls to be a significant deficiency. Cause of Condition The Town has not received a federal grant compliance audit recently, and staff and management did not know about the requirement to have written standards of conduct covering the selection and administration of contracts involving federal funds. Effect of Condition Without written standards of conduct, the Town is at a greater risk of noncompliance with these requirements when using federal funds to procure contractors. Although the Town did not have policies in place, we verified that no one involved with selecting and administrating the contract had a real or apparent conflict of interest for the contract. Recommendation We recommend the Town develop written standards of conduct policies that conform with Uniform Guidance. Town’s Response The Town of Twisp agrees with the findings as presented and has committed to adopting policy as recommended by the State Auditor’s office in accordance with the BARS Manual, implementing internal controls for federal expenditures and annual reporting. As this audit occurred in the 2023-2024 fiscal year, it will not be possible to have these changes in place in advance of the 2023 annual reporting deadline, however staff and management will implement these best practices in lieu of adopted policy. Auditor’s Remarks We appreciate the Town’s commitment to resolving the issues noted and will follow up during the next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200, Uniform Guidance, section 318, General Procurement Standards, establishes requirements for written standards of conduct. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Town of Twisp January 1, 2020 through December 31, 2020 2020-002 The Town did not have adequate internal controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 10.760 – Waste and Water Disposal Systems for Rural Communities Federal Grantor Name: U.S. Department of Agriculture Federal Award/Contract Number: N/A Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Description of Condition During fiscal year 2020, the Town spent $2,168,707 in loan and grant funds from the Water and Waste Disposal Systems for Rural Communities program. The objective of this program is to assist rural communities in obtaining safe drinking water and adequate waste disposal facilities. The Town used these funds primarily for a water line project. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations for procurements standards in 2 CFR § 200.318 require award recipients to have written standards of conduct that cover conflicts of interest and expectations for their employees who are involved in selecting, awarding, and administrating contracts and purchases. Our audit found the Town’s internal controls were ineffective for ensuring compliance with federal procurement requirements. Specifically, the Town did not establish written standards of conduct covering these required elements: • Officers, employees, and agents may not participate in selecting, awarding, or administrating a contract supported by a federal award if they have a real or apparent conflict of interest. • Officers, employees, and agents may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. • Disciplinary actions for violating these standards We consider this deficiency in internal controls to be a significant deficiency. Cause of Condition The Town has not received a federal grant compliance audit recently, and staff and management did not know about the requirement to have written standards of conduct covering the selection and administration of contracts involving federal funds. Effect of Condition Without written standards of conduct, the Town is at a greater risk of noncompliance with these requirements when using federal funds to procure contractors. Although the Town did not have policies in place, we verified that no one involved with selecting and administrating the contract had a real or apparent conflict of interest for the contract. Recommendation We recommend the Town develop written standards of conduct policies that conform with Uniform Guidance. Town’s Response The Town of Twisp agrees with the findings as presented and has committed to adopting policy as recommended by the State Auditor’s office in accordance with the BARS Manual, implementing internal controls for federal expenditures and annual reporting. As this audit occurred in the 2023-2024 fiscal year, it will not be possible to have these changes in place in advance of the 2023 annual reporting deadline, however staff and management will implement these best practices in lieu of adopted policy. Auditor’s Remarks We appreciate the Town’s commitment to resolving the issues noted and will follow up during the next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200, Uniform Guidance, section 318, General Procurement Standards, establishes requirements for written standards of conduct. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Town of Twisp January 1, 2020 through December 31, 2020 2020-002 The Town did not have adequate internal controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 10.760 – Waste and Water Disposal Systems for Rural Communities Federal Grantor Name: U.S. Department of Agriculture Federal Award/Contract Number: N/A Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Description of Condition During fiscal year 2020, the Town spent $2,168,707 in loan and grant funds from the Water and Waste Disposal Systems for Rural Communities program. The objective of this program is to assist rural communities in obtaining safe drinking water and adequate waste disposal facilities. The Town used these funds primarily for a water line project. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations for procurements standards in 2 CFR § 200.318 require award recipients to have written standards of conduct that cover conflicts of interest and expectations for their employees who are involved in selecting, awarding, and administrating contracts and purchases. Our audit found the Town’s internal controls were ineffective for ensuring compliance with federal procurement requirements. Specifically, the Town did not establish written standards of conduct covering these required elements: • Officers, employees, and agents may not participate in selecting, awarding, or administrating a contract supported by a federal award if they have a real or apparent conflict of interest. • Officers, employees, and agents may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. • Disciplinary actions for violating these standards We consider this deficiency in internal controls to be a significant deficiency. Cause of Condition The Town has not received a federal grant compliance audit recently, and staff and management did not know about the requirement to have written standards of conduct covering the selection and administration of contracts involving federal funds. Effect of Condition Without written standards of conduct, the Town is at a greater risk of noncompliance with these requirements when using federal funds to procure contractors. Although the Town did not have policies in place, we verified that no one involved with selecting and administrating the contract had a real or apparent conflict of interest for the contract. Recommendation We recommend the Town develop written standards of conduct policies that conform with Uniform Guidance. Town’s Response The Town of Twisp agrees with the findings as presented and has committed to adopting policy as recommended by the State Auditor’s office in accordance with the BARS Manual, implementing internal controls for federal expenditures and annual reporting. As this audit occurred in the 2023-2024 fiscal year, it will not be possible to have these changes in place in advance of the 2023 annual reporting deadline, however staff and management will implement these best practices in lieu of adopted policy. Auditor’s Remarks We appreciate the Town’s commitment to resolving the issues noted and will follow up during the next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200, Uniform Guidance, section 318, General Procurement Standards, establishes requirements for written standards of conduct. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Town of Twisp January 1, 2020 through December 31, 2020 2020-002 The Town did not have adequate internal controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 10.760 – Waste and Water Disposal Systems for Rural Communities Federal Grantor Name: U.S. Department of Agriculture Federal Award/Contract Number: N/A Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Description of Condition During fiscal year 2020, the Town spent $2,168,707 in loan and grant funds from the Water and Waste Disposal Systems for Rural Communities program. The objective of this program is to assist rural communities in obtaining safe drinking water and adequate waste disposal facilities. The Town used these funds primarily for a water line project. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations for procurements standards in 2 CFR § 200.318 require award recipients to have written standards of conduct that cover conflicts of interest and expectations for their employees who are involved in selecting, awarding, and administrating contracts and purchases. Our audit found the Town’s internal controls were ineffective for ensuring compliance with federal procurement requirements. Specifically, the Town did not establish written standards of conduct covering these required elements: • Officers, employees, and agents may not participate in selecting, awarding, or administrating a contract supported by a federal award if they have a real or apparent conflict of interest. • Officers, employees, and agents may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. • Disciplinary actions for violating these standards We consider this deficiency in internal controls to be a significant deficiency. Cause of Condition The Town has not received a federal grant compliance audit recently, and staff and management did not know about the requirement to have written standards of conduct covering the selection and administration of contracts involving federal funds. Effect of Condition Without written standards of conduct, the Town is at a greater risk of noncompliance with these requirements when using federal funds to procure contractors. Although the Town did not have policies in place, we verified that no one involved with selecting and administrating the contract had a real or apparent conflict of interest for the contract. Recommendation We recommend the Town develop written standards of conduct policies that conform with Uniform Guidance. Town’s Response The Town of Twisp agrees with the findings as presented and has committed to adopting policy as recommended by the State Auditor’s office in accordance with the BARS Manual, implementing internal controls for federal expenditures and annual reporting. As this audit occurred in the 2023-2024 fiscal year, it will not be possible to have these changes in place in advance of the 2023 annual reporting deadline, however staff and management will implement these best practices in lieu of adopted policy. Auditor’s Remarks We appreciate the Town’s commitment to resolving the issues noted and will follow up during the next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200, Uniform Guidance, section 318, General Procurement Standards, establishes requirements for written standards of conduct. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Town of Twisp January 1, 2020 through December 31, 2020 2020-002 The Town did not have adequate internal controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 10.760 – Waste and Water Disposal Systems for Rural Communities Federal Grantor Name: U.S. Department of Agriculture Federal Award/Contract Number: N/A Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Description of Condition During fiscal year 2020, the Town spent $2,168,707 in loan and grant funds from the Water and Waste Disposal Systems for Rural Communities program. The objective of this program is to assist rural communities in obtaining safe drinking water and adequate waste disposal facilities. The Town used these funds primarily for a water line project. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations for procurements standards in 2 CFR § 200.318 require award recipients to have written standards of conduct that cover conflicts of interest and expectations for their employees who are involved in selecting, awarding, and administrating contracts and purchases. Our audit found the Town’s internal controls were ineffective for ensuring compliance with federal procurement requirements. Specifically, the Town did not establish written standards of conduct covering these required elements: • Officers, employees, and agents may not participate in selecting, awarding, or administrating a contract supported by a federal award if they have a real or apparent conflict of interest. • Officers, employees, and agents may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. • Disciplinary actions for violating these standards We consider this deficiency in internal controls to be a significant deficiency. Cause of Condition The Town has not received a federal grant compliance audit recently, and staff and management did not know about the requirement to have written standards of conduct covering the selection and administration of contracts involving federal funds. Effect of Condition Without written standards of conduct, the Town is at a greater risk of noncompliance with these requirements when using federal funds to procure contractors. Although the Town did not have policies in place, we verified that no one involved with selecting and administrating the contract had a real or apparent conflict of interest for the contract. Recommendation We recommend the Town develop written standards of conduct policies that conform with Uniform Guidance. Town’s Response The Town of Twisp agrees with the findings as presented and has committed to adopting policy as recommended by the State Auditor’s office in accordance with the BARS Manual, implementing internal controls for federal expenditures and annual reporting. As this audit occurred in the 2023-2024 fiscal year, it will not be possible to have these changes in place in advance of the 2023 annual reporting deadline, however staff and management will implement these best practices in lieu of adopted policy. Auditor’s Remarks We appreciate the Town’s commitment to resolving the issues noted and will follow up during the next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200, Uniform Guidance, section 318, General Procurement Standards, establishes requirements for written standards of conduct. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Town of Twisp January 1, 2020 through December 31, 2020 2020-002 The Town did not have adequate internal controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 10.760 – Waste and Water Disposal Systems for Rural Communities Federal Grantor Name: U.S. Department of Agriculture Federal Award/Contract Number: N/A Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Description of Condition During fiscal year 2020, the Town spent $2,168,707 in loan and grant funds from the Water and Waste Disposal Systems for Rural Communities program. The objective of this program is to assist rural communities in obtaining safe drinking water and adequate waste disposal facilities. The Town used these funds primarily for a water line project. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations for procurements standards in 2 CFR § 200.318 require award recipients to have written standards of conduct that cover conflicts of interest and expectations for their employees who are involved in selecting, awarding, and administrating contracts and purchases. Our audit found the Town’s internal controls were ineffective for ensuring compliance with federal procurement requirements. Specifically, the Town did not establish written standards of conduct covering these required elements: • Officers, employees, and agents may not participate in selecting, awarding, or administrating a contract supported by a federal award if they have a real or apparent conflict of interest. • Officers, employees, and agents may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. • Disciplinary actions for violating these standards We consider this deficiency in internal controls to be a significant deficiency. Cause of Condition The Town has not received a federal grant compliance audit recently, and staff and management did not know about the requirement to have written standards of conduct covering the selection and administration of contracts involving federal funds. Effect of Condition Without written standards of conduct, the Town is at a greater risk of noncompliance with these requirements when using federal funds to procure contractors. Although the Town did not have policies in place, we verified that no one involved with selecting and administrating the contract had a real or apparent conflict of interest for the contract. Recommendation We recommend the Town develop written standards of conduct policies that conform with Uniform Guidance. Town’s Response The Town of Twisp agrees with the findings as presented and has committed to adopting policy as recommended by the State Auditor’s office in accordance with the BARS Manual, implementing internal controls for federal expenditures and annual reporting. As this audit occurred in the 2023-2024 fiscal year, it will not be possible to have these changes in place in advance of the 2023 annual reporting deadline, however staff and management will implement these best practices in lieu of adopted policy. Auditor’s Remarks We appreciate the Town’s commitment to resolving the issues noted and will follow up during the next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200, Uniform Guidance, section 318, General Procurement Standards, establishes requirements for written standards of conduct. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
Finding No.: 2019-007 Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.104 Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (SED) Award Number: 5U79SM062447-04 Area: Procurement and Suspension and Debarment Questioned Costs: $23,500 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CHCC’s procurement regulations, pursuant to the Commonwealth law, state the following: • All procurement records shall be retained by the CHCC Procurement and Supply (P&S) Director for a period of seven (7) years after completion of construction, or full delivery of the goods or services under the contract. • Competitive Sealed Bidding Because of the unique nature and varied needs of all parts of the institution, the CEO and the CHCC Director of P&S shall make a determination as to the best way to publicize the Invitation to Bid (ITB). Every procurement in excess of $10,000 shall be publicized in one or more of the following ways: (a) in a newspaper of general circulation; (b) in a newspaper of local circulation in the area pertinent to the procurement; (c) in industry media; (d) through electronic mailing lists, (e) through the internet, agency web site, or other publicly accessible electronic media, (f) through electronic mailing lists, or (g) in a government publication designed for giving public notice • Competitive Sealed Proposal Adequate public notice of the request for proposals shall be given in the same manner as provided for in competitive sealed bids. Finding No.: 2019-007, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.104 Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (SED) Award Number: 5U79SM062447-04 Area: Procurement and Suspension and Debarment Questioned Costs: $23,500 Criteria, continued: • Small Purchases Bidding is not required but is encouraged for procurement over $5,000 and under $25,000, or $50,000 if it is medical equipment, supplies, or devices. The CEO, the official with expenditure authority, must obtain price quotations from at least three vendors and base the selection on competitive price and quality for procurement valued at $5,000 to $25,000 or $50,000 for medical equipment, supplies, or devices. Any price quotations obtained must be written, documented, and submitted to the CHCC P&S Director for approval. Condition: Of thirty-nine procurement samples tested, aggregating $56,383 of a total population of $220,635, the following deficiencies were noted: 1. For four (or 10%), the Invitation to Bid (ITB) or the Request For Proposal (RFP) publication notices and evaluation forms were not provided. Finding No.: 2019-007, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.104 Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (SED) Award Number: 5U79SM062447-04 Area: Procurement and Suspension and Debarment Questioned Costs: $23,500 Condition, continued: 2. For seven (or 18%), the purchase requisitions and/or contracts were not provided. No questioned costs are presented as amounts are questioned at Condition 3. 3. For eight (or 21%), approval by the Expenditure Authority and the P&S Director were not evident. Finding No.: 2019-007, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.104 Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (SED) Award Number: 5U79SM062447-04 Area: Procurement and Suspension and Debarment Questioned Costs: $23,500 Condition, continued: 4. For one (or 3%) small purchase, no evidence of effort to obtain three quotations. Cause: CHCC did not enforce compliance with established procurement policies and procedures over procurement. Effect: CHCC is in noncompliance with applicable procurement regulations and questioned costs of $23,500 result as the projected questioned costs exceed the $25,000 threshold. Identification as a Repeat Finding: Finding No. 2018-013. Recommendation: The responsible personnel should monitor and enforce compliance with applicable procurement requirements, including the review of procurement files for completeness as to written rationale for any deviation from applicable procurement requirements. Finding No.: 2019-007, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.104 Comprehensive Community Mental Health Services for Children with Serious Emotional Disturbances (SED) Award Number: 5U79SM062447-04 Area: Procurement and Suspension and Debarment Questioned Costs: $23,500 Views of Responsible Officials: CHCC’s Corrective Action Plan provides a detailed rationale for disagreement with the finding described in Conditions 1 to 4. Auditor Response: Condition 1 - ITB and RFP publication notices were not provided. Condition 2 - Purchase requisitions and/or contracts were not provided. Condition 3 - Documentations evidencing approval by the Expenditure Authority and the P&S Director were not provided. Condition 4 - CHCC Corrective Action Plan stated no solicitation was obtained. In addition, documentations substantiating that the vehicle rental agreement was competitively procured during the initial year of the rental were not provided. Further, in accordance with 45 CFR Part 75.361 Retention requirements for records, financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award, must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the HHS awarding agency or pass-through entity in the case of a subrecipient. In addition, initial draft reports were provided to CHCC on 09/06/24 and 09/24/24. It was also agreed during the 09/06/24 and 10/04/24 meetings for CHCC to provide corresponding underlying accounting records to resolve the finding; however, no documentations were provided within the agreed timeline. Accordingly, finding is sustained.
Finding No.: 2019-011 Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Award Number: 5U79SP020710-04 and 5H795M062879-02 Area: Procurement and Suspension and Debarment Questioned Costs: $183,926 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CHCC’s procurement regulations, pursuant to the Commonwealth law, state the following: • All procurement records shall be retained by the CHCC Procurement and Supply (P&S) Director for a period of seven (7) years after completion of construction, or full delivery of the goods or services under the contract. • Competitive Sealed Bidding Because of the unique nature and varied needs of all parts of the institution, the CEO and the CHCC Director of P&S shall make a determination as to the best way to publicize the Invitation to Bid (ITB). Every procurement in excess of $10,000 shall be publicized in one or more of the following ways: (a) in a newspaper of general circulation; (b) in a newspaper of local circulation in the area pertinent to the procurement; (c) in industry media; (d) through electronic mailing lists, (e) through the internet, agency web site, or other publicly accessible electronic media, (f) through electronic mailing lists, or (g) in a government publication designed for giving public notice • Competitive Sealed Proposal Adequate public notice of the request for proposals shall be given in the same manner as provided for in competitive sealed bids. Finding No.: 2019-011, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Award Number: 5U79SP020710-04 and 5H795M062879-02 Area: Procurement and Suspension and Debarment Questioned Costs: $183,926 Criteria, continued: • Small Purchases Bidding is not required but is encouraged for procurement over $5,000 and under $25,000, or $50,000 if it is medical equipment, supplies, or devices. The CEO, the official with expenditure authority, must obtain price quotations from at least three vendors and base the selection on competitive price and quality for procurement valued at $5,000 to $25,000 or $50,000 for medical equipment, supplies, or devices. Any price quotations obtained must be written, documented, and submitted to the CHCC P&S Director for approval. • Sole Source Procurement A written justification for sole source procurement shall be prepared by the CEO, the official with expenditure authority, and shall contain the specific unique capabilities required; the specific unique capabilities of the contractor; the efforts made to obtain competition; and the specific considerations given to alternative sources and specific reasons why alternative sources were not selected. Condition: Of thirty-seven procurement samples tested, aggregating $232,278 of a total population of $1,068,186, the following deficiencies were noted: 1. For five (or 14%), procurement files were not provided. No questioned costs is presented for Document Number 249681 as the amount is questioned at Condition 2. Finding No.: 2019-011, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Award Number: 5U79SP020710-04 and 5H795M062879-02 Area: Procurement and Suspension and Debarment Questioned Costs: $183,926 Condition, continued: 2. For four (or 11%), approval by the Expenditure Authority and the P&S Director were not evident. 3. For four (or 11%), purchase requisitions and/or contracts were not provided. No questioned costs are presented as amounts are questioned at Condition 2. 4. For four (or 11%), either the Invitation to Bid (ITB) or Request for Proposal (RFP) publication notices and evaluations forms were not provided. Finding No.: 2019-011, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Award Number: 5U79SP020710-04 and 5H795M062879-02 Area: Procurement and Suspension and Debarment Questioned Costs: $183,926 Condition, continued: 5. For one (or 3%), there was no written justification by the Expenditure Authority for the sole source procurement method used for Document No. 1427946 (Business Unit H8243A), dated 11/30/18 amounting to $36,500. No questioned costs are presented as the amount is questioned at Finding No. 2019-010, Condition 2. 6. For three (or 8%) small purchase, no evidence of effort to obtain three quotations. No questioned costs are presented as the amount is questioned at Condition 2 for Document Number 1443186 and at Finding No. 2019-008, Condition 1 for Document Numbers 1456156 and 1456160. 7. For one (or 3%), the written justification by the Official Expenditure Authority of the sole source procurement method used was not provided. No questioned costs are presented as the amount is questioned at Finding No. 2019-010, Condition 2. Cause: CHCC did not enforce compliance with established procurement policies and procedures over procurement. Finding No.: 2019-011, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Award Number: 5U79SP020710-04 and 5H795M062879-02 Area: Procurement and Suspension and Debarment Questioned Costs: $183,926 Effect: CHCC is in noncompliance with applicable procurement regulations, and questioned costs of $183,926 exist. Identification as a Repeat Finding: Finding No. 2018-017. Recommendation: The responsible personnel should monitor and enforce compliance with applicable procurement requirements, including the review of procurement files for completeness as to written rationales for any deviations from applicable procurement requirements. Views of Responsible Officials: CHCC’s Corrective Action Plan states agreement with the findings described for Conditions 1 to 7; however, disagrees with the questioned costs. Auditor Response: Conditions 1 to 7 - Questioned costs are warranted given transactions tested were not supported by adequate documentations. In addition, initial draft reports were provided to CHCC on 09/06/24 and 09/24/24. It was also agreed during the 09/06/24 and 10/04/24 meetings for CHCC to provide corresponding underlying accounting records to resolve the finding; however, no documentations were provided within the agreed timeline. Accordingly, finding is sustained.
Finding No.: 2019-016 Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.870 Maternal, Infant and Early Childhood Home Visiting Grant Program Award Number: 1X10MC31162-01-00 Area: Procurement and Suspension and Debarment Questioned Costs: $60,104 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. CHCC’s procurement regulations, pursuant to the Commonwealth law, state the following: • All procurement records shall be retained by the CHCC Procurement and Supply (P&S) Director for a period of seven (7) years after completion of construction, or full delivery of the goods or services under the contract. • Competitive Sealed Bidding Because of the unique nature and varied needs of all parts of the institution, the CEO and the CHCC Director of P&S shall make a determination as to the best way to publicize the Invitation to Bid (ITB). Every procurement in excess of $10,000 shall be publicized in one or more of the following ways: a. in a newspaper of general circulation; b. in a newspaper of local circulation in the area pertinent to the procurement; c. in industry media; d. through electronic mailing lists, e. through the internet, agency web site, or other publicly accessible electronic media, f. through electronic mailing lists, or g. in a government publication designed for giving public notice • Competitive Sealed Proposal Adequate public notice of the request for proposals shall be given in the same manner as provided for in competitive sealed bids. • Small Purchases Bidding is not required but is encouraged for procurement over $5,000 and under $25,000, or $50,000 if it is medical equipment, supplies, or devices. The CEO, the official with expenditure authority, must obtain price quotations from at least three vendors and base the selection on competitive price and quality for procurement valued at $5,000 to $25,000 or $50,000 for medical equipment, supplies, or devices. Any price quotations obtained must be written, documented, and submitted to the CHCC P&S Director for approval. Finding No.: 2019-016, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.870 Maternal, Infant and Early Childhood Home Visiting Grant Program Award Number: 1X10MC31162-01-00 Area: Procurement and Suspension and Debarment Questioned Costs: $60,104 Criteria, Continued: • Sole Source Procurement A written justification for sole source procurement shall be prepared by the CEO, the official with expenditure authority, and shall contain the specific unique capabilities required; the specific unique capabilities of the contractor; the efforts made to obtain competition; and the specific considerations given to alternative sources and specific reasons why alternative sources were not selected. Condition: Of thirty-seven nonpayroll expenditures tested, aggregating $75,546 of a total population of $212,059, the following deficiencies were noted: 1. For five (or 14%), written justifications by the Official Expenditure Authority for the sole source procurement method used were not provided. 2. For twelve (or 32%), the Invitation to Bid or Request for Proposal publications notices were not provided. Finding No.: 2019-016, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.870 Maternal, Infant and Early Childhood Home Visiting Grant Program Award Number: 1X10MC31162-01-00 Area: Procurement and Suspension and Debarment Questioned Costs: $60,104 Condition, continued: 3. For nine (or 24%), purchase requisitions and/or contracts were not provided. No questioned costs are presented as amounts are questioned at Condition 4. Finding No.: 2019-016, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.870 Maternal, Infant and Early Childhood Home Visiting Grant Program Award Number: 1X10MC31162-01-00 Area: Procurement and Suspension and Debarment Questioned Costs: $60,104 Condition, continued: 4. For nine (or 24%), approval by the Expenditure Authority and the P&S Director were not evident. 5. For three (or 8%), either the purchase order was not provided or was not signed by the P&S Director. No questioned costs are presented as amounts are questioned at Condition 4. 6. For one (or 3%) small purchase, no evidence of effort to obtain three quotations. No questioned costs are presented as the amount is questioned at Condition 4. Finding No.: 2019-016, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.870 Maternal, Infant and Early Childhood Home Visiting Grant Program Award Number: 1X10MC31162-01-00 Area: Procurement and Suspension and Debarment Questioned Costs: $60,104 Cause: CHCC did not enforce compliance with established policies and procedures over procurement. Effect: CHCC is in noncompliance with applicable procurement regulations and questioned costs of $60,104 result. Identification as a Repeat Finding: Finding No. 2018-025. Recommendation: The responsible personnel should monitor and enforce compliance with applicable procurement requirements, including the review of procurement files for completeness as to written rationale for any deviation from applicable procurement requirements. Views of Responsible Officials: CHCC’s Corrective Action Plan states agreement with the finding described in Conditions 1 to 6; however, disagrees with the questioned costs. Auditor Response: Conditions 1 to 6 - Questioned Costs are warranted given transactions tested were not supported by adequate documentations. Finding No.: 2019-016, continued Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.870 Maternal, Infant and Early Childhood Home Visiting Grant Program Award Number: 1X10MC31162-01-00 Area: Procurement and Suspension and Debarment Questioned Costs: $60,104 Auditor Response, continued: In addition, initial draft reports were provided to CHCC on 09/06/24 and 09/24/24. It was also agreed during the 09/06/24 and 10/04/24 meetings for CHCC to provide corresponding underlying accounting records to resolve the finding; however, no documentations were provided within the agreed timeline. Accordingly, finding is sustained.