Finding 2025-002: Procurement, Suspension and Debarment Federal Agency: U.S. Agency for International Development (USAID) Federal Program: Foreign Assistance for Programs Overseas Assistance Listing Number: 98.001 Pass-through Entity (if applicable): Not applicable Award Identification Number and Year: All Criteria or Specific Requirement: 2 CFR 200.318 through 200.327; 2 CFR 200.303 Recipients and subrecipients must maintain and use documented procurement procedures consistent with applicable laws and the Federal procurement standards. Procurement transactions must be conducted using an appropriate method, with records sufficient to support the procurement history and required determinations. The standards also address competition, conflicts of interest, contractor oversight, cost or price analysis when applicable, required contract provisions, and suspension and debarment requirements. Condition: For several procurement transactions sampled, Internews Network was unable to provide some or all documentation necessary to support compliance. Missing items included procurement method determination, solicitation or quotations, bid/proposal evaluation, sole-source justification, price reasonableness or cost/price analysis. Accordingly, we were unable to determine whether the transactions were procured in accordance with Internews Network’s policies, 2 CFR 200.318 through 200.327, and applicable award terms. Cause: Management indicated that significant staffing reductions followed the termination of Federal awards and funding. Procurement and grants administration duties were dispersed or discontinued without a complete transition of electronic and paper records. Management did not have an enforced, centralized procurement file standard or a closeout control designed to confirm that each procurement file was complete before responsible staff separated. Effect or Potential Effect: The missing documentation prevented verification that procurement transactions were conducted with the required competition, approvals, price considerations, exclusion checks, and contract terms. This increases the risk of unsupported vendor selection, unreasonable costs, transactions with excluded parties, omitted Federal clauses, and costs that may be challenged by a Federal agency or pass-through entity. Questioned Costs: Undetermined Context: Internews Network used Federal award funds to acquire goods and services under during the audit period. Compliance with Federal procurement requirements is ordinarily demonstrated through a contemporaneous procurement file documenting the applicable method, competition or authorized noncompetitive justification, vendor selection, price or cost considerations, approvals, exclusion checks, contract terms, and oversight. Identification as a Repeat Finding, if Applicable: Not a repeat finding Recommendation: Implement a standardized procurement checklist scaled to method and threshold. Retain the funding source, threshold and method determination, competition or approved noncompetitive justification, vendor responses, evaluation, price support, conflicts documentation, exclusion verification, approvals, contract provisions, invoices, and oversight evidence. Require independent completeness reviews before award and final payment, centralize records, and use a staffing-reduction or award-termination protocol to transfer ownership, preserve access, and certify file completeness.
Finding 2025-006 I. Procurement, Suspension and Debarment Identification of the Federal Program: Federal Agency: U.S. Department of Housing and Urban Development (HUD) Federal Assistance Listing Number: 14.881 Federal Program Name: Moving to Work (MTW) Demonstration Program Public and Indian Housing (Public Housing) Program Year: January 1, 2025 through December 31, 2025 Program No.: IL002-01-00025D Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): The Uniform Guidance 2 CFR section 200.303 states, “The recipient and subrecipient must: (a) Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” The Uniform Guidance 2 CFR section 200.318, general procurement standards states “(a) Documented procurement procedures. The recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services.” The Uniform Guidance 2 CFR section 200.319 states that “all procurement transactions under the Federal award must be conducted in a manner that provides for full and open competition and is consistent with the standards of this section and §200.320.” The Authority’s procurement policy for an intergovernmental purchasing agreement requires an agency contract and amendments. The Authority’s internal control procedures require procurements of more than $500,000 to have Board of Commissioners’ approval. Recipients and subrecipients are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR 180.220. When a recipient or subrecipient enters into a covered transaction with an entity at a lower tier, the recipient or subrecipient must verify that the entity, as defined in 2 CFR 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA) and available at SAM.gov, (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR 180.300). Condition: For one of nine (11.1%) procurement transactions and one of 40 (2.5%) procurement transactions tested for internal controls over and compliance with federal procurement compliance requirements, respectively, we identified one procurement exception. Specifically, the procurement lacked Board of Commissioners approval, and no executed agreement or amendment existed for fiscal year 2025. Therefore, the Authority was unable to demonstrate compliance with Uniform Guidance procurement standards. For three of 40 (7.5%) procurement transactions tested for internal controls over and compliance with the suspension and debarment compliance requirement, the suspension and debarment check was not performed or retained on file before entering the covered transaction. Therefore, the Authority was unable to demonstrate compliance with Uniform Guidance suspension and debarment standards. Cause: The Authority’s internal controls over the review and approval of procurement transactions and the review and retention of suspension and debarment checks were not operating effectively. Effect or Potential Effect: Procurements may not be made in accordance with Uniform Guidance procurement standards. Contractors/vendors may be suspended or debarred. Questioned Costs: A total of $6,412,600 related to Assistance Listing No. 14.881, representing one procurement with a procurement exception (invoices totaling $6,412,600). Context: The one procurement and three suspension and debarment transactions totaled $8,443,452 out of 40 procurement transactions sampled for compliance totaling $38,544,823. Public Housing expenditures reported in the schedule of expenditures of federal awards were $253,935,873 for the year ended December 31, 2025, representing 21.32% of total federal expenditures under Assistance Listing No. 14.881 of $1,190,937,657. Identification as a Repeat Finding, if Applicable: The finding is a partial repeat of finding 2024-006 from the prior year. Recommendation: The Authority should follow its established internal controls over the review and approval of procurement transactions and the review and retention of suspension and debarment checks. Views of Responsible Officials: CHA Management agrees. This finding pertains to an intergovernmental contractual agreement with the Chicago Police Department, which was under renegotiation and not yet approved by the Board. Although the suspension and debarment check had been performed, it was not documented in accordance with CHA procedures. Going forward, the CHA will ensure compliance with its existing procurement process and procedures.
The District did not have written procurement procedures or a procurement policy in effect for procurements related to the project funded under ALN 66.202, Congressionally Mandated Projects, for the year ended December 31, 2025, as required by 2 CFR §§ 200.318–200.327. The District did have a conflict-of-interest policy.
City of Mattawa January 1, 2025 through December 31, 2025 2025-002 The City did not have adequate internal controls and did not comply with federal procurement requirements. Assistance Listing Number and Title: 66.447, Sewer Overflow and Stormwater Reuse Municipal Grant Program Federal Grantor Name: Environmental Protection Agency Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Ecology Pass-through Award/Contract Number: WQC-2024-Mattaw-00118 Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background During fiscal year 2025, the City spent $844,559 in Sewer Overflow and Stormwater Reuse Municipal Grant Program funds. The program’s objective is to provide funds for the planning, design, or construction of treatment works to intercept, transport, control, treat, or reuse municipal combined sewer overflows, sanitary sewer overflows, or stormwater; and any other measures to manage, reduce, treat, or recapture stormwater or subsurface drainage water. The City used program funding to eliminate the Portage Avenue Lift Station and construct 5,100 linear feet of new gravity sewer main. Federal regulations require recipients to establish, document and maintain effective internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR § 200.318-327. The procedures must reflect the most restrictive of federal, state or local procurement thresholds and methods. When using federal funds to procure goods and services, governments must apply the more restrictive requirements of federal, state or local laws by obtaining quotes or following a competitive procurement process, depending on the estimated cost of the procurement activity. The City must maintain documentation showing the procurement process it performed. Description of Condition Our audit found the City’s internal controls were ineffective for ensuring compliance with federal procurement requirements. Although the City has an established procurement policy, it does not conform with federal requirements. Specifically, it does not include the most restrictive thresholds and procedures for public works projects and professional services, and other required elements included in 2 CFR § 200.318-327. Additionally, our audit found the City did not have adequate controls to ensure it complied with procurement requirements, and it did not follow the most restrictive requirements when procuring an architectural and engineering firm. Specifically, the City used its on-call engineer for the service rather than advertising a request for proposals as federal regulations require. In 2025, the City entered into the contract totaling $298,000 and paid the engineer $77,185 in federal program funds. We consider these deficiencies in internal controls to be a material weakness that led to material noncompliance. Cause of Condition The City does not regularly receive federal audits. Although the City established a procurement policy, staff were unaware the City’s documented procurement procedures did not conform to federal procurement standards. Staff were unaware they had to solicit requests for proposals by project and thought the City could use the on-call engineer for this service. Effect of Condition Without written policies and procedures that conform to federal procurement standards, the City is at an increased risk of not complying with the most restrictive of federal, state or local procurement methods when using federal funds. Without effective internal controls, the City cannot demonstrate it complied with federal procurement standards, allowed for full and open competition, received the best price or selected the most qualified contractor. Recommendation We recommend the City update its procurement policy to conform with federal procurement requirements and strengthen internal controls to ensure it procures goods and services in accordance with federal procurement requirements and its own procurement policies and procedures. City’s Response The City of Mattawa appreciates SAO staff for help in identifying opportunities for improvement. The City will continue to update its procurement policies for compliance. The funding agency for the project was in agreement with utilizing the city’s yearly engineering procurement for services. The City now understands that, when it comes to federal funds, we would need to procure a separate engineering services proposal. Auditor’s Remarks We thank the City for its cooperation and assistance during the audit and acknowledge its commitment to improving this condition. We will review the corrective action taken during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring goods and services, including noncompetitive procurement.
Assistance Listing Number: 93.193 Name of Federal Program: Urban Indian Health Services; COVID-19 Urban Indian Health Services Name of Federal Agency: Department of Health and Human Services Award Period: January 1, 2025 – December 31, 2025 Criteria or Specific Requirement: 2 CFR section 200.318(i) requires a non-federal entity to maintain sufficient records to detail the history of procurement including, but 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. Condition: Procurements charged to the federal program were not performed in accordance with the procurement standards of the Uniform Guidance. Specifically, the Council did not maintain sufficient documentation to demonstrate that applicable procurement requirements were followed, including evidence of the procurement method used, competition obtained, cost or price analysis when required, and basis for contractor selection. Cause: The Council lacked written policies and procedures to ensure procurements charged to federal awards were performed, documented, reviewed, and approved in accordance with the Uniform Guidance. Procurement policies and procedures have not been designed and implemented that adhere to Uniform Guidance requirements. Effect or Potential Effect: Without sufficient records, the organization cannot demonstrate compliance with Uniform Guidance procurement requirements. This increases the risk of unallowable or unreasonable costs being charged to federal awards and may result in questioned costs or funding agency disallowances. Questioned Costs: $690,921 Context: All general disbursements were considered as a population. Repeat Finding: Yes, thsi is a repeat of Finding 2024-004. Recommendation: Management should implement procedures to ensure that complete procurement documentation is maintained in accordance with 2 CFR §200.318(i). This should include standardized procurement checklists, training for staff involved in purchasing, and periodic internal reviews to confirm that procurement files contain all required documentation. Views of Responsible Officials: Management agrees with the finding and will implement procurement procedures.
2025-004 – Hearts for the Invisible Charlotte Coalition did not follow established Federal procurement procedures and maintain required procurement documentation. Federal Agency: Department of the Treasury Assistance Listing Number: 21.027 Award Period: 05/01/2023 to 04/30/2026 Type of Finding: Significant Deficiency in Internal Controls Over Compliance for Each Major Program Criteria or Specific Requirement: Under 2 CFR § 200.318(a), recipients and subrecipients must “maintain and use documented procedures for procurement transactions under a Federal award or subaward.” Additionally, 2 CFR § 200.318(i) requires that “the recipient or subrecipient must maintain records sufficient to detail the history of each procurement transaction,” including: Rationale for the method of procurement, Selection of contract type, Contractor selection or rejection, and Basis for the contract price. Condition: During our audit of procurement activities under Federal award 21.027, we noted that the Organization did not follow its documented procurement procedures. Specifically:The procurement plan lacked evidence of adherence to competitive procurement methods as required under 2 CFR § 200.320. No documentation was maintained to support when or how procurement decisions were made, including missing records of contractor selection, price justification, and procurement method rationale. Context: The finding pertains to two purchases tested under Assistance Listing 21.027 for which sufficient documentation was not maintained to demonstrate compliance with the Organization’s procurement procedures and applicable Federal requirements. Cause: The Organization did not implement adequate internal controls to ensure compliance with Federal procurement standards. Procurement activities were conducted informally without sufficient oversight or documentation, and staff were not adequately trained on Uniform Guidance requirements. Effect: Failure to follow documented procurement procedures and maintain required records increases the risk of: Noncompliance with Federal regulations, Unfair or noncompetitive procurement practices, Inability to justify expenditures to Federal agencies or auditors, and Disallowed costs or questioned costs during Federal review. Repeat Finding: Yes Auditor’s Recommendation: We recommend that the Organization: Implement and enforce the updated procurement policy. Train staff on Federal procurement requirements. Implement a checklist or control mechanism to ensure all required documentation is retained for each procurement transaction. Views of Responsible Officials and Planned Corrective Actions: Management acknowledges the finding and agrees with the recommendation. The Organization updated its procurement policy in February 2026 to align with applicable Federal procurement requirements. Management will implement and enforce the procurement methods established in the updated policy, provide training to relevant staff on Federal procurement requirements, and maintain the required supporting documentation for applicable procurement transactions going forward.
Finding 2025-005 AL No.: 21.027 Program Title: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Agency: U.S. Department of Treasury Pass-through Agency: Wisconsin Department of Health Services Award Number/Year: Unknown/ 2025 Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR 200.318 through 200.327. Per 2 CFR 200.319, the entity is to conduct all procurement transactions in a manner providing full and open competition and the procurement method was appropriate based off of the dollar amount and conditions specified in 2 CFR 200.320 and the entity's procurement policy. Condition/Context: The County did not go out for bid for a project above the required dollar threshold in their policy therefore not providing full and open competition and did not have controls in place to ensure the policy was being followed for one of nine of the selected vendors. The sample was not statistically valid. Cause: The County did not have internal control procedures in place to ensure the procurement policy was being followed. Effect: The County could miss out on the best pricing for a project. Questioned Costs: The amount of questioned costs, if any, could not be determined. Recommendation: We recommend the County ensure all employees are aware and familiar with the County procurement policy. Management Response: Staff will be informed of the procurement policy specific to Federally funded projects requiring three bids
2025-002 Procurement Policy Prior Year Finding Number: N/A Year of Finding Origination: 2025 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Agriculture Program: 10.561 State Administrative Matching Grants for the Supplemental Nutrition Assistance Program Award Number and Year: 252MN101S2514; 2025 Pass-Through Agency: Minnesota Department of Human Services and Minnesota Department of Children, Youth, and Families Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 2 U.S. Code of Federal Regulations § 200.318 states that 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 with applicable federal law and the standards identified in this regulation. Condition: The Health and Human Services has written procurement policies; however, these policies do not include the required components in accordance with Title 2 U.S. Code of Federal Regulations § 200.318. Questioned Costs: None. Context: This issue was discovered during the audit of the major federal program; however, it impacts federal programs entity-wide. Written policies that reflect the specific components of federal regulations improve controls to ensure compliance with federal award requirements. Effect: Written policies and procedures that are not updated to reflect the federal procurement requirements could increase the risk of noncompliance with federal program requirements. Cause: The Health and Human Services modified the procurement policy during the year resulting in language related to several procurement requirements being excluded due to an oversight. Recommendation: We recommend the Health and Human Services include the specific components of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards requirements in its written procurement policies and procedures. View of Responsible Official: Concur
2025-003 Procurement, Suspension, and Debarment Prior Year Finding Number: 2024-003 Year of Finding Origination: 2024 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of Agriculture Program: 10.561 State Administrative Matching Grants for the Supplemental Nutrition Assistance Program Award Number and Year: 252MN101S2514; 2025 Pass-Through Agency: Minnesota Department of Human Services and Minnesota Department of Children, Youth, and Families Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 2 U.S. Code of Federal Regulations § 200.318(i) states that the Health and Human Services 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. Additionally, the Health and Human Services must follow further federal guidance over full and open competition as provided in Title 2 U.S. Code of Federal Regulations § 200.319 and perform a cost or price analysis as provided in Title 2 U.S. Code of Federal Regulations § 200.324. Condition: The following exceptions were noted in the procurement testing: • For three of the small purchases tested, the Health and Human Services did not have documentation of price or rate quotations obtained from an adequate number of qualified sources detailing the history of procurement or documentation of full and open competition. • For two of the micro-purchase procurements tested, the Health and Human Services did not document how purchases are distributed among qualified suppliers, as practical. • For the one transaction over the simplified acquisition threshold tested, no documentation was maintained detailing the history of the procurement, demonstrating full and open competition, or that a cost or price analysis was performed. Questioned Costs: $320,983; known questioned costs were determined based on exceptions noted from a sample of transactions. Context: The thresholds used for procurement testing were based on the Health and Human Services’ policy for simplified acquisition threshold (over $150,000), small purchases ($3,000 to $150,000), and micro-purchases ($3,000 or less) through November 18, 2025, and after November 18, 2025, then the thresholds used for procurement testing were small purchases ($10,000 to $100,000) and micro-purchases ($10,000 or less). The population consisted of one procurement over the simplified acquisition threshold, 32 small purchases, and 395 micro-purchases. The sample was one transaction over the simplified acquisition threshold, six small purchases, and five micro-purchases. The sample size was based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: It cannot be determined that the contracting process was open and fair because the Health and Human Services did not document the rationale for the contractor selection. Cause: The Health and Human Services does not have processes in place to ensure federal requirements for procurement are followed. Recommendation: We recommend the Health and Human Services maintain documentation on the history of a procurement, provide for full and open competition, and perform a cost or price analysis to support compliance with Title 2 U.S. Code of Federal Regulations §§ 200.318, 200.319, and 200.324. View of Responsible Official: Concur
Subject: COVID-19 Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of Treasury Federal Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Number and Year (or Other Identifying Number): CY2025 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness Criteria: Federal regulations 2 CFR section 200.318 through 200.327 and 2 CFR 180.300 require the City to: 200 CFR.318 (a): The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. 200 CFR.320 (b-c) states in part: Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require the following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. (3) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate Finding 2025-001 (Continued) Criteria (Continued) 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person.” Condition: An effective system of internal controls was not in place at the City to ensure compliance with requirements related to the Procurement and Suspension and Debarment compliance requirement. Cause: Management had not established and implemented a system of internal controls and written procedures to ensure compliance with the Procurement and Suspension and Debarment compliance requirement, including the use of formal procurement methods when required and documenting suspension and debarment verification for applicable contracts. Effect: The failure to design and implement an effective system of internal controls enabled noncompliance with the Procurement and Suspension and Debarment compliance requirement to occur and go undetected. Noncompliance with the Procurement and Suspension and Debarment compliance requirement could have resulted in questioned costs or the loss of federal funds to the City. Questioned Costs: There were no questioned costs identified. Context: There was one procurement selected for testing for which The City did not follow federal procurement requirements for a professional services contract totaling approximately $442,200, which exceeded the City's small purchase threshold of $10,000. The City contracted with a firm to perform the design services for the Ohio River Greenway Trail Design Project; however, a formal procurement method was not used for the purchase as required by the federal procurement requirements outlined in 2 CFR § 200.320. Additionally, for the same contract, representing the procurement selected for testing, the City did not document that it verified the contractor was not suspended or debarred from participation in federal award programs prior to awarding the contract exceeding $25,000, as required by 2 CFR § 180.300. Identification as a repeat finding, if applicable: No. Recommendation: We recommend that the City's management establish and implement written federal procurement policies to supplement its organizational policies and develop a system of internal controls and written procedures to ensure compliance with grant agreement requirements and the Procurement and Suspension and Debarment compliance requirement. We further recommend that management document the use of the appropriate procurement method and perform and retain documentation of suspension and debarment verification for all covered transactions. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Condition 2025-02 The Organization did not have written procedures for determining the allowability of costs charged to Federal awards. In addition, the Organization did not have documented procurement policies and procedures governing procurement transactions under Federal awards. Criteria 2 CFR Section 200.302(b)(7) requires a recipient or subrecipient's financial management system to provide for written procedures for determining the allowability of costs in accordance with Subpart E of 2 CFR Part 200 and the terms and conditions of the Federal award. 2 CFR Section 200.318(a) requires a recipient or subrecipient to maintain and use documented procedures for procurement transactions under a Federal award. The procedures must conform to applicable Federal, State, and local laws and regulations and the standards identified in 2 CFR Sections 200.317 through 200.327. Cause The Organization had not established and implemented formal written policies and procedures to govern Federal award expenditures and procurement activities. Effect The absence of written allowable cost and procurement procedures increases the risk that Federal funds may be used for costs that are not allowable under the terms and conditions of the Federal award or that procurement transactions may not comply with applicable Federal requirements. Recommendation We recommend that the Organization establish, document, and implement written procedures for determining the allowability of costs charged to Federal awards. We also recommend that the Organization establish and implement documented procurement procedures addressing, at a minimum, procurement methods, competition requirements, contractor selection and evaluation, cost and price analysis, contractor responsibility, conflicts of interest, suspension and debarment, applicable contract provisions, procurement records, and other requirements applicable to Federal awards. Views of Responsible Officials In 2026, written procedures governing the allowability of costs charged to Federal awards and procurement activities involving Federal funds were developed, documented, and implemented. Responsibility for implementing and maintaining these procedures has been assigned to the Finance Department. The procedures address applicable Federal requirements for determining allowable costs and procurement activities and will be reviewed periodically and updated as necessary to maintain compliance with applicable Federal requirements.
Department of Energy and Passed through Nebraska Department of Environment and Energy Federal Financial Assistance Listing 81.254, 2025-150224869 Grid Infrastructure Deployment and Resilience Procurement, Suspension & Debarment Material Weakness in Internal Control Over Compliance and Material Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.318 maintains that recipients must have and use documented procurement policies and must conform procurement standards in sections 200.317 through 200.327. 2 CFR 200 Appendix II requires certain provisions be included in contracts if criteria are applicable. Additionally, 2 CFR 200.214 requires recipients to restrict the subawards and contract with certain parties that are debarred, suspended, or excluded from ineligible participation in Federal assistance programs or activities. Condition: Testing of expenditures under the federal program identified opportunities to strengthen the District’s procurement and vendor compliance documentation practices. Specifically: -The District has not formalized and adopted a written procurement policy. - In two instances involving covered transactions exceeding $25,000, documentation was not retained to demonstrate that a verification was performed to confirm the vendor was not suspended or debarred from participation in federally funded programs. - In two instances, supporting documentation was not maintained to demonstrate the procurement method utilized and the basis for vendor selection. Cause: Covered transactions were not evaluated compared to Uniform Guidance as it relates to procurement methods and suspension and debarment. Effect: Ineffective controls over this area of compliance could result in a reasonable possibility the District would be noncompliant with the compliance requirements outlined above. Additionally, the District may enter into a covered transaction with a vendor that is suspended or debarred. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 2 out of 5 vendors were selected for testing. Repeat Finding from Prior Year: No Recommendation: We recommend the District implement a procurement policy that complies with Uniform Guidance. In addition, we suggest that management implement procedures and control processes related to the review of covered transactions to ensure the procurement methods are being followed and any contracts include the required Uniform Guidance provisions. Also, management should ensure vendors are not suspended or debarred from doing business with the federal government prior to entering into work with the vendor. Views of Responsible Officials: Management agrees with the finding.
FINDING 2025-003 Information on the federal program: Subject: Drinking Water State Revolving Fund – Internal Controls Federal Agency: Environmental Protection Agency Federal Program: Drinking Water State Revolving Fund (DWSRF) Assistance Listing Number: 66.468 Federal Award Numbers and Years (or Other Identifying Numbers): 2025 Pass-Through Entity: Indiana Financing Authority Compliance Requirement: Procurement Audit Finding: Material Weakness Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: a. Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) " 2 CFR 200.318(a) states: "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." 2 CFR 200.320 states in part: "The non-Federal Entity must use one of the following methods of procurement. . . . b. Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources " Condition: An effective internal control system was not in place at the Town to ensure compliance with requirements related to the Drinking Water State Revolving Fund and Procurement compliance requirements as part of the small purchases procurement threshold. Cause: The Town was not aware that procurement policies/practices were needed for professional services, such as hiring a project engineer. Effect: The failure to obtain multiple bids placed the Town at risk of noncompliance with the grant agreement and the procurement compliance requirements. Questioned Costs: There were no questioned costs identified. Context: One contract was subject to small purchase procurement testing for calendar year 2025. The Town disbursed $147,963 to DLZ, Inc. during 2025 for engineering services related to the new water treatment plant. Based on our testing, the Town did not obtain quotes or otherwise solicit proposals from other qualified engineering firms prior to procuring these services. Identification as a repeat finding, if applicable: No. Not a repeat finding Recommendation: We recommend the Town establish and implement procedures to ensure purchases subject to small purchase procurement requirements are made in accordance with applicable procurement policies and regulations. Such procedures should include obtaining and documenting quotes for an adequate number of qualified sources prior to selecting a vendor. The Town should also retain documentation supporting the procurement process, including quotes received, vendor selection, and the basis for the award. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2025-004 Information on the federal program: Subject: Drinking Water State Revolving Fund – Internal Controls Federal Agency: Environmental Protection Agency Federal Program: Drinking Water State Revolving Fund (DWSRF) Assistance Listing Number: 66.468 Federal Award Numbers and Years (or Other Identifying Numbers): 2025 Pass-Through Entity: Indiana Financing Authority Compliance Requirement: Procurement Audit Finding: Material Weakness Criteria: 2 CFR 200.303 states in part: "The non-Federal entity must: a. Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) " 2 CFR 200.318(a) states: "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." 2 CFR 200.320 states in part: "The non-Federal Entity must use one of the following methods of procurement. . . . b. Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources " Condition: An effective internal control system was not in place at the Town to ensure compliance with requirements related to the Drinking Water State Revolving Fund and Procurement compliance requirements as part of the Build America Buy America (BABA) requirement. Cause: The Town’s procurement review process was not designed or implemented to ensure that all applicable BABA requirements were incorporated into contracts subject to BABA. Specifically, the review process focused on the American Iron and Steel requirements and did not adequately consider the additional domestic preference requirements applicable to manufactured products and construction materials. As a result, the respective contracts did not include provisions addressing all applicable BABA requirements. Effect: The failure to include the BABA requirements within the respective contracts placed the Town at risk of noncompliance with the grant agreement and the procurement compliance requirements. Questioned Costs: There were no questioned costs identified. Context: Crowe sampled two contracts that were subject to the procurement compliance requirements. Only one of the two contracts were subject to the Build America Buy America (BABA) requirements. Crowe noted that in that contract, management included contractual provisions addressing the American Iron and Steel requirements; however, the contract did not include provisions addressing the manufactured products and construction materials requirements applicable under BABA. As a result, the procurement control did not operate effectively to ensure that all applicable BABA requirements were incorporated into the respective contracts. Additionally, management was unable to provide sufficient supporting documentation demonstrating that construction materials used in the project were produced in the United States in accordance with applicable BABA requirements. Further, the documentation provided did not allow for a determination of the portion of total project costs attributable to construction materials as compared to iron and steel. Accordingly, Crowe was unable to determine whether the project complied with the applicable BABA requirements, resulting in a material weakness finding. Identification as a repeat finding, if applicable: No. Not a repeat finding Recommendation: We recommend the Town strengthen its procurement and contract review procedures to ensure that all applicable Build America, Buy America Act (BABA) requirements are identified and incorporated into contracts prior to execution. Such procedures should include consideration of the domestic preference requirements applicable to iron and steel, manufactured products, and construction materials. Management should also establish procedures to obtain and retain sufficient supporting documentation demonstrating compliance with applicable BABA requirements, including documentation necessary to substantiate that covered materials and products were produced in the United States. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2025-003 Subject: Drinking Water State Revolving Fund – Procurement Federal Agency: Environmental Protection Agency Federal Program: Drinking Water State Revolving Fund Assistance Listings Number: 66.468 Federal Award Number and Year (or Other Identifying Number): DW24312502 Pass-Through Entity: Indiana Finance Authority Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The City had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance for the acquisition of property and services. The City expended federal funds to pay five separate vendors to provide goods and services for the duration of the City's Lead Service Line Replacement project. One vendor was identified with contract amount or aggregated total of expenditures that exceeded the simplified acquisition threshold of $150,000. The vendor was tested, and the City did not have documented procurement procedures or polices used to procure engineering and design services. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. INDIANA STATE BOARD OF ACCOUNTS 17 CITY OF ROCHESTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases– (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; INDIANA STATE BOARD OF ACCOUNTS 18 CITY OF ROCHESTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or costreimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and (iv) The non-Federal entity may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort." Cause The City did not develop effective internal controls to ensure the appropriate procedures were followed when procuring with federal funding and were not aware of the need to follow federal guidelines for procurement expenditures associated with the SRF awards. INDIANA STATE BOARD OF ACCOUNTS 19 CITY OF ROCHESTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, proper procurement procedures were not adhered to for all vendors. Without following the required methods for procurement, the City could be overpaying for services. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funds to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the City's management establish a proper system of internal controls to ensure expenditures made from federal awards use the appropriate procurement method and retain the documentation to support the procurement methods used in order to ensure compliance with the grant agreement and the Procurement compliance requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. INDIANA STATE BOARD OF ACCOUNTS 20
Assistance Listing Number: 93.193 Name of Federal Program: Urban Indian Health Services; COVID-19 Urban Indian Health Services Name of Federal Agency: Department of Health and Human Services Award Period: January 1, 2025 – December 31, 2025 Criteria or Specific Requirement: 2 CFR section 200.318(i) requires a non-federal entity to maintain sufficient records to detail the history of procurement including, but 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. Condition: Procurements charged to the federal program were not performed in accordance with the procurement standards of the Uniform Guidance. Specifically, the Council did not maintain sufficient documentation to demonstrate that applicable procurement requirements were followed, including evidence of the procurement method used, competition obtained, cost or price analysis when required, and basis for contractor selection. Cause: The Council lacked written policies and procedures to ensure procurements charged to federal awards were performed, documented, reviewed, and approved in accordance with the Uniform Guidance. Procurement policies and procedures have not been designed and implemented that adhere to Uniform Guidance requirements. Effect or Potential Effect: Without sufficient records, the organization cannot demonstrate compliance with Uniform Guidance procurement requirements. This increases the risk of unallowable or unreasonable costs being charged to federal awards and may result in questioned costs or funding agency disallowances. Questioned Costs: $690,921 Context: All general disbursements were considered as a population. Repeat Finding: Yes, thsi is a repeat of Finding 2024-004. Recommendation: Management should implement procedures to ensure that complete procurement documentation is maintained in accordance with 2 CFR §200.318(i). This should include standardized procurement checklists, training for staff involved in purchasing, and periodic internal reviews to confirm that procurement files contain all required documentation. Views of Responsible Officials: Management agrees with the finding and will implement procurement procedures.
2025 002 Reporting and Procurement U.S. Department of the Treasury: Passed through State of New Jersey Department of Community Affairs: COVID 19 Coronavirus State and Local Fiscal Recovery Funds (ALN 21.027) Contract Number and Years: G2022 09 (03/02/2021 – 12/31/2026) Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample Repeat Finding: Yes (2024 001) Finding Type: Material Weakness, Material Noncompliance Criteria Reporting Per 2 CFR 200.502, the determination of when a Federal award is expended must be based on when the activity related to the Federal award occurs. Generally, the activity pertains to events that require the non Federal statutes, regulations and the terms and conditions of Federal awards, such as: expenditures/expense transactions associated with awards including grants. Further, the Uniform Guidance compliance supplement notes, each recipient must report program outlays and program income on a cash or accrual basis, as prescribed by the Federal awarding agency. In accordance with the grant agreement and the reporting requirements for the State of New Jersey Department of Community Affairs, direct grants and pass through funds are fulfilled utilizing an advanced payment method and tracking reports. The grantee shall submit quarterly financial reports, in a format to be provided by the Department, and including the number of government full time employees responding to COVID 19 as supported by this funding. The reports are prepared and submitted to allow for relevant and reliable information to be provided to the Federal government or State of New Jersey for tracking purposes. The reports are the source documents for the grantee to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the grantee’s financial statements in accordance with 2 CFR 200.502, Basis for determining Federal awards expended, for the SEFA. Procurement 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 200.327. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR Part 200. A non Federal entity must: 1. Meet the general procurement standards in 2 CFR section 200.318, which include oversight of contractors’ performance, maintaining written standards of conduct for employees involved in contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurements. 2. Conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR section 200.319. 3. Use the micro purchase and small purchase methods only for procurements that meet the applicable criteria under 2 CFR sections 200.320(a) (1) and (2). Under the micro purchase method, the aggregate dollar amount does not exceed $50,000 ($2,000 in the case of acquisition for construction subject to the Wage Rate Requirements (Davis Bacon Act)). Small purchase procedures are used for purchases that exceed the micro purchase amount but do not exceed the simplified acquisition threshold ($250,000). Micro purchases may be awarded without soliciting competitive quotations if the non Federal entity considers the price to be reasonable (2 CFR 200.320(a)(1)(ii)). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR 200.320(a)(2)(i)). In accordance with the grant agreement and the reporting requirements for the State of New Jersey Department of Community Affairs, recipients may use award funds to enter into contracts to procure goods and services necessary to implement one or more of the eligible purposes outlined in sections 602(c) and 603(c) of the Act and Treasury’s Interim Final Rule and Final Rule. As such, recipients are expected to have procurement policies and procedures in place that comply with the procurement standards outlined in the Uniform Guidance. Under the program, St. Joseph’s Health, Inc. must follow the procurement standards in 2 CFR sections 200.318 through 200.327, including ensuring that the procurement method used for the contracts are appropriate based on the dollar amount and conditions specified in 2 CFR section 200.320. Internal Control 2 CFR 200.303 requires non Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Condition and Context Reporting On a quarterly basis, St. Joseph’s Health, Inc. (the System) prepares and reports to New Jersey Department of Community Affairs (the Department) the program expenditures for Federal funding amounts on the tracking report of expenditures, which are then used to prepare the annual SEFA in conjunction with the general ledger detail at the end of the fiscal year. While expenditures per the SEFA as prepared by the System were accurate and the quarterly reporting was accepted by the State, the System’s expenditures per the report of expenditures continue to be based upon purchase order amounts, which include expenditures that were incurred subsequent to year end. Procurement Further, the System engaged multiple vendors for several projects under the G2022 09 grant that were above the $50K micro purchase threshold, but below the simplified acquisition threshold. However, the System did not obtain multiple quotes from different vendors to encourage fair competition in the market. The System’s policies and procedures to ensure compliance with the above compliance requirements did not include certain internal controls that were designed properly and operating effectively to ensure that the System properly reported costs on the report of expenditures or obtained the necessary quotes from potential bidders for procurements over the micro purchase threshold. Cause Management did not properly design adequate review procedures to ensure that expenditures reported on financial reports to the Department were reconciled to the System’s accounting records and reflected expenditures incurred. Consequently, purchase order commitments were reported in lieu of incurred expenditures, resulting in a variance of approximately $1.9 million between amounts reported on financial reports to the Department and amounts reported on the SEFA. We noted, however, that this variance did not represent any unallowable costs. Additionally, Management did not retain or obtain the required documentation indicating quotes from multiple vendors were obtained for the ongoing construction projects under the grant. Effect The System had a material variance in the amount of expenditures reported on financial reports to the Department as compared to the SEFA and did not obtain multiple quotations from vendors when making selections for various projects ongoing under the Federal program. Questioned Costs None Recommendation Reporting We recommend that the System strengthen its processes and internal controls to ensure that only allowable and incurred expenditures and not purchase order amounts, are reported on the financial reports submitted to the Department in the applicable period in which they were incurred. Procurement We recommend that the System strengthen its processes and internal controls to ensure that all procurement related transactions are supported by the appropriate bidding documentation as required by the Uniform Guidance for each respective bidding threshold. View of Responsible Official Management agrees with the auditor’s finding and will strengthen its processes and internal controls to ensure the report of expenditures provided to the Department has a reconciliation of the amount of expenditures incurred in the period compared to the purchase order balances and all procurement transactions contain the required bidding documentation for each bidding threshold in accordance with the Uniform Guidance.
2025-004 Procurement Prior Year Finding Number: N/A Year of Finding Origination: 2025 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of Justice Program: 16.710 Public Safety Partnership and Community Policing Grants Award Number and Year: 15JCOPS-24-GG-02198-TECP; 2025 Pass-Through Agency: N/A - Direct Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 2 U.S. Code of Federal Regulations § 200.318(i) states that the County 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. Additionally, the County must follow further federal guidance over full and open competition as provided in Title 2 U.S. Code of Federal Regulations § 200.319 and perform a cost or price analysis as provided in Title 2 U.S. Code of Federal Regulations § 200.324. Condition: For one contract over the simplified acquisition threshold tested, no documentation was maintained detailing the history of the procurement demonstrating full and open competition, or that a cost or price analysis was performed. Questioned Costs: $273,011; known questioned costs were calculated as the amount of the contract. Context: The threshold used for the procurement testing was based on the County's policy for simplified acquisition threshold which is over $175,000. The population consisted of two contracts over the simplified acquisition threshold; both contracts were tested. Effect: Documentation detailing the procurement was not maintained and therefore it cannot be determined whether the County provided full and open competition or performed a cost or price analysis. Cause: The County relied on a sole source contract established within the County between a vendor and the Ramsey/Washington Recycling & Energy Board. Ramsey County staff who purchased the generators believed that the contract used was competitively bid. Recommendation: We recommend the County maintain documentation on the history of a procurement, provide for full and open competition, and perform a cost or price analysis to support compliance with Title 2 U.S. Code of Federal Regulations §§ 200.318, 200.319, and 200.324. View of Responsible Official: Concur
Finding 2025-001: Procurement – Significant Deficiency Assistance Listing Number: 12.632 Criteria: 2 CFR Section 200.318 requires that the non-federal entity must have and use documented procurement procedures, consistent with state, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a federal award or subaward. The non-federal entity’s documented procurement procedures must conform to the procurement standard identified in §§ 200.317 through 200.327 and must be adhered to. Condition: During testing of the Institute’s controls over procurement and compliance with procurement requirements, we identified instances where the Institute did not have all the needed documentation around the procurement process. Cause: The Institute did not have formal written procurement policies and procedures during the year to ensure compliance with applicable Federal procurement requirements. Effect: The Institute was not fully compliant with the procurement requirements of the Uniform Guidance. Questioned costs: None Repeat Finding: No. Recommendation: We recommend the Institute review its current processes and controls over procurement to ensure all required documentation is retained and available and implement a formal written procurement policy. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.
Finding 2025-003: Material Weakness - Procurement, Suspension and Debarment Federal Program: Water and Waste Disposal Systems for Rural Communities Federal Agency: U.S. Department of Agriculture Assistance Listing Number: 10.760 Repeat of Prior Year Finding 2024-003 Criteria: For federal awards after January 1, 2018, guidance provided in 2 CFR part 200.318 requires non-federal entities to establish and follow their own documented procurement procedures that conform to applicable federal law and standards. 2 CFR part 200.320 includes different allowable methods of procurement. Condition/Context: During testing for this program, one of two vendors tested did not go through the appropriate procurement process. The vendor was directly awarded the project. The sample was not a statistically valid sample. Cause: The City has not historically bid out their engineering services and has used the same vendor for all projects. Effect: The City could potentially not have selected an appropriate vendor for the project. Questioned Costs: None noted. Recommendation: The City should ensure contracts are following the procurement process for selection of vendors for federally funded projects. Program personnel should become familiar with the procurement, suspension and debarment rules for federal programs and implement process changes for future projects and retain documentation of such verifications. Views of Responsible Officials: The City will be reviewing its procurement policy to define clearer expectations for the administrative staff to follow.
Noncompliance with Procurement Requirements and Material Weakness in Internal Control over Procurement and Suspension and Debarment Assistance Listing Number: 14.251 Name of Federal Program or Cluster: Economic Development Initiative, Community Project Funding, and Miscellaneous Grants Name of Federal Agency: Department of Housing and Urban Development Name of Pass-Through Entities: N/A Procurement and Suspension and Debarment 2 CFR§200.318(i) requires the recipient or subrecipient must maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price. 2 CFR§200.303 requires the Organization to establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). WRTP entered into a contract with a vendor greater than the simplified acquisition threshold to perform services under the federal award. WRTP was unable to provide records sufficient to detail the history of the procurement transaction. WRTP had turnover during the year with the positions that assisted with the procurement transactions. WRTP was unable to locate the records requested with their departures. Failure to keep adequate procurement records limits the ability to determine that procurement complied with applicable Uniform Guidance procurement standards or whether the procurement provided the required degree of competition. We recommend that WRTP implement procedures to ensure that adequate documentation is maintained for all procurements subject to the Uniform Guidance. Procurement files should document the procurement method used, vendors solicited, bids or quotations received, the basis for vendor selection or rejection, and the basis for determining contract price is reasonable. No Management concurs with the finding and recognizes the importance of maintaining consistent documentation supporting compliance with federal procurement, suspension, and debarment requirements. While WRTP|BIG STEP has procedures in place intended to ensure that it is in compliance with procurement requirements for federally funded activities, management acknowledges that documentation supporting those procedures was not maintained in a manner sufficient to satisfy audit requirements. During 2026, Management will establish standardized compliance checklists and procedures to ensure procurement requirements are being met. The planned hiring of a Finance Director will further strengthen oversight and accountability related to federal grant compliance and documentation requirements. The Finance Director will be responsible for overseeing grant financial management, federal and state grant compliance, implementation of internal controls, maintenance of supporting grant documentation, development and monitoring of compliance procedures, audit coordination, and ongoing verification that required documentation is maintained in accordance with federal regulations and Uniform Guidance requirements. Management believes these enhancements will strengthen internal controls over federal grant compliance and ensure adequate support is maintained for future audits.
2025-002 Department of the Treasury, Passed through the State of Michigan Federal Financial Assistance Listing 21.029, CPFFN0190, 2025 COVID-19 – Coronavirus Capital Projects Fund Procurement, Suspension, and Debarment Material Weakness in Internal Control Over Compliance Criteria – Uniform Guidance and 2 CFR sections 200.318 through 200.327 set forth the procurement standards non-federal entities other than states must follow when operating federal programs and the procurement procedures required. Condition – In our testing of procurement, suspension, and debarment it was identified that the Cooperative’s written policy did not address the requirements of 2 CFR sections 200.318 through 200.327. Cause – Lack of oversight, awareness, or understanding of all of the specific requirements under the Uniform Guidance and applicable CFR sections, and controls were not adequately designed to ensure compliance with all of these requirements. Effect – A lack of compliant policies increases the overall risk of non-compliance. Questioned Costs – None reported. Context/Sampling – Overall procurement policy. Repeat Finding from Prior Years – Yes. Recommendation – We recommend that management establish a written policy that is in compliance with all of the procurement requirements for federal programs as identified in 2 CFR sections 200.318 through 200.327 and maintain adequate supporting documentation and records to document history and methods of procurement and the procedures performed to comply with these CFR sections. Views of Responsible Officials – There is no disagreement with the audit finding and the Cooperative is in the process of updating the policy to include all required Uniform Guidance components for the year ended December 31, 2026.
2 CFR 200 outlines the following policies required for a County spending Coronavirus State and Local Fiscal Recovery Funds: • 2 CFR 200.302(b)(7) for determining the allowability of costs in accordance with Subpart E-Cost Principles; • 2 CFR 200.430 for allowability of compensation costs; • 2 CFR 200.318(c)(2) for organizational conflicts of interest; • 2 CFR 200.320(b)(2) for selection and awarding of contracts for competitive proposals; and • 2 CFR 200.319(d) for minimum evaluation criteria for bids and proposals During testing we noted that the County Commissioner’s department did not have sufficient written policies addressing the above requirements. Failure to adopt and implement policies could lead to noncompliance with federal requirements. We recommend the County approve and implement the above policies to ensure compliance with federal requirements.
Department of Energy, Federal Financial Assistance Listing 81.254, DE-GD0000886, 2025 Grid Infrastructure Deployment and Resilience Procurement, Suspension & Debarment Material Weakness in Internal Control over Compliance and Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.318 maintains that recipients must have and use documented procurement policies and must conform procurement standards to sections 200.317 through 200.327. 2 CFR 200 Appendix II requires certain provisions to be included in contracts if criteria are applicable. Additionally, 2 CFR 200.214 requires recipients to restrict the subawards and contract with certain parties that are debarred, suspended, or excluded from ineligible participation in Federal assistance programs or activities. Condition: Testing of procurement activities and related controls identified the following exceptions: • The Cooperative's documented procurement policy did not include several elements required by Uniform Guidance. • One contract tested did not contain all applicable Uniform Guidance contract provisions. • In one instance involving a contract exceeding $25,000, the Cooperative did not document a review to verify that the vendor was not suspended or debarred from participation in federal programs. Cause: The Cooperative had not established procedures to periodically evaluate its procurement policy and procurement documentation for compliance with Uniform Guidance requirements, including required contract provisions, documentation of procurement decisions, and suspension and debarment verification procedures. Effect: Failure to maintain effective controls over procurement activities increases the risk of noncompliance with federal procurement requirements. As a result, the Cooperative may enter into contracts that do not contain required federal provisions, fail to adequately document procurement decisions, or engage in covered transactions with vendors that are suspended or debarred from participation in federally funded programs. Questioned Costs: None reported. Context/Sampling: Sampling was not used. Repeat Finding from Prior Year: No Recommendation: We recommend that the Cooperative update its procurement policy to incorporate all applicable Uniform Guidance requirements. Management should also establish and implement procedures to: • Verify and document suspension and debarment reviews for all applicable covered transactions. • Review contracts prior to execution to ensure all required Uniform Guidance contract provisions are included. • Maintain documentation evidencing compliance with federal procurement requirements. Views of Responsible Officials: Management agrees with the finding.
2025-004 - Absence of Written Standards of Conduct – Significant Deficiency Federal Agency: Environmental Protection Agency Federal Program: Climate Pollution Reduction Grants Assistance Listing Number: 66.046 Pass-through Entity: City of New Orleans Award Identification Number: K25-486, BRASS No. 7241 Criteria 2 CFR 200.318(c)(1) requires a non-Federal entity to maintain written standards of conduct covering conflicts of interest and governing the actions of employees engaged in the selection, award, and administration of contracts. Condition The Organization had not adopted written standards of conduct addressing conflicts of interest and employee conduct requirements applicable to federal awards. Cause Management had not formally developed and adopted standards of conduct meeting Uniform Guidance requirements. Effect Without written standards of conduct, the Organization may be unable to demonstrate compliance with federal conflict-of-interest and ethical conduct requirements. Recommendation Management should adopt written standards of conduct that address conflicts of interest and other ethical requirements applicable to federal awards and communicate those standards to employees, officers, and governing board members. Views of Responsible Official and Planned Corrective Actions Management agrees with the finding. The Organization will develop and adopt written standards of conduct addressing conflicts of interest and other ethical requirements applicable to federal awards and will communicate those standards to employees and Board members. Questioned Costs None.
Finding 2025-001 –Procurement , Suspension & Debarment Material Weakness in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.318 maintains that recipients must have and use documented procurement policies and must conform to the procurement standards in sections 200.317 through 200.327. These standards generally require recipients to maintain records sufficient to detail the history of procurement, including the rationale for the procurement method, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition: Testing of the federal program identified the following: • The Organization failed to document price comparisons including the rationale or circumstances leading up to the selection of the non-competitive sole source procurement. The Organization did follow through with the suspension and debarment check of the contracted vendor. Cause: The Organization lacked adequate documentation of procurement decisions being reached during the initial project funding phase. Effect/Potential Effect: Ineffective controls over this area of compliance could result in a reasonable possibility the Organization would be noncompliant with the compliance requirements outlined above. Questioned Costs: None reported. Context / Sampling: A statistical sample of 1 out of 3 vendors selected for testing.
Criteria - Under 2 CFR § 200.318(a), a recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for the acquisition of property or services. The documented procurement procedures must be consistent with applicable state, local, and tribal laws and regulations and with the procurement standards identified in 2 CFR §§ 200.317 through 200.327. The Uniform Guidance procurement compliance requirement also contemplates that recipients establish and follow written procurement procedures that conform to applicable Federal statutes and the procurement requirements identified in 2 CFR Part 200.9. Condition - During our audit of the Clean Water State Revolving Fund program for the year ended December 31, 2025, we noted that the Authority had informal procurement practices in place for purchases charged to Federal awards; however, the Authority did not maintain formal written procurement procedures applicable to procurement transactions under a Federal award or subaward. Cause - Management indicated that the Authority historically relied on informal procurement practices and institutional knowledge of staff responsible for purchasing activities. The Authority had not developed and formally approved written procurement procedures specifically addressing the Uniform Guidance procurement standards applicable to Federal awards. Effect or Potential Effect - Without documented procurement procedures, there is an increased risk that procurement transactions under a Federal award or subaward may not be performed consistently or in accordance with applicable procurement requirements. The absence of written procedures also increases the risk that personnel responsible for procurement may not consistently apply required procurement methods, obtain appropriate competition, document contractor selection decisions, perform required suspension and debarment checks, or retain sufficient documentation to support compliance. Although no questioned costs were identified as a result of the procedures performed, the lack of documented procedures represents a deficiency in the design of internal control over compliance because informal practices and reliance on external engineer review alone do not provide formal, consistent internal guidance to ensure ongoing compliance with Federal procurement requirements. Questioned Costs - None identified Recommendation - We recommend that management develop, formally approve, and implement written procurement procedures that comply with the Uniform Guidance procurement standards in 2 CFR §§ 200.317 through 200.327. At a minimum, the written procedures should address: • Procurement methods and applicable dollar thresholds; • Requirements for full and open competition; • Required approvals before procurement transactions are initiated or awarded; • Documentation requirements supporting the history of each procurement transaction;• Standards of conduct and conflict-of-interest requirements for employees involved in procurement decisions; • Procedures for verifying suspension and debarment status, when applicable; • Requirements for cost or price analysis, when applicable; • Contractor selection and contract administration procedures; • Record retention requirements; and • Monitoring procedures to ensure the written procurement procedures are consistently followed.
Condition: Although the College performs the necessary selection procedures and suspended or debarred verifications, the College's policies and procedures do not have a written internal control in place. Criteria: 2 CFR sections 200.318 outlines that non-Federal entities must maintain written procedures that align with federal standards, detail conflict-of-interest rules, and reflect applicable state or local laws. Cause: The College does not have a written procurement policy that contains the necessary provisions stated above. Effect: Failing to have the appropriate written controls in place may result in vendors not being selected properly or are suspended or debarred. Questioned costs: None. Recommendation: The College creates a procurement policy to specifically address the requirements of 2 CFR sections 200.318. Views of Responsible Officials: Management agrees with the finding and recommendation, see corrective action plan.
2025-002 Procurement, Suspension and Debarment - Compliance and Internal Control Finding – Material Weakness Federal Agency - U.S. Department of Treasury Federal Award Number - 21.027: Coronavirus State and Local Fiscal Recovery Funds Pass-Through Entity - Kansas Department for Aging and Disability Services Criteria Or Specific Requirement: In accordance with 2 CFR §200.318 through §200.327, non-federal entities are required to establish and maintain documented written procurement policies and procedures for purchases funded with federal awards. Additionally, pursuant to 2 CFR §180 and 2 CFR §200.214, non-federal entities are prohibited from contracting with or making covered transactions with parties that are suspended or debarred from participating in federal programs. The Uniform Guidance requires entities to verify that vendors are not suspended or debarred through SAM.gov or through other allowable methods and to maintain documentation supporting the verification. Condition: During testing of procurement transactions and vendor payments charged to federal programs, it was noted that the Organization did not perform or document suspension and debarment verification procedures prior to entering into covered transactions with vendors paid from federal awards. Additionally, the Organization was unable to provide evidence that competitive procurement methods, cost or price analyses, vendor selection procedures, or suspension and debarment reviews were consistently performed for federally funded purchases. Cause: Management has not established or implemented formal procurement policies and procedures designed to comply with Uniform Guidance procurement standards. In addition, management has not developed a process to perform and document suspension and debarment checks before executing contracts or making covered transactions funded by federal awards. As a result, internal controls over procurement and suspension and debarment compliance have not been designed, implemented, or monitored effectively. Effect: The lack of documented procurement procedures and suspension and debarment verification controls increases the risk that federal funds may be expended in a manner that does not comply with Uniform Guidance requirements. The Organization may inadvertently procure goods or services from suspended or debarred vendors, fail to obtain full and open competition, or otherwise incur expenditures that could be determined to be unallowable by federal awarding agencies. This deficiency could result in questioned costs, repayment of federal funds, increased monitoring by grantors, and damage to the Organization's reputation as a federal award recipient. For The Year Ended December 31, 2025 Questioned Costs: None. Context: A sample of procurement transactions and vendor disbursements charged to federal awards was tested. For all applicable transactions selected for testing, the Organization was unable to provide evidence of documented procurement procedures or suspension and debarment verification. No written procurement policy existed, and no evidence of SAM.gov searches or other allowable suspension and debarment verification methods was maintained. Identification As A Repeat Finding: No. Recommendation: We recommend that management develop, formally adopt, and implement written procurement policies and procedures that comply with the requirements of Uniform Guidance. The policies should address procurement methods, documentation standards, competition requirements, conflict-of-interest provisions, cost and price analysis requirements, and vendor selection procedures. In addition, management should establish controls requiring documented suspension and debarment verification through SAM.gov or other allowable methods before entering into covered transactions with vendors funded by federal awards. Evidence of all compliance procedures should be retained and reviewed by supervisory personnel. Views Of Responsible Officials: Management agrees with the findings and acknowledges that formal procurement and suspension and debarment procedures have not been established. Management intends to develop and implement written policies and procedures, provide staff training, and establish a vendor verification process designed to ensure compliance with Uniform Guidance procurement and suspension and debarment requirements.
2 CFR 200.318 requires that recipients and subrecipients must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. Management has a control in place to monitor vendors for suspension and debarment (“excluded”). The control is not designed to provide for review of vendors and personnel who are potentially excluded on a timely enough basis. In 2025, the System transitioned exclusion monitoring partners, systems, and supporting processes while also onboarding a new employee who was responsible for this work. Documentation gaps were discovered upon this employee’s departure in June 2026 and new procedures were implemented at that time. Lack of review could result in reimbursement of expenditures paid to a suspended or debarred vendor or person, which is not allowed under ALN 21.027.
2025-004 U.S. Department of the Treasury, Passed through the State of Michigan Federal Financial Assistance Listing 21.029, CV0019120, 2025 COVID-19 – Coronavirus Capital Projects Fund Procurement, Suspension, and Debarment Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria – Uniform Guidance and 2 CFR sections 200.318 through 200.327 set forth the procurement standards non-federal entities other than states must follow when operating federal programs and the procurement procedures required. Condition – In our testing of procurement, suspension, and debarment it was identified that the Cooperative’s written policy did not address the requirements of 2 CFR sections 200.318 through 200.327. In addition, the Cooperative did not follow procurement, suspension, and debarment procedures required under the Uniform Guidance prior to entering into contracts with vendors. Cause – Lack of oversight, awareness, or understanding of all of the specific requirements under the Uniform Guidance and applicable CFR sections, and controls were not adequately designed to ensure compliance with all of these requirements. Effect – A lack of compliant policies and procedures increases the overall risk of noncompliance. Questioned Costs – None reported. Context/Sampling – Two out of four procurement contracts were selected for testing. Repeat Finding from Prior Years – Yes. Recommendation – We recommend that management establish a written policy that is in compliance with all of the procurement requirements for federal programs as identified in 2 CFR sections 200.318 through 200.327 and maintain adequate supporting documentation and records to document history and methods of procurement, suspension, and debarment procedures performed to comply with these CFR sections. Views of Responsible Officials – There is no disagreement with the audit finding.
Finding 2025-002 U.S. Department of Health and Human Services ALN: 93.493 Congressional Directed Spending for Construction Projects ALN: 93.526 Grants for Capital Development in Health Centers I - Procurement and Suspension and Debarment Condition: During testing of procurement transactions subject to federal compliance requirements, we noted the Organization did not consistently follow its documented procurement policy. Specifically, for the seven transactions tested, management was unable to provide documentation supporting the procurement process performed, including evidence of competitive bids, vendor selection procedures, or other records demonstrating compliance with the procurement requirements outlined in its policy. Criteria: Per 2 CFR section 200.318(a), non-Federal entities must use and follow documented procurement procedures that are consistent with applicable Federal statutes, regulations, and the terms and conditions of Federal awards. Additionally, 2 CFR section 200.320 through 200.327 require entities to maintain documentation supporting the procurement method used, including the basis for contractor selection and evidence of required competition when applicable. The Organization's procurement policy requires the solicitation and retention of competitive bids for purchases exceeding established thresholds. Cause: Management did not consistently adhere to established procurement procedures and did not maintain adequate documentation to demonstrate that required competitive procurement activities were performed. In addition, controls over the retention of procurement documentation were not operating effectively to ensure compliance with federal procurement requirements and the Organization's procurement policy. Effect: Without adequate documentation of the procurement process and competitive bidding requirements, the Organization cannot demonstrate compliance with Uniform Guidance procurement requirements. As a result, federal funds may have been expended in a manner that does not ensure full and open competition or may be subject to questioned costs by federal awarding agencies. Recommendation: We recommend that management strengthen internal controls over procurement activities by (1) ensuring procurement procedures are consistently followed for all federally funded purchases; (2) retaining documentation supporting the procurement method utilized, including competitive bids, quotes received, bid evaluations, vendor selection decisions, and contract approvals; (3) implementing a review process to verify procurement documentation is complete and maintained before expenditures are approved; and (4) providing training to personnel responsible for purchasing activities regarding Uniform Guidance procurement requirements and the Organization's procurement policy. View of Responsible Officials: Management acknowledges the finding and agrees that documentation supporting compliance with procurement requirements was not consistently retained. For the seven disbursements selected for testing, management had established longstanding relationships with the vendors utilized and, in several instances, there were a limited number of vendors capable of providing the specialized equipment and services acquired for the project. Management indicated that procurement procedures were performed during the vendor selection process, including obtaining and evaluating quotes, discussing vendor alternatives, and visiting other healthcare organizations to assess the quality and suitability of certain products before making purchasing decisions. However, many of these activities occurred several years earlier, at the outset of the construction project, and supporting documentation was not maintained in accordance with the Organization's procurement policy and federal documentation requirements. Management agrees with the finding and will implement procedures to ensure procurement activities are conducted and documented in accordance with the Organization's procurement policy and Uniform Guidance requirements. Corrective actions will include establishing a centralized procurement file, providing additional training to personnel responsible for purchasing activities, and implementing supervisory review procedures to ensure that competitive procurement and documentation requirements are consistently met and appropriately retained.
United States Environmental Protection Agency Federal Assistance Listing #66.458 Capitalization Grants for Clean Water State Revolving Funds Procurement, Suspension, and Debarment Material Weakness in Internal Control Over Compliance Criteria - Uniform Guidance and 2 CFR sections 200.318 through 200.326 set forth the procurement standards non-federal entities other than states must follow when operating federal programs and the procurement procedures required. Condition - In our testing of procurement, suspension, and debarment it was identified that the City’s written policy did not address the requirements of 2 CFR sections 200.318 through 200.326. Cause - Lack of oversight, awareness, or understanding of all of the specific requirements under the Uniform Guidance and applicable CFR sections, and controls were not adequately designed to ensure compliance with all of these requirements. Effect - A lack of compliant policies increases the overall risk of non-compliance. Questioned Costs - None reported. Context – Sampling was not used. Repeat Finding from Prior Years - No Recommendation - We recommend that management establish a written policy that is in compliance with all of the procurement requirements for federal programs as identified in 2 CFR sections 200.318 through 200.326 and maintain adequate supporting documentation and records to document history and methods of procurement and the procedures performed to comply with these CFR sections. Views of Responsible Officials - There is no disagreement with the audit finding.
Corporation for National and Community Service Federal Financial Assistance Listing #94.012, 22BIICA001 10/1/2022 – 9/30/2025, 23BIACA001 10/1/2023 – 9/30/2026, 23BIFNY001 10/1/2023 – 9/30/2026 Americorps September 11th National Day of Service and Remembrance Grants Procurement, Suspension and Debarment Material Weakness in Internal Controls over Compliance and Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 2 CFR 200.318 through 200.327 which also requires documentation to be retained to detail the history of procurements. Condition: The Organization’s procurement policy is missing required provisions in accordance with 2 CFR 200.318. For each of the 3 vendors selected for testing there was no documentation retained to support the rationale for the method of procurement. Additionally, the Organization did not retain supporting documentation to substantiate whether consideration was taken whether the vendor was suspended or debarred from doing business with the federal government prior to entering the covered transaction for each of the 3 vendors selected for testing. Cause: There was a lapse in oversight of the internal control process ensuring documentation was retained supporting the Organization’s procurement, suspension and debarment process. Additionally, the Organization did not cross reference procurement policy with 2 CFR 200.318 through 200.327 ensuring minimum required provisions were included within. Effect: Without retaining documentation to support procurement, suspension and debarment rationale, demonstrating that the program complies with laws, regulations, and other compliance requirements is difficult. Questioned Costs: None reported based on assessment of comparative pricing readily available. Context/Sampling: A nonstatistical sample of 3 vendors out of 9 vendors were selected for testing. Repeat Finding from Prior Year: Yes, prior year finding 2024-003 Recommendation: We recommend management to review internal control procedures ensuring support is retained to substantiate procurement, suspension and debarment was considered prior to entering the transaction. We recommend management review 2 CFR 200.318 through 200.327 and revise the Organization’s procurement policy to include all minimum required provisions. Views of Responsible Officials: Management is in agreement.
Finding number: 2025-003 (Material Weakness in Internal Control over Compliance and Instance of Noncompliance) AL number: 21.027 AL title: Coronavirus State and Local Fiscal Recovery Funds (SLFRF) Federal award identification number and year: California Department of Housing and Community Development 21-HK-17231, 21-HK-17171, 21-HK-17192, 23-HK-18055, 23-HK-18064, 23-HK-18079, 23- HK-18085, 23-HK-18090, County of Los Angeles ARPA funds awarded in 2022. Name of federal agency: U.S. Department of the Treasury Name of pass-through entity: California Department of Housing and Community Development, and County of Los Angeles Repeat finding: Yes Criteria: Under 2 CFR §200.318-326, non-federal entities must adhere to procurement standards for purchases made with federal funds. Key requirements include: - Full and Open Competition: Procurement transactions must be conducted to ensure open competition and prevent practices that may unduly restrict competition (2 CFR §200.319(a)). - Documentation of Procurement History: Entities must maintain records that detail the procurement history, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price (2 CFR §200.318(i)). -Use of Non-Competitive Procurement: Non-competitive procurement is only allowed under limited circumstances, such as when the item is available from a single source, there is a public emergency, or after solicitation of multiple sources, competition is deemed inadequate (2 CFR §200.320(c)). Condition: During 2025, the organization incurred expenditures of approximately $8.90 million for the renovation of motels into permanent housing using federal funds under the SLFRF program. However: - While estimate documentation was available to support certain contracts and management obtained three bids for most of its new contracts under these awards, documentation demonstrating compliance with other federal procurement standards, including the contractor solicitation process, selection method, or the basis for the contract price, was largely unavailable. - The Mission did not document its suspension and debarment consideration for each new contractor. SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Cause: The organization did not establish or follow sufficient internal controls to ensure compliance with federal procurement requirements, including maintaining the required documentation for procurement activities. Possible effect: The lack of procurement documentation creates a significant risk that noncompliant practices occurred, such as non-competitive procurement or payments exceeding fair market value. Questioned cost: None Recommendation: Implement comprehensive procurement policies and procedures that comply with federal regulations under 2 CFR §200.318-326. Ensure all procurement transactions are documented, including evidence of competitive bidding or justification for non-competitive procurement under 2 CFR §200.320(c). Procurement documentation is required to include information on the solicitation process, considerations used by management in evaluating proposals, and the reasoning for management's final determinations. Each procurement process should be set up as a separate file, and include the suspension and debarment search results. Conduct staff training on procurement standards for federal awards, focusing on documentation, competition, and conflict of interest requirements. Incorporate review of the procurement process by the accounting team in advance of setting up new vendors. Perform periodic internal reviews to confirm compliance with procurement policies. SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Views of responsible officials: Management concurs with the recommendation and recognizes that procurement compliance requires both appropriate competition and sufficient contemporaneous documentation demonstrating how the procurement decision was made. The Mission will strengthen its procurement framework to ensure applicable procurement requirements are identified before purchases are initiated and that the procurement file demonstrates the method used, competition obtained, selection rationale, required approvals, conflicts review, price or cost considerations where applicable, and justification for exceptions. Management adopted a procurement policy July 2026 and plans to implement supporting procedures designed to comply with applicable federal, state, local, and award-specific requirements. By December 31, 2026, the Mission plans to issue detailed procedures and standardized procurement-file templates covering procurement method selection, applicable thresholds, independent cost or price analysis, full and open competition, solicitation and bid documentation, conflictof- interest disclosures, contractor selection or rejection, contract type, price basis, required approvals, and permitted noncompetitive procurement justifications. Vendor onboarding will require documented suspension and debarment verification for each applicable vendor and contractor before commitment of funds, with evidence retained in the procurement file. Staff with purchasing, program, grant, and accounts-payable responsibilities will complete role-based training, and completion records will be retained. Management plans to consult with California HCD regarding contractor-selection expectations for the Homekey program and incorporate applicable requirements into the policy, procedures, and contract summaries. The Chief Financial Officer or designee will conduct and document periodic sample-based compliance reviews, track exceptions to resolution, and report material or recurring issues to executive management. Management plans to complete an operating-effectiveness review of procurement transactions and address identified deficiencies before year-end.
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Economic Development Initiative, Community Project Funding, and Miscellaneous Grants Assistance Listing Number: 14.251 Pass-Through Agency: N/A Pass-Through Numbers: N/A Award Period: 8/13/2024 – 8/31/2032 Type of Finding: Material Weakness in Internal Control over Compliance. Condition: The Organization did not maintain a written procurement policy that incorporated the procurement standards required by Uniform Guidance during the fiscal year. As a result, procurement activities were not governed by a formally documented policy designed to ensure compliance with federal requirements. Criteria or specific requirement: 2 CFR §200.318 through §200.327 requires non-federal entities expending federal awards to maintain and follow documented procurement policies and procedures that comply with the procurement standards established under Uniform Guidance. Cause: Management had not established or updated procurement policies and procedures to address the specific requirements of Uniform Guidance. Effect: The absence of a compliant procurement policy increases the risk that procurements funded by federal awards may not be conducted in accordance with applicable federal requirements, including competition, documentation, and vendor selection standards. Repeat Finding: No Recommendation: We recommend that management develop, adopt, and implement a written procurement policy that complies with the requirements of 2 CFR §200.318 through §200.327 and ensure personnel involved in procurement activities are trained on the policy and applicable federal requirements. Views of responsible officials and planned corrective actions: There is no disagreement with the audit finding.
FINDING 2025-005 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY2021 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 21 FLOYD COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Procurement When the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a nonfederal entity, formal procurement methods are required. The SAT is typically set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold; and, therefore, the threshold for the SAT is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. Two vendors were identified that fell within the SAT, with total purchases of $1,401,188. A review of the procurement files revealed that the County did not solicit, receive, or retain sealed bids or competitive proposals for these contracts. While the project awards were documented within the Board of County Commissioners' meeting minutes, the formal competitive process, public advertisements, and underlying evaluation metrics were completely absent from the record. Suspension and Debarment Prior to entering into subawards and covered transactions with the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF), recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The County's procedure to verify the vendor was not suspended or debarred was not always implemented or effective. A population of four covered transactions totaling $1,816,421 met or exceeded the $25,000 threshold and was paid using the SLFRF allocations. All four covered transactions were selected for testing, and the County failed to provide documentation to support that it performed any of the mandatory verification procedures prior to entering into the agreements or issuing payments to the contractors. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 22 FLOYD COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance awards exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. . . . (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls over procurement and suspension and debarment was not implemented by the management of the County to ensure that goods and services were properly procured and that vendors to whom payment equaled or exceeded $25,000 were not suspended or debarred. The County was unable to provide documentation to demonstrate they had properly procured and verified that contractors were neither suspended nor debarred, or otherwise excluded or disqualified, from participating in federal assistance programs or activities. INDIANA STATE BOARD OF ACCOUNTS 23 FLOYD COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, property and services were not properly procured and vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Any program funds the County used to pay vendors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County establish a proper system of internal controls and develop procedures to ensure that property and services are properly procured and that contractors are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Department of Veteran Affairs FFAL #64.033, 20-SD-136-25, 10/1/2024 – 12/31/2025 FFAL #64.033, 20-SD-136-26, 10/1/2025 – 9/30/2026 VA Supportive Services for Veteran Families Program Procurement, Suspension & Debarment Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.318 maintains that recipients must have and use documented procurement policies and must conform with procurement standards in sections 200.317 through 200.327. Additionally, 2 CFR 200.214 requires recipients to restrict making contracts with certain parties that are debarred, suspended, or excluded from participating in Federal awards. Condition: Testing of the federal program identified the following: a. The Organization’s formally documented procurement policy is missing one required element as it relates to domestic preferences (2 CFR 200.322). b. Two lease agreements were entered into where the Organization did not follow the procurement process as detailed in the procurement policy. The lease agreements with the vendors were also missing a required contract provision in accordance with Uniform Guidance and there was no review performed by the Organization to ensure the vendors were not suspended or debarred as the lease agreements with the vendors were over $25,000. Cause: Individuals with key roles over compliance reporting were not involved in the Organization’s compliance reporting activities for the full year. Contract provisions were not evaluated compared to Uniform Guidance contract requirements. Lease agreements entered into were not evaluated in accordance with Uniform Guidance as it relates to suspension and debarment. Effect: Ineffective controls over this area of compliance could result in a reasonable possibility the Organization would be noncompliant with the compliance requirements outlined above. Additionally, the Organization may enter into a covered transaction with a vendor that is suspended or debarred. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 2 out of 4 vendors were selected for testing. Repeat Finding from Prior Year: No Recommendation: We recommend the Organization update their procurement policy to ensure it includes the required elements as it relates to domestic preference. In addition, we suggest that management implement procedures and control processes related to the review of contracts to ensure the procurement methods are being followed, documentation is being retained, and that the contracts include the required Uniform Guidance provisions. Also, management should ensure vendors are not suspended or debarred from doing business with the federal government. Views of Responsible Officials: Management agrees with the finding.
2025-004 Procurement Policy Criteria: Under 2 CFR §200.318 through 200.327, General Procurement Standards, a non-federal entity must use and document procurement procedures for the acquisition of property or services required under a federal award or subaward. Additionally, the non-federal entity must include policies and procedures related to competition, informal and formal procurement methods, and noncompetitive procurement known as sole source. 2 CFR §200.214, Suspension and Debarment, requires entities to verify that vendors are not suspended or debarred from participating in federal funds. Condition: There is no evidence of a documented formal procurement policy with regards to federal grant awards and expenditures; no documented support that a competitive price analysis for vendors and organizations funded with federal grant funds were performed; and no evidence that suspension and debarment verifications were performed for certain vendors and organizations, as required by the general procurement standards of the Uniform Guidance. Context: We tested all procurement transactions totaling $863,741. All transactions tested lacked documentation to demonstrate compliance with the applicable procurement requirements of the Uniform Guidance. Cause: Management had not established and formally adopted procurement policies and procedures consistent with Uniform Guidance requirements during the audit year. Effect: Without documented procurement policies, there is an increased risk that procurements may not be conducted in accordance with Federal requirements, resulting in potential noncompliance with the Uniform Guidance. Charges relating to vendor services and sub-awards that were charged to the federal award may not be in accordance with the specific compliance requirements of the Uniform Guidance. Recommendation: We recommend that management develop, formally adopt, and implement written procurement policies and procedures that comply with the procurement standards in 2 CFR §200.317 through 200.327 and provide training to personnel responsible for purchasing. We also recommend the Organization to adopt policies that incorporate the requirements of 2 CFR §200.214 regarding suspension and debarment regulations. We also recommend that a review of all existing vendor contract filed be performed to ensure that the documentation, as required by the Uniform Guidance, is maintained in the files.Views of Responsible Officials and Planned Corrective Actions: The Organization is in the process of developing a corrective action plan and provide personnel training.
Criteria: Uniform Guidance and 2 CFR sections 200.318 through 200.326 set forth the procurement standards non-federal entities other than states must follow when operating federal programs and the procurement procedures required. Condition Found: In our testing of procurement, suspension, and debarment it was identified that the City did not have a written policy on procurement that satisfied the requirements of 2 CFR sections 200.318 through 200.326. Cause/Effect: Lack of oversight, awareness, or understanding of all of the specific requirements under the Uniform Guidance and applicable CFR sections and controls were not adequately designed to ensure compliance with all of these requirements. A lack of documented policies increase the risk that employees are not aware of the specific requirements with contracting and awarding contracts to lower tier entities.
2025-005 — Procurement – Material Weakness in Internal Control Over Compliance and Noncompliance (Repeat of Finding 2024-005, 2023-006 and 2022-004) Federal program information: Funding agencies: U.S. Department of Interior and U.S. Department of Education Titles: Assistance to Tribally Controlled Community Colleges and Higher Education Institutional Aid ALN Number: 15.027 and 84.031 Award years: Various Criteria: According to 2 CFR Section 200.318i, the recipient or subrecipient must maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price. According to 2 CFR Section 0200.319a, all procurement transactions under the federal award must be conducted in a manner that provides full and open competition. Condition: The College did not maintain records sufficient to detail the history of each procurement transaction for the procurement contracts tested. Cause: The College did not have sufficient procedures in place to ensure that procurement records are maintained. Effect: The College is not in compliance with procurement requirements. Questioned Costs: None. Context: Procurement documents were not retained for transactions tested. Recommendation: Formally document and enforce policies and procedures that will promote adequate monitoring of the procurement and bidding process. Ensure that any contract over the College’s threshold ($150,000) follows the sealed bid requirements listed in 2 CFR Section 200.320b1. Management’s Response: The College concurs with the finding. Management will follow procedures as outlined in its policies and procedures to ensure all stages of the process adequately conducted and documented.
Finding Number: 2025-001 Repeat Finding: Yes; 2024-002, 2023-002, 2022-002, 2021-002 Federal Program Name/Assistance Listing Title: Federal Transit Cluster Federal Assistance Listing Number: 20.507, 20.526 Federal Agency: U.S. Department of Transportation Federal Award Number: 5339-R-2024-GCTD-00025 Federal Pass-Through Agency: Texas Department of Transportation State Program Name: Urban State Program State Agency: Texas Department of Transportation Type of Finding: Noncompliance Material to Financial Statements and Federal/State Major Programs, Material Weakness in Internal Control Over Compliance Compliance Requirement: Procurement, Suspension and Debarment Questioned Costs: $368,203 Criteria Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR §§200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR part 200. Condition The District was unable to provide evidence that the federal guidelines were followed for purchases exceeding the small purchases and simplified acquisition threshold. Cause The District’s internal controls over procurement of goods and services were not adequate. Effect The District was not in compliance with Federal regulations and guidelines related to procurement of goods and services. Context During our testing of procurement compliance, we selected all vendors with expenditures exceeding the federal Simplified Acquisition Threshold for the fiscal year. The population consisted of one (1) vendor with total FY 2025 expenditures of $368,203. The District was unable to provide any documentation supporting the procurement method, competitive solicitation, or suspension and debarment verification for this vendor. Because the District could not produce a procurement file or alternative evidence demonstrating compliance with 2 CFR 200.318–200.326, the entire amount paid to this vendor was considered questioned costs. Recommendation The District should maintain documentation of procurement actions in the vendor file including sealed procurements issued and quotes. Review of procurement compliance should occur before the District’s funds are obligated. Views of Responsible Officials The District agrees with the finding and has taken steps to address this issue as detailed in the Corrective Action Plan.
Finding 2025-003: Conflict of Interest Attestations Federal Agency(ies): United States Agency for International Development (USAID) Federal Program(s): Adv HIV & AIDS Epidemic Control (AHEC) Activity Assistance Listing Number(s): N/A – Federal Contract Pass-through Entity (if applicable): N/A Award Identification Number and Year: 72066821C00001 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Under 2 CFR §200.112, non-Federal entities must disclose in writing any potential conflict of interest to the Federal awarding agency or pass-through entity. Additionally, 2 CFR §200.318(c)(1) requires organizations to maintain written standards of conduct governing the performance of employees engaged in the administration of Federal awards. Effective internal controls require employees to periodically acknowledge and attest to compliance with IntraHealth’s conflict of interest policy to ensure transparency, accountability, and compliance with Federal regulations. Condition: During our testing of payroll and employee personnel files at both headquarters and the field office level, we noted instances in which employee-signed conflict of interest attestation forms were not available for our review. For various employees included in our sample, there was no documentation evidencing that the employee had acknowledged or certified compliance with IntraHealth’s conflict of interest policy. Cause: Based on discussions with management, the condition appears to be the result of employees which were terminated prior to the fiscal year 2025 attestation date. However, we were unable to verify that the employees had signed the conflict of interest forms for the immediately preceding period (which their sampled pay periods pertained to). This limitation was due to the inability to access systems which were discontinued, as well as the termination of responsible employees, due to cost reduction measures in response to the stop-work orders issued by the Federal Government. Effect or Potential Effect: Failure to obtain and retain signed conflict of interest attestations increases the risk that potential or actual conflicts may not be identified, disclosed, or appropriately managed. This weakens IntraHealth’s internal control environment and increases the risk of noncompliance with Federal conflict of interest requirements. Without documented attestations, IntraHealth cannot demonstrate that employees involved in the administration of Federal awards are aware of and complying with established standards of conduct. Questioned Costs: N/A, as the condition does not lead to unallowable costs. Context: The exceptions were identified across multiple locations and arose from our testing of internal controls around the payroll cycle. Identification as a Repeat Finding, if Applicable: N/A Recommendation: We recommend that management strengthen controls over its conflict of interest compliance process by implementing procedures to ensure all employees complete and sign conflict of interest attestations upon hire and on a periodic basis thereafter. Management should establish a centralized tracking mechanism and perform periodic monitoring to ensure documentation is complete and retained in personnel files. Strengthening this process will enhance transparency, promote ethical conduct, and provide reasonable assurance of compliance with Federal conflict of interest requirements.
Item: 2025-001 Assistance Listing Number: 93.185 Program: Immunization Research, Demonstration, Public Information and Education Training and Clinical Improvement Projects Federal Agency: U.S. Department of Health and Human Services, Centers for Disease Control and Prevention Pass-Through Agencies: n/a Contract/Pass-Through Grantor Identifying Number: NH23IP922665 Award Year: August 2024 to July 2029 Compliance Requirement: Procurement, Suspension and Debarment Criteria: Per 2 CFR §200.318 - §200.326, non-federal entities must follow procurement procedures that ensure full and open competition and maintain proper documentation of procurement transactions. Additionally, under 2 CFR §200.213, entities must verify that vendors and subrecipients are not suspended or debarred before entering into contracts funded by federal awards. Condition: AIRA did not retain sufficient/updated documentation to support compliance with Uniform Guidance procurement standards. Specifically: • Procurement files lacked evidence of cost/price analysis and vendor selection criteria for purchases exceeding the micro-purchase threshold of $10,000. • The entity did not retain verification records confirming that selected vendors were not suspended or debarred in SAM.gov before contract execution. Questioned Costs: n/a Context: In a population of 35 vendors with purchases in excess of $10,000, we conducted a non-statistical sample of six vendors. In our sample of six vendors, we noted that for two vendors selected and tested, AIRA did not retain sufficient documentation to support compliance with the Uniform Guidance procurement standards. Effect: Failure to maintain proper procurement documentation and verify vendor eligibility increases the risk of noncompliance with federal requirements. This may lead to questioned costs and potential disallowance of federal expenditures. This was deemed to be a significant deficiency in internal control over compliance. Cause: The deficiency appears to result from inadequate internal control over procurement documentation and a lack of formalized procedures ensuring compliance with federal procurement and debarment requirements for a portion of fiscal 2025. In April 2025, AIRA implemented a standardized procurement policy and a formal review process to verify and document vendor eligibility through SAM.gov before awarding any contracts funded with federal funds. As these controls were not in place during the entire fiscal year the finding is repeated. Identification as a Repeat Finding: Repeat finding. See 2024-001 Recommendation: Recommendations from prior year’s finding were implemented effectively beginning in April 2025. No additional action necessary. Views of Responsible Officials: Management of the Organization concurs with the finding. See Corrective Action Plan.
U.S. Department of Treasury, Federal Financial Assistance Listing #21.027, COVID-19 – Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Procurement, Suspension, and Debarment Significant Deficiency in Internal Control over Compliance Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. 2 CFR sections 200.212 and 200.318(h); 2 CFR section 180.300; 48 CFR section 52.2096 outlines the requirements the non-federal entity verify vendors for which it plans to enter into a covered transaction are not debarred, suspended, or otherwise excluded. We noted that while the County does have a purchasing policy, elements as required by Uniform Guidance are absent from the policy. In addition, we noted the County did not retain the supporting documentation indicating they had verified vendors they were entering into covered transactions with were neither suspended nor debarred. The County was made aware that the policy is out of compliance with the Uniform Guidance during the 2024 audit. However, management has not had sufficient time to draft an updated policy in compliance with the Uniform Guidance. While our testing noted no instances of noncompliance, the absence of internal controls over compliance as it relates to having a Uniform Guidance compliant policy, could lead the County to enter into covered transactions that are not compliant with federal regulations. Questioned Costs: None reported Context/Sampling: Sampling was not used to test the policy. Repeat Finding from Prior Year(s): Yes Recommendation: The County should review the applicable provisions of the CFR to ensure their written procurement policy is compliant with Uniform Guidance requirements. Additionally, the County should review their checklist and/or document retention requirements for contracts to be sure it includes the support the County verified the vendor was neither suspended nor debarred. Views of Responsible Officials: Management agrees with the finding.
Federal Agency: Environmental Protection Agency Federal Program Name: Water Pollution Control Assistance Listing Numbers: 66.419 Federal Award Identification Number: 98339418 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: 10/1/2023 - 12/30/2025 Compliance Requirement: Procurement Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matter Criteria or specific requirement: Compliance: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR §200.318 through §200.327. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. Small purchase procedures are used for purchases that exceed the micro-purchase amount but do not exceed the simplified acquisition threshold ($250,000). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR §200.320(b)). Control: Per 2 CFR §200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should comply with the guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control-Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition/Context: For two of five procurements selected for testing, the Commission was unable to provide documentation (completed requisition form) to demonstrate compliance with their procurement policy. Questioned costs: Undetermined. Cause: Controls were not operating effectively to ensure that the Commission’s procurement policies were followed for procurements entered into where expenses were charged to the federal program. Effect: The Commission was unable to provide documentation to support compliance with Federal requirements. Repeat Finding: No. Recommendation: We recommend that the Commission ensure that it follows its procurement policies for all goods and services charged to the program and that documentation be readily available for audit. Views of responsible officials: To prevent future noncompliance the Commission will 1)clarify vendor coverage on existing agreements, 2) strengthen controls over procurement threshold, 3) monitor cumulative spending by vendor, and 4) reinforce training and communication.
Finding 2025-003: Procurement, Suspension and Debarment Federal Program Name: National Railroad Passenger Corporation Grants Assistance Listing No. 20.315 Federal Award Nos.: 69A36525520030AMTDC 69A36525520040AMTDC 69A36524520000AMTDC 69A36524520010AMTDC FR-AMT-0028-22 FR-AMT-0027-22 Federal Agency: Department of Transportation, Federal Railroad Administration Federal Program Name: Railroad Development Assistance Listing No. 20.314 Federal Award No.: 69A36524400010MEGDC Federal Agency: Department of Transportation, Federal Railroad Administration Federal Program Name: Railroad Rehabilitation and Improvement Financing Program Assistance Listing No. 20.316 Federal Award No.: RRIF_2016_0040 Federal Agency: Department of Transportation, Federal Railroad Administration Federal Program Name: Federal-State Partnership for Intercity Passenger Rail Assistance Listing No. 20.326 Federal Award Nos.: 69A36525421260FSPDC 69A36525521430FSPDC 69A36525421100FSPDC Federal Agency: Department of Transportation, Federal Railroad Administration Criteria 1. The code of federal regulations - 2 CFR 200.318 General procurement standards state that: (h) Responsible contractors. The recipient or subrecipient must award contracts only to responsible contractors that possess the ability to perform successfully under the terms and conditions of a proposed contract. The recipient or subrecipient must consider contractor integrity, public policy compliance, property classification of employees, past performance record, and financial and technical resources when conducting a procurement transaction. (i) Procurement records. The recipient or subrecipient must maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price. 2. Section 10 of the Annual Grant Agreements and Section 500 of the IIJA Supplemental Grant Agreements (Assistance Listing No. 20.315) state: The Recipient will ensure persons or entities that perform any part of the work under this Agreement, including Subrecipients, as defined in 2 C.F.R. § 200.1, or Contractors, as defined in 2 C.F.R. § 200.1, will comply with applicable federal requirements and federal guidance, and the applicable requirements of this Agreement. Recipient agrees that flowing down such requirements does not relieve it of any obligation to comply with the requirements itself. For each of the Recipient’s subawards or contracts to perform all or part of the work under this Agreement: (a) The Recipient must include applicable grant regulations in the subaward or contract and ensure compliance with these provisions, including applicable provisions of 2 C.F.R. § 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, and DOT’s implementing regulations at 2 C.F.R. § 1201. (b) The Recipient must include applicable federal statutory and regulatory requirements in the subaward or contract and ensure compliance with these requirements, including applicable limitations on use of federal funds. 3. Additionally, the code of federal regulations - 2 CFR 200 Appendix II Contract Provisions for Non-Federal Entity Contracts Under Federal Awards states that: In addition to other provisions required by the Federal agency or non-Federal entity, all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. H) Debarment and Suspension – A contract award must not be made to parties listed on the government wide exclusions in the System for Award Management (SAM), in accordance with the OMB guidelines at 2 CFR 180 that implement Executive Orders 12549 and 12689. SAM Exclusions contains the names of parties debarred, suspended, or otherwise excluded by agencies, as well as parties declared ineligible under statutory or regulatory authority other than Executive Order 12549. 4. The code of federal regulations or 2 CFR 200.320 (c) Procurement Methods states that: (c) Noncompetitive procurement. There are specific circumstances in which the recipient or subrecipient may use a noncompetitive procurement method. The noncompetitive procurement method may only be used if one of the following circumstances applies: 2) The procurement transaction can only be fulfilled by a single source; Condition The following exceptions to the criteria were observed during the performance of the audit procedures: 1. Required flow-down provisions were not incorporated into the legal agreements related to both of EY's legal expense selections as part of its testing of the procurement, suspension and debarment compliance requirement. 2. Amtrak failed to comply with the key compliance requirement related to suspension and debarment which includes a review of sam.gov to verify the legal firms were not present in the suspension and debarment list prior to the procurement. 3. Amtrak lacked adequate documentation to support the sole source justification of the legal firm related to one of EY's legal expense selections as part of its testing of the procurement, suspension and debarment compliance requirement. Cause Amtrak’s inappropriate interpretation of the annual and IIJA supplemental grant agreements involved the treatment of the procurement of legal counsel as exempt from the 2 CFR procurement, suspension and debarment process requirements. Effect or Potential Effect Noncompliance with Section 10 of the Annual Grant Agreements, Section 500 of the IIJA Supplemental Grant Agreements, 2 CFR 200.318, 2 CFR 200 Appendix II and 2 CFR 200.320. Additionally, Amtrak is at risk of doing business with contractors that are suspended/debarred. Amtrak is also at risk of facing increased costs and increased reliance due to the lack of competitive procurement. Questioned Costs Total questioned costs of $1.3 million were identified. Of this amount, approximately $3,500 relates to two EY selections identified as part of procurement, suspension, and debarment testing involving two legal firms. The remaining questioned costs represent legal expenses associated with the two legal firms that are also included on the SEFA. Assistance Listing No. 20.315 69A36522503710AMTDC $ 150,928 69A365255200340AMTDC 40,449 69A36525520040AMTDC 9,964 Assistance Listing No. 20.315 Total $ 201,341 Assistance Listing No. 20.314 69A36524400010MEGDC 135,247 Assistance Listing No. 20.316 RRIF_2016_0040 84,659 Assistance Listing No. 20.326 69A36525521430FSPDC $ 461,261 69A36525421100FSPDC 254,394 69A36525421260FSPDC 197,655 Assistance Listing No. 20.326 Total $ 913,310 Total Questioned Costs $ 1,334,557 Context EY randomly selected 40 procurement transactions as part of the testing of the procurement, suspension and debarment compliance requirement. EY identified exceptions related to its two legal expenditure selections as noted in the Condition section above. Identification as a Repeat Finding Not a repeat finding. Recommendation EY recommends that Amtrak include legal expenses within their procurement, suspension and debarment policy as outlined within each of the grant agreements. Views of Responsible Officials Amtrak understands the need to comply with procurement requirements for grants and retain documentation of the compliance. Amtrak will change its approach for allocating grant funding and its review of legal contracts to address the issue identified in this finding.
Assistance Listing, Federal Agency, and Program Name - 93.045/93.053, Department of Health and Human Services, Aging Cluster Federal Award Identification Number and Year - N/A Pass through Entity - Area Aging on Aging 1C Finding Type - Material weakness Repeat Finding - Yes 2024-15 Criteria - Per 2 CFR 200.303, nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Per 2 CFR 200.318(b), recipients must maintain oversight to ensure contractors perform in accordance with the terms, conditions, and specifications of their contracts. Per the “Minimum Nutrition Program Standards” issued Commission on Services to the Aging, individuals receiving certain nutrition benefits to undergo a periodic reassessment of eligibility that includes obtaining confirmation of medical necessity for certain benefit levels. Condition - The County engaged a third party contractor to perform certain eligibility reassessments, including obtaining verification of medical necessity, when required. While the County had a process in place to properly identify when reassessment was required and to follow up with the contractor about the status of reassessments, controls did not ensure the third party contractor followed through on reassessments on a timely basis. Questioned Costs - None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - N/A Identification of How Questioned Costs Were Computed - N/A Context - The County is responsible for ensuring participants who receive meals are eligible under the terms of the grant. The County did not have a control over home delivered meal participants that ensured the third party contractor timely reassessed participants every six months. 3 of the 43 samples selected did not have updated assessment forms within six months of receiving meals and 17 of the 43 samples did not have updated assessment forms. Cause and Effect - The County's controls were not adequate to ensure that the third party contractor was reassessing participants every six months. The lack of controls could result in the County providing meals to ineligible participants. Recommendation - We recommend the County update its policy on the reassessment process, including actions to be taken when participants refuse to complete the reassessment or cannot be contacted. This plan should also include a schedule for actions to be taken when participants do not complete reassessment submissions timely. The County should also implement the appropriate controls to monitor the third-party contractor and ensure reassessments are being performed timely. Views of Responsible Officials and Corrective Action Plan - The Department of Senior Services would like to clarify that the third-party contractor is contracted through The Senior Alliance, the Area Agency on Aging for region 1 C and not Wayne County. Wayne County Senior Services will continue to monitor the third-party vendor for timely assessments and reassessments through the existing controls which include: • Providing the third-party contractor monthly lists of clients in need of assessment/reassessment • Generating monthly lists of outstanding reassessments (clients not reassessed from the monthly list) • Reminding clients of the requirement for six-month reassessments • Obtaining updated information (phone numbers, emergency contacts, etc.) twice per year • Providing updated information to third-party contractor • Documentation of communicated information regarding third-party contractor’s performance to The Senior Alliance
2025-001 Procurement, Suspension and Debarment – Significant Deficiency in Internal Control over Compliance Identification of federal programs: 20.205 Highway Planning and Construction Grand award numbers: 693JJ22440000Y176AK307502400199900 693JJ22440000Y602AK307502400199900 693JJ22540000Y177AK307502500299900 693JJ22540000Y271AK307502500199900 693JJ22540000Y602AK307502500199900 Criteria: Per 2 CFR §200.318(i), non-Federal entities must maintain records sufficient to detail the history of procurement transactions, including the rationale for the method of procurement, contractor selection, and the basis for contract price. Additionally, 2 CFR §200.214 prohibits awards, subawards, and contracts with parties that are suspended or debarred, requiring entities to verify contractor eligibility prior to award. Effective internal controls over procurement activities should ensure required documentation is obtained, reviewed, and retained in procurement files. Condition: During testing of procurement transactions, we noted three instances in which adequate supporting documentation was not retained internally to support that the vendors were not suspended or debarred. We also noted one sole source procurement transaction in which documentation supporting the noncompetitive procurement justification and approval was not maintained at the time of purchase. Cause: Management indicated procurement documentation procedures were not consistently followed, and existing review controls did not detect the missing documentation prior to purchase approval and payment processing. Effect or potential effect: Failure to maintain required procurement documentation increases the risk of noncompliance with federal procurement requirements and may result in unsupported procurement actions or questioned costs. Questioned Costs: None. Identification of Repeat Finding: N/A Recommendation: We recommend management strengthen internal controls over procurement activities by implementing procedures to ensure sole source procurements are properly supported with written justification and suspension and debarment checks are performed and documented timely. Views of Responsible Officials: Management concurs with this finding. See corrective action plan below.
Finding 2025-001 – Procurement, Non-compliance (Significant Deficiency) Federal programs: Covid-19 Coronavirus State and Local Fiscal Recovery Funds Criteria: 2 CFR § 200.318(a) requires that the recipient or subrecipient must maintain and use documented procurement procedures for procurement transactions under federal awards. These procedures must be consistent with applicable laws and the procurement standards in Sections 200.317 through 200.327. Condition: During our testing of procurement transactions, we noted that the Authority does not have formal, written procurement policies and procedures governing the acquisition of goods and services with federal award funds. Context: Procurement, Suspension and Debarment was identified as a direct and material compliance requirement for the major program. As such, the Uniform Guidance requires the auditee to both design and implement internal controls over compliance, including formal, documented procurement policies. Cause: Management has not developed or implemented formal written policies to address procurement requirements under the Uniform Guidance. Effect: The absence of documented procedures increases the risk that procurement activities are not conducted in accordance with Uniform Guidance requirements. Questioned Costs: None Repeat finding: No Recommendation: We recommend that management develop and implement formal, written procurement policies and procedures that comply with 2 CFR Sections 200.317 through 200.327, which address procurement methods, competition requirements, and documentation standards, and are consistently applied to all procurement transactions under federal awards. Views of Responsible Officials: Management agrees with the finding and the auditors’ recommendation. See Corrective Action Plan at the end of the report.