2025-003 – GRANT AWARD POLICIES AND PROCEDURES Criteria: 2 CFR 200.303 requires that a 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 and the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2 CFR 200.318 requires that the non-federal entity “must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations and the standards identified in §§ 200.317 through 200.327.” Condition: There was a lack of adequate documentation to support control activities were present. Specifically, the Municipality had no policies and procedures related to the administration of federal awards. Questioned Costs: None. Context: There were approximately 15 total disbursements totaling $1,031,467. Cause: The Municipality lacks formal internal controls and procedures related to the administration of federal awards. Effect: There is an increased risk that noncompliance with a federal award could occur and not be detected in a timely fashion. Recommendation: Management should establish proper policies and procedures which ensure that federal awards are adequately administered in accordance with program requirements. Management’s Response: Management concurs with the finding and has developed a plan to correct the issue. See corrective action plan. Status: This finding was not present in the prior audit year.
FINDING 2025-004 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023-2024, FY 2024-2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-004. Condition and Context An effective internal control system was not designed or implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement When the value of goods or services exceeds the simplified acquisition threshold, the proper purchasing method would be the bidding process, unless the purchase meets certain other qualifications. Federal regulations allow for informal procurement methods when the value of the procurement for goods or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. The School Corporation procured goods and services totaling $5,967,079 from three vendors that exceeded the simplified acquisition threshold during the audit period. The School Corporation did not follow procurement requirements for one of the three vendors. Multiple quotes were obtained for the purchase of cafeteria equipment totaling $361,575; however, the procurement method used should have been the bidding process. Additionally, the School Corporation did not obtain a contract for the purchase. The School Corporation made three small purchases totaling $35,045 that were selected for testing. The School Corporation did not obtain price or rate quotes as required. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. INDIANA STATE BOARD OF ACCOUNTS 25 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Suspension and Debarment Prior to entering into subawards and covered transactions, recipients are required to verify that 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 (e.g., grant agreement) that are expected to equal or exceed $25,000 and all subawards. The verification is to be done by checking the SAM exclusions list, collection of a certification from that person or entity, or adding a clause or condition to the covered transaction with that person or entity. There were three covered transactions over $25,000 during the audit period, which totaled $5,967,079. The School Corporation did not verify that one of the three covered transactions, totaling $361,575, was not suspended, debarred, or otherwise excluded from participation in federal assistance programs. 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). . . ." 2 CFR 200.318 states in part: "(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. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." Indiana Code 5-22-8-3(d) states: "If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required." 2 CFR 200.320 states in part: "The non-Federal entity must have and use document 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 26 SCHOOL CITY OF EAST CHICAGO 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. . . ." 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." Cause Management had not designed or implemented a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect Material noncompliance with the grant agreement and compliance requirements could cause federal expenditures to be unallowable which the funding agency could potentially recover. INDIANA STATE BOARD OF ACCOUNTS 27 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls to ensure compliance with requirements related to procurement and suspension and debarment. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
SIGNIFICANT DEFICIENCY IN INTERNAL CONTROL OVER COMPLIANCE – U.S. DEPARTMENT OF AGRICULTURE, PASSED THROUGH MINNESOTA DEPARTMENT OF EDUCATION, CHILD NUTRITION CLUSTER – FEDERAL ALN 10.553, 10.555, AND 10.556 2025-003 Internal Control Over Compliance With Federal Suspension and Debarment Requirements Criteria – 2 CFR § 180 and 2 CFR § 200.318-327 requires the District to establish and maintain effective internal control over compliance with requirements applicable to federal program expenditures, including suspension and debarment requirements applicable to the child nutrition cluster federal programs. Condition – During our audit, we noted the District did not have sufficient controls in place within its child nutrition cluster federal programs to ensure compliance with federal requirements related to assuring that the District was not contracting for goods or services with parties that are suspended or debarred, or whose principals are suspended or debarred from participating in contracts involving the expenditures of federal program funds. Questioned Costs – Not applicable. Our testing did not indicate any instances of noncompliance with this requirement. Context – The District’s internal controls required the District to review for compliance with suspension and debarment requirements on an annual basis. The District should also be reviewing for compliance with suspension and debarment requirements any time the District adds a new vendor. For two of two vendors tested, the District did not retain documentation to support they had performed procedures to verify vendor eligibility with suspension and debarment requirements. This was not a statistically valid sample. Repeat Finding – This is a current year finding. Cause – This was an oversight by district personnel. Effect – Noncompliance with suspension and debarment requirements could result in the District expending federal funds inappropriately or utilizing vendors that are not eligible to be parties to such transactions, which could be viewed as a violation of the award agreement. Recommendation – We recommend that the District review its internal control procedures relating to suspension and debarment for the child nutrition cluster federal program. Internal controls over compliance for this area should include documentation of compliance with Uniform Guidance requirements related to suspension and debarment. These controls should also include steps to ensure any vendor with which the District contracts for goods or services exceeding $25,000 is not listed as suspended or debarred on the federal Excluded Parties List System website. View of Responsible Official and Planned Corrective Actions – The District agrees with the finding. The District will review and update its policies and procedures relating to suspension and debarment applicable to the child nutrition cluster federal programs to ensure compliance with the Uniform Guidance in the future. The District has separately issued a Corrective Action Plan related to this finding.
FINDING 2025-002 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children, Fresh Fruit and Vegetable Program Assistance Listings Numbers: 10.553, 10.555, 10.559, 10.582 Federal Award Number and Year (or Other Identifying Number): FY2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-004. Condition and Context The School Corporation did not have effective internal controls in place to ensure compliance with the Procurement and Suspension and Debarment compliance requirement. The School Corporation did not have adequate procedures in place to ensure that the requirements for small purchases were met for each applicable procured good or service or to ensure that vendors were not suspended or debarred prior to entering into a covered transaction. INDIANA STATE BOARD OF ACCOUNTS 17 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. For the audit period, the School Corporation self-certified a micro-purchase threshold of $50,000. Any purchase above this threshold but below the $150,000 simplified acquisition threshold would be considered a small purchase. During fiscal year 2023-2024 , the School Corporation had one vendor with disbursements totaling $60,757, which exceeded the School Corporation established small purchase threshold of $50,000. The School Corporation did not provide supporting documentation that an adequate number of price or rate quotes were obtained from qualified sources for the purchases. The lack of effective internal controls and noncompliance were isolated to the one vendor noted above. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, 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 SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. Upon inquiry of the School Corporation and inspection of supporting documentation in order to review the procedures in place for verifying that a vendor with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, it was identified that the School Corporation did not have policies or procedures in place to verify if vendors were suspended or debarred or otherwise excluded from participation in federal awards. In 2023-2024, for one covered transaction totaling $60,757, there was no evidence provided that the School Corporation verified the vendor's suspension and debarment status prior to payment. The lack of effective internal controls and noncompliance were isolated to the one vendor noted above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 18 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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 states in part: "(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. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 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. (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. . . ." 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 the SAM Exclusions; or (b) Collecting a certification from that person; or INDIANA STATE BOARD OF ACCOUNTS 19 WABASH CITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (c) Adding a clause or condition to the covered transaction with that person." Cause An effective system of internal controls was not designed and implemented by management of the School Corporation. The School Corporation had outlined a process for handling small purchase vendor related transactions, but that process was not followed, nor was supporting evidence maintained for the items described in the Condition and Context. Also, the School Corporation had designed a process for determining whether a vendor is suspended or debarred, but that process was not completed. Effect As a result of not designing and implementing an effective system of internal controls and following the School Corporation's policies and procedures, goods that fell within the small purchase threshold were not properly procured, and vendors to whom payments equal to or in excess of $25,000 were made were not verified to be not suspended, debarred, or otherwise excluded. 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 School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation design and implement an effective internal control system and follow through with the policies and procedures related to small purchase vendor procurement and suspension and debarment compliance requirements that they designed through an action plan to correct the prior audit period finding. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Criteria: 2 C.F.R. § 200.318(a) requires non-Federal entities to use their own documented procurement procedures which reflect applicable state and local laws and regulations, provided such procedures conform to federal procurement standards. Additionally, school district policy and state law require service contracts to be approved by the Board and entered upon the official minutes prior to execution and payment. Condition: During our testing of procurement transactions within the Child Nutrition Program for the fiscal year ended June 30, 2025, we noted the District procured services without obtaining a contract approved by the Board of Education and recorded in the official minutes prior to services being rendered and payments being made. Cause: The District did not ensure that procurement procedures requiring Board approval of service contracts were followed for services charged to the Child Nutrition Program. Effect: Failure to obtain Board approval of service contracts constitutes noncompliance with local policy, state law, and federal procurement requirements. This control deficiency increases the risk of unauthorized procurements and may subject questioned costs to federal review. Questioned Costs: None noted Context: Of the procurement transactions tested within the Child Nutrition Program, four exceptions were identified out of forty tested, representing approximately $41,025 in expenditures. The exceptions involved one contract. Based on the results of our testing, this matter appears to be an isolated instance. Although no questioned costs were identified, the lack of timely Board approval increased the risk of noncompliance and unauthorized purchasing. Recommendation: The District should strengthen internal controls over procurement to ensure all service contracts, including those charged to federal programs, are approved by the Board of Education and entered upon the official minutes prior to execution and payment. Management should also provide training to personnel responsible for federal program expenditures regarding procurement compliance requirements under Uniform Guidance.
SIGNIFICANT DEFICIENCY IN INTERNAL CONTROL OVER COMPLIANCE – U.S. DEPARTMENT OF AGRICULTURE – PASSED THROUGH MINNESOTA DEPARTMENT OF EDUCATION – CHILD NUTRITION CLUSTER (FEDERAL ALN 10.555 AND 10.553) 2025-001 Internal Control Over Compliance With Federal Suspension and Debarment Requirements Criteria – 2 CFR § 180 and 2 CFR § 200.318-327 requires Independent School District No. 719, Prior Lake-Savage Area Schools (the District) to establish and maintain effective internal control over compliance with requirements applicable to federal program expenditures, including suspension and debarment requirements applicable to the child nutrition cluster federal programs. Condition – During our audit, we noted the District did not have sufficient controls in place within its child nutrition cluster federal programs to ensure compliance with federal requirements related to assuring that the District was not contracting for goods or services with parties that are suspended or debarred, or whose principals are suspended or debarred from participating in contracts involving the expenditures of federal program funds. Questioned Costs – Not applicable. Context – The District did not obtain the appropriate documentation for 10 of the 10 vendors tested applicable to the child nutrition cluster to ensure the vendors were not suspended or debarred from participation in federal program contracts. This is not a statistically valid sample. The District’s internal controls required the District to review for compliance with suspension and debarment requirements on an annual basis. The District should also be reviewing for compliance with suspension and debarment requirements any time the District adds a new vendor. Repeat Finding – This is a current year and prior year finding. Cause – This was an oversight by district personnel. Effect – Noncompliance with suspension and debarment requirements could result in the District expending federal funds inappropriately or utilized vendors that are not eligible to be parties to such transactions, which could be viewed as a violation of the award agreement. Recommendation – We recommend that the District review its internal control procedures relating to suspension and debarment for the child nutrition cluster federal program. Internal controls over compliance for this area should include documentation of compliance with Uniform Guidance requirements related to suspension and debarment. These controls should also include steps to ensure any vendor with which the District contracts for goods or services exceeding $25,000 is not listed as suspended or debarred on the federal Excluded Parties List System website. View of Responsible Official and Planned Corrective Actions – The District agrees with the finding. The District will review procedures relating to suspension and debarment for its federal programs to ensure compliance with the Uniform Guidance in the future. The District has separately issued a Corrective Action Plan related to this finding.
2025-003 – Procurement, Suspension and Debarment Cluster: Research and development Sponsoring Agency: Department of Energy, Department of Education, Department of Defense and National Aeronautics and Space Administration Award Name: A New Approach to Discerning Transport of Gases in MOFs, Citizen Diplomacy I, High Fidelity 2D Noise Resilient Superconducting, The Compton Spectrometer and Imager COSI, and solar Polarization and Directivity XRay Experiment PAD Award Number: DE-SC0025524, P021A240012, W911NF-22-1-0258, 80GSFC21C0059, and 80NSSC22M0098 Assistance Listing Title: Office of Science Financial Assistance Program, Overseas Programs - Group Projects Abroad, Basic Scientific Research, Science Assistance Listing Number: 81.049. 84.021, 12.431, 43.RD, and 43.001 Award Year: 2024-2025 Pass-through entity: N/A Criteria Non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. When a non-federal entity enters into a covered transaction with an entity at a lower tier, the nonfederal entity must verify that the entity, as defined in 2 CFR section 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, (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). 2 CFR 200.318(i) also notes that non-Federal entities must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition Through testing of procurement, suspension and debarment across four campuses, exceptions were noted at one campus where 25 selections were made, as follows: • This campus requires a SAM screenprint or Debarment and Anti-Lobbying Form to be attached to their Federal Funds Checklist in their procurement system for grants and cooperative agreement purchases over $10,000 and for federal contracts over $35,000. This documentation is required to be completed prior to entering into the procurement transaction. For 1 selection over $10,000, the SAM screenprint was not part of the initial procurement file and in 2 other instances the SAM screenprint was not completed timely; 12 months and 9 months, respectively, after the purchase order. • We noted 1 instance ($51k) where a purchase was initiated using non-federal funds and subsequently transferred onto a federal award. No Federal Funds Checklist or Source Selection and Price Reasonableness forms were completed, as required by campus policy. • For 2 selections, the Source Selection and Price Reasonableness form was not signed, as required by campus policy and in 1 instance the form was not completed, however, we were able to see appropriate vendor selection support outside of the form. Cause The buyers executing these transactions did not provide the required support when executing these transactions due to lack of understanding of how the order of operations that documentation must be provided impacts federal compliance. Additionally, there are no additional levels of reviews required to enable missing documentation to be identified prior to executing federal purchases. Effect The University lacks support showing that vendors undergo proper screening for debarment and suspension prior to execution of the purchase order. Questioned Costs None noted. Recommendation We recommend the campus provide additional training in this area and determine if there is a more effective way to identify federal transactions for buyers and when identified, guidance is readily made available as to what documentation is required prior to executing the transaction. Management’s Views and Corrective Action Plan Management’s response is included in “Management’s Views and Corrective Action Plan” included at the end of this report after the summary schedule of status of prior audit findings.
Assistance Listing, Federal Agency, and Program Name - 93.332 - U.S. Department of Health and Human Services Navigator Grants Program, Various R&D Cluster Federal Award Identification Number and Year - NAVCA210431 02, NAVCA210431 03, Research and Development grants Pass through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - Yes 2024-003 Criteria - 2 CFR 200.318 requires that a nonfederal entity that acquires property or services under a federal award or subaward is required to adopt, maintain, and follow written procurement procedures, which comply with sections 2 CFR 200.318 through 327. Condition - The University did not follow the written procurement procedures in place. Questioned Costs - $888,816 Identification of How Questioned Costs Were Computed - Questioned costs reflect the amount of costs expended under the grant during 2025 that exceeded the procurement policy threshold. Context - The University did not follow its written policy in place over procurement methods, including using a competitive bid process and reviewing for suspension and debarment for purchases over the policy's threshold. Cause and Effect - Failure to comply with the University's written procurement policy, where controls were not in place to comply with University's policy. Recommendation - The University should ensure controls are in place to comply with the procurement policy on an ongoing basis. Views of Responsible Officials and Corrective Action Plan - It was noted that certain purchase orders and requisitions were processed after services had already been performed. To address this issue, procurement training will now be required for certain faculty and staff, emphasizing that requisitions and purchase orders must be submitted and approved prior to the initiation of any services, to ensure adherence to the University’s documented competitive bid process. The University Purchasing Department currently provides monthly procurement policy training. In the new award setup phase, the Office of Research Development and Administration will require that a Principal Investigator (PIs) with awards with direct costs greater than the University bid limit attend such training within three months of award date. PIs with multiple awards will only be required to attend such training every 24 months. Additionally, Sponsored Research Accounting will follow up with PIs on all awards opened within the first three months to confirm adherence to University purchasing policies. Continued non compliance may result in corrective actions for the applicable Principal Investigator/award team, including, but not limited to, loss of eligibility to submit future proposals, suspension of existing funding, or the requirement to use indirect cost (IDC) funds to cover any unallowable expenses.
Federal Program: Higher Education Institutional Aid (Title III) Assistance Listing Number: 84.031 Compliance Requirement: Procurement, Suspension and Debarment Criteria: Per 2 CFR § 180.220 and 2 CFR § 200.318, non-federal entities are required to have written procurement policies and procedures governing the acquisition of goods and services funded by federal awards. Furthermore, a non-federal entity is prohibited from contracting with or making subawards to parties that are suspended or debarred. Recipients must verify that the entity is not excluded or disqualified by checking the System for Award Management (SAM.gov), collecting a certification from the entity, or adding a clause or condition to the contract. Condition: During our test of 51 procurement transactions, we noted that for 12 contracts (exceeding the $25,000 threshold), the College could not provide documentation that a suspension and debarment check had been performed via SAM.gov prior to the award. Additionally, the contracts did not include a provision requiring the contractor to certify their eligibility. Cause: Management had not implemented a formal, documented process requiring staff to perform and retain evidence of SAM.gov checks for all covered transactions. Staff involved in the procurement process were unaware of the specific documentation requirements under the Uniform Guidance. Effect: The College entered into contracts with vendors without verifying their eligibility to receive federal funds. While our subsequent search of SAM.gov revealed that the vendors involved were not actually suspended or debarred, the College was in violation of federal compliance requirements. Questioned Costs: None (since the vendors were not actually excluded). Recommendation: Management should draft and adopt a formal procurement manual. For every federally funded purchase exceeding the micro-purchase threshold, staff must print and file a SAM.gov "Exclusion Search" result prior to executing the contract. Views of Responsible Officials: Management agrees with the finding. We are currently implementing a new procurement checklist that requires a printed copy of the SAM.gov search result to be attached to the purchase order packet. Staff training on federal procurement requirements will be required.
SIGNIFICANT DEFICIENCY IN INTERNAL CONTROL OVER COMPLIANCE – U.S. DEPARTMENT OF AGRICULTURE – PASSED THROUGH MINNESOTA DEPARTMENT OF EDUCATION – CHILD NUTRITION CLUSTER (FEDERAL ALN 10.553, 10.555, AND 10.559) 2025-004 Internal Control Over Compliance With Federal Suspension and Debarment Requirements Criteria – 2 CFR § 180 and 2 CFR § 200.318-327 requires the District to establish and maintain effective internal control over compliance with requirements applicable to federal program expenditures, including suspension and debarment requirements applicable to the child nutrition cluster federal programs. Condition – During our audit, we noted the District did not have sufficient controls in place within its child nutrition cluster federal programs to ensure compliance with federal requirements related to assuring that the District was not contracting for goods or services with parties that are suspended or debarred, or whose principals are suspended or debarred from participating in contracts involving the expenditures of federal program funds. Questioned Costs – Not applicable. Context – The District did not obtain the appropriate documentation for one of the four vendors tested applicable to the child nutrition cluster to ensure the vendors were not suspended or debarred from participation in federal program contracts. This is not a statistically valid sample. Repeat Finding – This is a current and prior year finding. Cause – This was an oversight by district personnel. Effect – Noncompliance with suspension and debarment requirements could result in the District expending federal funds inappropriately or utilized vendors that are not eligible to be parties to such transactions, which could be viewed as a violation of the award agreement. Recommendation – We recommend that the District review its internal control procedures relating to suspension and debarment for the child nutrition cluster federal program. Internal controls over compliance for this area should include documentation of compliance with Uniform Guidance requirements related to suspension and debarment. These controls should also include steps to ensure any vendor with which the District contracts for goods or services exceeding $25,000 is not listed as suspended or debarred on the federal Excluded Parties List System website. View of Responsible Official and Planned Corrective Actions – The District agrees with the finding. The District will review procedures relating to suspension and debarment for its federal programs to ensure compliance with the Uniform Guidance in the future. The District has separately issued a Corrective Action Plan related to this finding.
Federal Agency: U.S. Department of Agriculture, and U.S. Department of Education Federal Program Name: Research & Development, Agriculture Extension at 1890 Land-grant Institutions, and Higher Education Institutional Aid Assistance Listing Number: 10.205, 10.512, 84.031 Federal Award Identification Number and Year: NI241445XXXXG012 - 2025, NI221444XXXXG019 - 2025, NI211444XXXXG016 - 2025, P031B220009 - 2025 Award Period: July 1, 2024 to June 30, 2025 Type of Finding: - Significant Deficiency in Internal Control over Compliance - Other Matters Criteria or specific requirement: Per Uniform Guidance 2 CFR 200.318(i), the recipient 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. Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: The University did not go through procurement procedures prior to entering into a contract with the vendor. Questioned costs: None. Context: During our testing of the Research & Development Cluster, we identified 1 out of 8 transactions that did not go through the proper procurement procedures. During our testing of the Higher Education Institutional Aid Program, we identified 1 out of 8 transactions that did not go through the proper procurement procedures. During our testing of the Extension Services at 1890 Colleges and Tuskegee University, West Virginia State College, and Central State University Program, we identified 3 out of 8 transactions that did not go through the proper procurement procedures. Cause: The University did not have an effective control in place to ensure that the purchases went through the procurement procedures. Effect: The University was not in compliance with the regulation to go through the procurement procedures prior to entering a contract. Repeat Finding: No Recommendation: We recommend that the University review policies and procedures for procurement to ensure that every applicable transaction is going through the proper procurement procedures. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Finding 2025-001 Federal Program: Congressional Directives Assistance Listing Number: 93.493 Compliance Requirement: Procurement Criteria or Specific Requirement: Title 2 CFR §200.318 through §200.326 requires non-Federal entities to use documented procurement procedures that provide for full and open competition and are consistent with applicable Federal standards. Specifically, 2 CFR §200.320 requires procurement transactions for construction in excess of the simplified acquisition threshold to be conducted using competitive proposals or sealed bids, unless conditions exist to justify noncompetitive procurement. Additionally, the Agency’s internal procurement policy requires competitive bidding for construction projects exceeding established dollar thresholds unless an approved exception is documented. Condition: During our audit of procurement transactions charged to the Federal program, we noted that the Agency did not obtain competitive bids for a construction project funded in part with Federal award funds. The project was awarded to a contractor without evidence that competitive proposals were solicited, evaluated, or documented. Furthermore, the Agency did not maintain documentation supporting a noncompetitive procurement justification or evidence of advance written approval as required by Uniform Guidance and internal policy. Cause: The condition appears to have resulted from inadequate internal controls over procurement compliance, including insufficient review of procurement documentation prior to contract execution and limited understanding of Uniform Guidance procurement requirements by personnel responsible for project oversight. Additionally, there has been turnover in senior leadership positions since receipt of the award and since the project began. Effect and Questioned Costs: The failure to follow Uniform Guidance procurement requirements increases the risk that Federal funds may not be used in a manner that ensures full and open competition, reasonableness of cost, and compliance with federal regulations. This condition exposes the Agency to potential disallowance of costs, repayment of federal funds, and increased scrutiny from the Federal awarding agency or pass-through entity. No questioned costs were identified as a result of this finding. Was the finding a repeat of a finding in the immediately prior year? No Recommendation: We recommend that the Agency strengthen internal controls over procurement by: 1. Ensuring all construction procurements funded by Federal awards comply with the competitive procurement requirements of 2 CFR Part 200. 2. Requiring documented evidence of bid solicitation, evaluation, and selection prior to contract award. 3. Establishing procedures to ensure noncompetitive procurements are supported by written justification and receive required approvals in advance. 4. Providing periodic training to personnel involved in procurement and project management on Uniform Guidance requirements. Management Response: The procurement of construction services funded through this award was done in early 2023 and preceded Dimock’s updated procurement policy which calls for competitive bidding. It also preceded changes in procurement leadership. Subsequent procurement for services have since been subject to competitive bidding by Dimock consistent with CFR 200.318-200.326.
2025-002 Procurement Supporting Documentation CFDA No: 93.434 Program Name: Preschool Development Grants Award Number: 25FPDGCN-510841-01A Federal Agency: U.S. Department of Health and Human Services (HHS) Pass-Through Grantor: Arizona Department of Education Compliance Requirement: L. Procurement, Suspension and Debarment Questioned Costs: $29,281 Summary of Finding: Material weakness in internal controls over compliance which resulted in a qualified opinion on federal program compliance. Repeat Finding? No Condition Heartwood could not provide documentation for the selection of two vendors within the Simplified Acquisition Threshold, which totaled $29,281. The population of vendors who met applicable thresholds was tested and totaled four vendors. 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. Specifically, 2 CFR 200.318(i) states “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.” Cause Heartwood did not retain price or rate quotations from an adequate number of qualified sources or document justification for the use of sole source vendors. 2 CFR 200.320(a)(2)(i) states: “Unless specified by the Federal agency, the recipient or subrecipient may exercise judgment in determining what number is adequate.” Effect The inability of Heartwood to retain procurement documentation impairs the ability to demonstrate compliance with federal requirements, increases the risk of unallowable or unreasonable costs, and may result in repayment/disallowance of the related expenditures. Recommendation Primarily, Heartwood should enforce their written procurement and documentation procedures which are prepared as part of grant award acceptance. Then, Heartwood should ensure every purchase is supported, and retained in a central file. At a minimum, the school should: Establish checklist for every purchase (paper or electronic), retained centrally, that includes: Requisition/need justification and funding source, in this instance Preschool Development Grant (PDG) Evidence of price reasonableness: quotes from an adequate number of qualified sources (or documented attempts) Basis for vendor selection Approvals (who approved, when) Contract/purchase order, invoice, and proof of receipt/performance Required contract provisions (when applicable) In the case of sole source procurements, justification dcumentation for the use of the vendor. Suspension/debarment verification (SAM check) when required by the school’s policy/pass-through requirements Centralize record retention Store all procurement documentation in a single shared location (e.g., secured drive) by grant year and vendor, with a naming convention. Assign a specific role (grant manager/business office) responsible for completeness before payment.
Agency: U.S. Department of Health and Human Services Federal Assistance Listing Number: 93.528, National Forum for State and Territorial Chief Executives HHS OA, Yr 10 and Yr 11, National Forum Contract Number: 2U98OA09028 Criteria: In accordance with 2 CFR §200.318(a), General Procurement Standards, the nonfederal 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 General Procurement Standards. Additionally, §200.318(i) states that the nonfederal entity must maintain records sufficient to detail the history of the procurement. These records are required to include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection and the basis for the contract price. In accordance with §200.213 and §180.300, Suspension and Debarment, nonfederal entities cannot enter into awards, subawards or contracts with certain parties that are debarred, suspended or otherwise excluded from or ineligible for participation in federal assistance programs or activities. Non-federal entities must either check for exclusions in the System for Award Management (SAM); collect a certification from the entity or add a clause or condition to the covered transaction with the entity prior to entering into a covered transaction with a nonfederal entity. In addition, in accordance with §180.415(b), nonfederal entities cannot renew or extend covered transactions (other than no-cost time extension) with any excluded person or under which an excluded person is a principal, unless the nonfederal entity obtains an exception under §180.135. Condition: During our testing of the internal controls over compliance and compliance with procurement, suspension and debarment compliance requirements, we identified one procurement agreement out of a total of three tested where the Organization did not have documented controls over the application of their procurement policy. Additionally, the Organization did not retain documentation of controls over their verification that the vendor contracted was not suspended or debarred prior to entering into the contract. Management has subsequently determined that the vendor was not suspended or debarred. Questioned Costs: None. Context: The population consisted of three vendor charges or contracts entered into during the period that exceeded the Organization's micro-purchase policy. Three of the items were tested, two of which had no exceptions in testing and the other had the exceptions identified in the condition above. The one exception was paid $31,661 from the award. Cause: NGAC's personnel did not adhere to NGAC's documented policies and procedures for ensuring proper suspension and debarment validations were performed prior to entering a covered transaction and did not retain proper documentation supporting procurement controls and compliance. Effect: Failure to obtain and retain sufficient supporting documentation could result in an incorrect application of procurement policies and procedures. Failure to timely verify that a vendor is not suspended or debarred could result in transactions involving unreasonable costs or result in unintentionally entering a contract with an entity that is barred from performing work for the Federal government. Repeat Finding: This finding was identified during the year ending June 30, 2024 as finding 2024-002. Recommendation: We recommend management ensure that procurement and suspension and debarment regulations are followed. We also recommend management ensure all required procurement documentation is maintained in conjunction with its document retention policy. Management's Response: NGA management agrees with the finding and recommendations presented by Baker Tilly auditors and has developed a corrective action plan in response.
Federal Agency: United States Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Pass-Through Agency: Connecticut Department of Transportation, Department of Social Services, Department of Mental Health and Addiction Services, and Department of Developmental Services Pass-Through Numbers: 21DOT0015AA; 25SDRARG01TKC; 24ECD0504CAT; 24DDS0088RD Award Period: 07/01/2024-06/30/2025 Type of Finding: Material Weakness in Internal Control over Compliance and Other Matters Criteria or specific requirement: Federal regulations require that the entity must comply with procurement standards set out at 2 CFR sections 200.318 through 200.326 within Uniform Guidance. Condition: During testing of procurement standards, the auditor noted there is no procurement policy during the award period and in line with that, we noted that the conflict of interest policy of the entity does not include the essential elements as outlined in 2 CFR section 200.318. Questioned costs: None. Context: Through testing performed, it was identified that the entity does not have a procurement policy in place during the award period and that the conflict of interest policy policies do not include the essential elements as outlined in 2 CFR section 200.318. Cause: Management was unaware of the restrictive requirements of the procurement standards and was unaware that the conflict of interest policies did not contain required guidance. Effect: With the absence of a compliant policy, the entity is at risk for noncompliance as it relates to federal procurement. Repeat Finding: None. Recommendation: We recommend that management compose a procurement policy with the criteria as set out in 2 CFR sections 200.318 and 200.326. and review the conflict of interest policy and make necessary changes to comply with the criteria as set out in 2 CFR section 200.318. Views of responsible officials: Management agrees with the finding and will compose a procurement policy in line with compliance requirements and review and edit the conflict of interest policy to be in compliance.
2025-004 Improve Procurement Process for Child Nutrition Cluster Federal Agency: U.S. Department of Education Cluster/Program: Child Nutrition Cluster AL Number(s): 10.553/10.555/10.559/10.582 Award Year: 2025 Compliance Requirement: Procurement Type of Finding Compliance Internal Control over Compliance – Material Weakness Criteria or Specific Requirement Uniform Guidance (2 CFR § 200.318–200.320) requires recipients of federal funds to follow their own documented procurement procedures, which must conform to applicable federal and state laws and promote full and open competition. For small purchases, Uniform Guidance and School policy require obtaining price or rate quotations from an adequate number of qualified sources, which per School policies is at least three. Additionally, proper contract documentation must be maintained for vendor relationships. Condition and Context Of the three vendors tested for procurement transactions under the Child Nutrition Cluster program, sufficient support could not be provided for one small purchase selection. School policy requires at least three quotes for small purchases; however, only two quotes were consistently obtained from vendors throughout the year. Each month, only two vendors provided quotes and the lowest-priced vendor was selected to supply produce. Further, no contracts were in place with the vendor supplying the produce. Effect or Potential Effect Noncompliance with policies and procedures regarding required number of quotes and maintaining formal contracts with vendors increases the risk of noncompliance with federal procurement requirements, lack of competition, and unallowable costs. Questioned Costs Due to the condition noted above, we were unable to determine if costs of $241,737 charged to the grant were allowable. Cause The School Department did not implement adequate controls to ensure compliance with its procurement policy for obtaining sufficient quotes and did not formalize vendor relationships with contracts as required. Recommendation The School Department should strengthen its procurement controls by ensuring that the required number of quotes are obtained and documented for all small purchases, in compliance with School policy and Uniform Guidance. The School should also implement procedures to ensure that contracts are in place with all vendors providing goods and services to the program. Views of Responsible Official and Planned Corrective Action Management’s views and Corrective Action Plan are included at the end of this report after the summary Schedule of Prior Year Findings.
Written Policies and Procedures Related to Federal Awards - Condition: The Town does not have written policies and procedures to ensure compliance with federal award requirements. Specifically, written procedures are missing for: Allowability of Costs (2 CFR 200 Subpart E), Procurement Standards (2 CFR 200.318), Financial Management (2 CFR 200.302). Criteria: 2 CFR §200.303(a) requires non-federal entities to establish and maintain effective internal control over federal awards that provides reasonable assurance that the entity is managing the award in compliance with federal statutes, regulations, and the terms of the award. Cause of Condition: The organization lacked dedicated administrative staff or training to develop these documents, relying on informal processes.Effect: Without written policies, the Town cannot ensure that costs are consistently treated as allowable, reasonable, and allocable in accordance with federal requirements, potentially leading to questioned costs or disallowance. Recommendation: The Town should develop and formally adopt comprehensive, written, and up-to-date policies and procedures that explicitly address 2 CFR 200 requirements for procurement, allowable costs, and financial reporting. Views of Responsible Officials and Planned Corrective Actions: We will reach out to MTAS to help the Town write and implement a policy for the Federal Award Program.
Condition: The Organization did not have written procedures regarding federal cash management, allowability of costs pertaining to federal funds, procurement procedures, or written standards of conduct covering conflicts of interest and governing the performance of its employees engaged in the selection, award and administration of federal contracts. Neither did the Organization have evidence of verication that the providers of covered transactions were not suspended, debarred or otherwise excluded. Criteria: In accordance with 2 CFR Section 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, the Organization must have written procedures regarding federal cash management (Section 200.302(b)(6)), allowability of costs pertaining to federal funds (Section 200.302(b)(7)), procurement procedures (Section 200.318(a)), and written standards of conduct covering conflicts of interest and governing the performance of its employees engaged in the selection, award and administration of federal contracts (Section 200.318(c)(1)). In accordance with 2 CFR Section 180, OMB Guidelines to Agencies on Government-Wide Debarment and Suspension (Nonprocurement), the Organization must have verified that the provider of covered transactions is not suspended, debarred or otherwise excluded (Section 180.300). Effect: The Organization was not in compliance with procurement provisions in 2 CFR Section 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards and 2 CFR Section 180, OMB Guidelines to Agencies on Government-Wide Debarment and Suspension (Nonprocurement). Cause: The Organization had no internal control structure in place to implement the procurement provisions of 2 CFR Section 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards and 2 CFR Section 180, OMB Guidelines to Agencies on Government-Wide Debarment and Suspension (Nonprocurement). Recommendation: The Organization should create an internal control structure in place to implement the procurement provisions 2 CFR Section 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards and 2 CFR Section 180, OMB Guidelines to Agencies on Government-Wide Debarment and Suspension (Nonprocurement), create required written procedures and adhere to them. Repeat Finding: No Views of Responsible Officials: Management of Challenger Learning Center of Northwest Indiana, Inc. acknowledges the findings identified in the audit and is in agreement with the condition as stated. We recognize that certain deficiencies were identified related to donor-restricted grants, and federal grant compliance requirements. As this was the Organization’s first experience managing federal funding, some compliance requirements were not fully understood at the time; however, all actions taken were in good faith and with the intent to appropriately steward funds. Management is committed to strengthening internal controls and ensuring full compliance moving forward. Corrective actions have already been initiated, including the liquidation of remaining federal funds in accordance with grant requirements and the development of formalized policies and procedures to address procurement, financial tracking, and documentation practices.
Federal agency: U.S. Small Business Administration Federal program name: Congressional Grants Inclusive Ventures Small Business Program Assistance listing number: 59.059 Pass-through agency: Anne Arundel County, Maryland Pass-through number: SBAHQ23I0140 Award Period: September 1,2023 through August 31, 2028 Compliance Requirement: Procurement and Suspension and Debarment Type of Findings: Material Weakness in Internal Control over Compliance, Material Noncompliance (Modified Opinion) Criteria or specific requirement: Compliance: Nonfederal entities must follow the procurement standards set out at 2 CFR sections 200.318 through 200.327. 2 CFR section 200.318 states the grant recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations and the standards identified in sections 200.317 through 200.327. Compliance: Non-federal entities 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 section 180.220. All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. When a non-federal entity enters into a covered transaction with an entity at a lower tier, the nonfederal entity must verify that the entity, as defined in 2 CFR section 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), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Control: Per 2 CFR section 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 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 The Corporation did not follow their written procurement procedures which reflect applicable State, local, and tribal laws and regulations which also conform to the applicable federal law and standards identified in the Uniform Guidance. The Corporation could not provide documentation that it ensured contractors were not suspended or debarred before executing contracts with the entities. Questioned Costs Amounts paid to the two contractors for the fiscal year ended June 30, 2025 was $175,000. Context Supporting documentation for the procurement, suspension and debarment status for two of the two contractors selected for testing was not documented. Cause The Corporation has not historically received federal funding so the procurement, suspension and debarment documentation was not deemed necessary. Effect A lack of documented procurement standards for the Corporation could increase the risk of goods and services being procured through a method which is not in accordance with applicable State, local, and tribal law as well as federal regulations including the Uniform Guidance. If the suspension and debarment status is not verified when entering into covered transactions, it is possible that a subaward could be issued to an ineligible entity. Repeat Finding No Recommendation We recommend that management follow their written procurement policies and controls to ensure it maintains documentation of procurement, suspension and debarments checks and that the documentation is available for audit. Views of Responsible Officials Management agrees with finding. See corrective action plan for additional information.
Federal Agency: U.S. Department of Transportation and U.S. Treasury Federal Program Name: Research & Development and Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 20.000 and 21.027 Federal Award Identification Number and Year: 692Ml5-20-T-00029-2025 and SLFRP4646-2025 Pass-Through Agency: Iowa State University Pass-Through Number: 692M15-20-T-00029 PASS THRU 023063C Award Period: July 1, 2024 to June 30, 2025 Type of Finding: - Significant Deficiency in Internal Control over Compliance - Other Matters Criteria or specific requirement: Per Uniform Guidance 2 CFR 200.318(i), the recipient 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. Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: Oklahoma State University Stillwater (OSU STW) and Oklahoma State University Center for Health Sciences (OSU CHS) did not go through procurement procedures prior to entering into a contract with the vendor. Questioned costs: None. Context: During our testing of the Research & Development Cluster, we identified 1 transaction from OSU STW out of 40 transactions that did not go through the proper procurement procedures. During our testing of the Coronavirus State and Local Fiscal Recovery Funds Program, we identified 1 transaction from OSU CHS out of 6 transactions that did not go through the proper procurement procedures. Cause: OSU STW and OSU CHS did not have an effective control in place to ensure that the purchases went through the procurement procedures. Effect: OSU STW and OSU CHS were not in compliance with the regulation to go through the procurement procedures prior to entering a contract. Repeat Finding: No Recommendation: We recommend that OSU STW and OSU CHS review policies and procedures for procurement to ensure that every applicable transaction is going through the proper procurement procedures. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Finding Number: 2025‐001 Repeat Finding: No Program Name/Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Agency: Department of Treasury Federal Award Number: WCG2023‐‐00008 Pass‐Through Agency: Water Infrastructure Finance Authority of Arizona Questioned Costs: N/A Type of Finding: Significant Deficiency Compliance Requirement: Procurement and Suspension and Debarment Criteria Non‐federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR §§200.318 through 200.326. Subrecipients 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 §§200.214 requires that vendors are checked to ensure they are not suspended or debarred from receiving federal funds. Condition The District did not follow Federal and State regulations governing procurement. Cause The District did not have policies and procedures in place to verify a vendor was not suspended or debarred. Effect The District was not in compliance with Federal and State regulations governing procurement. Context The sample was not intended to be, and was not, a statistically valid sample. For two vendors reviewed for suspension and debarment check requirements, the District did not maintain verification that the vendor was not suspended or debarred. Upon review of the vendors, neither were suspended or debarred. Recommendation The District should implement policies and procedures over procurement, specifically suspension and debarment, to ensure goods and services are procured through vendors who are not suspended or debarred, so that federal monies exceeding the formal procurement threshold are used appropriately. Views of Responsible Officials See Corrective Action Plan.
Finding 2025-002: Procurement - Significant Deficiency. Program name: Substance Abuse and Mental Health Services Projects of Regional and National Significance. Assistance Listing: 93.243. Federal award number: 45CBB04530. Federal award year: 7/1/2024 - 6/30/2025. Federal awarding agency: U.S. Department of Health and Human Services. Criteria - 2 CFR §200.318 requires written procurement procedures and awarding contracts only to responsible contractors, with sufficient procurement documentation. Condition - NAMI Chicago’s procurement controls were not designed or operating effectively. The procurement policy does not fully comply with Uniform Guidance. Cause - Management has not fully updated procurement policies or implemented consistent controls over vendor eligibility verification and contract authorization. Effect - There is an increased risk of noncompliance with federal procurement requirements, including contracting with ineligible vendors or entering into unauthorized agreements, which could result in questioned or disallowed costs. Questioned costs - None identified. Identification of Repeat Findings - No. Recommendation - Management should update the procurement policy to align with Uniform Guidance. Management response - See corrective action plan.
Finding 2025-001 Internal control deficiency and noncompliance over procurement and suspension and debarment. Identification of the federal program: Assistance Listing Number 93.493: • Congressional Directives • U.S. Department of Health and Human Services • Federal award identification number – CE146487 • Federal award year – 7/1/2024 – 6/30/2025 • Pass-through entity – The Board of Regents of the University of Oklahoma Health Sciences Center • Pass-through entity identifying numbers: H79FG000747 and H79FG001034 Criteria or specific requirement (including statutory, regulatory, or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303, Internal controls: 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). Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318, General procurement standards: (a) the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 200.317 through 200.327; (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders; (c) (1) the non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award, and administration of contracts. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318, General procurement standards: (i) the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.319, Competition: (a) All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and 200.320. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320, Methods of procurement to be followed: 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: (a) (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 simplified acquisition threshold, 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; (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320, Methods of procurement to be followed: (c) 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; (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. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.324, Contract cost and price: (a) The non-Federal entity must perform a cost or price analysis in connection with every procurement action in excess of the Simplified Acquisition Threshold, including contract modifications. The method and degree of analysis is dependent on the facts surrounding the particular procurement situation, but, as a starting point, the non-Federal entity must make independent estimates before receiving bids or proposals. Title 2, Subtitle A, Chapter II, Part 200, Subpart C 200.214, Suspension and debarment: Non-Federal entities are subject to the non-procurement debarment and suspension regulations that restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Title 2, Subtitle A, Chapter I, Part 180, Subpart C 180.300: What must I do before I enter into a covered transaction with another person at the next lower tier? 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; (b) Collecting a certification from that person; or (c) adding a clause or condition to the covered transaction with that person. Condition: During our testing over procurement, we observed management did not have documented procurement procedures that conformed to the procurement standards identified in 2 CFR section 200.318 to 200.327 and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award, and administration of contracts. Management did not have internal controls in place over procurements to ensure price or rate quotations were obtained from an adequate number of qualified sources, formal procurements to ensure sealed bids or proposals were obtained through public advertising, and completion of a cost or price analysis in connection with all procurement actions exceeding the simplified acquisition threshold. Management did not maintain records for procurements to document the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. In addition, during our testing over suspension and debarment, we observed management did not retain support for internal control documentation for all vendors, evidencing that the vendors were searched for suspension and debarment upon entering into a contract supported with federal funds. Cause: Management did not have internal controls in place over the compliance requirements as stated in the criteria or specific requirement section above. Effect or potential effect: Procurements were not supported by internal controls and could potentially include unreasonable prices or rates. In addition, if a search for suspension and debarment is not conducted, the entity could contract with vendors that are suspended or debarred. Questioned costs: $1,385,165 – Assistance Listing Number 93.493 Federal award identification number – CE146487 Pass-through entity identifying numbers: H79FG000747 and H79FG001034 Questioned costs were computed as all procurements selected for testing. Questioned costs for each award are as follows: • CE146487: $60,874 • H79FG000747: $119,479 • H79FG001034: $1,204,812 Questioned costs means an amount, expended or received from a Federal award, that (1) is noncompliant or suspected noncompliant with Federal statutes, regulations, or the terms and conditions of the Federal award or (2) at the time of the audit, lacked adequate documentation to support compliance. Context: During our testing over procurements, we selected five vendors for testing with total expenditures of $1,385,165 from a population of procurements totaling $1,425,361, subject to formal procurement procedures. We observed management did not have internal controls in place to ensure the compliance requirements as stated in the criteria or specific requirement section above were performed for any of the five procurements selected for testing. For suspension and debarment, we selected five vendors for testing totaling $1,385,165. Management was unable to provide documentation that internal controls were executed for any of the vendors selected for testing. Identification as a repeat finding, if applicable: No. Recommendation: Management should create documented procurement procedures that conform to the procurement standards identified in 2 CFR section 200.318 through 200.327 and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award, and administration of contracts. Management should develop and implement internal controls over procurements to ensure price or rate quotations are obtained from an adequate number of qualified sources, formal procurements to ensure sealed bids or proposals are obtained through public advertising, and completion of a cost or price analysis in connection with all procurement actions exceeding the simplified acquisition threshold. Management should maintain records for procurements to document the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Management should create documented suspension and debarment procedures and develop and implement internal controls to ensure vendors were searched for suspension and debarment at the time of awarding a contract supported by federal funding and retain evidence supporting such procedures. Management should review the procurements identified as questioned costs to identify if any improper payments were made to the entity. Views of responsible officials: We agree with the finding that internal controls were not sufficient to maintain compliance with federal procurement standards under Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 to 200.327 for a non-federal entity. However, the funds were expended for the intended purpose of the federal award. The Company is committed to implementing internal controls to ensure procurement related to federal awards follow 2 CFR section 200.318 to 200.327. The Company will update the procurement policy to ensure it complies with the requirements of 2 CFR section 200.318 through 200.327, which includes the written standards of conduct covering conflicts of interest, governing the actions of its employees who select, award, and administer procurement contracts. This policy will include procedures to ensure proper procurement for purchases to ensure sufficient price quotations are obtained from the required number of qualified sources, proper sealed bids or proposals are obtained through public advertising, an appropriate cost or price analysis is performed for procurement actions exceeding the simplified acquisition threshold, documentation is retained, and proper oversight is exercised to demonstrate compliance with 2 CFR section 200.318 through 200.327.
Federal Agency: U.S. Department of the Treasury; U.S. Department of Homeland Security Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds; Assistance to Firefighters Grant Assistance Listing Number: 21.027; 97.044 Federal Award Identification Number and Year: SLFRP0136-2021, EMW-2021-FG-00409 Pass-through Agency: State of Rhode Island's Pandemic Recovery Office (CSLFRF) Award Period: 3/3/21- 12/31/26, 2/28/23 - 2/27/25 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Repeat Finding: No Criteria or specific requirement The Town must comply with procurement standards set out at 2 CFR sections 200.303 and 200.318 through 200.326 within Uniform Guidance. Condition The Town's purchasing policies do not include all elements as outlined in 2 CFR sections 200.303 and 200.318 through 200.326 noted above. Questioned Costs None Context Although the Town's purchasing policies do not include all elements as outlined in 2CFR sections 200.303 and 200.318 through 200.326, we did not identify transactions where contracts were awarded without proper justification in 7 of 7 procurement transactions tested. Cause The Town's has not updated its purchasing policy to fully incorporate all procurement requirements under Uniform Guidance. Effect The Town is at risk for noncompliance with Federal grants as it relates to procurement. Recommendation We recommend that the Town updates its procurement policy to include all elements identified in 2 CFR sections 200.303 and 200.318 through 200.326. Views of Responsible Officials Management agrees with this finding.
U.S. Department of Treasury Pass-through Entity: Mecklenburg County, North Carolina Program Name: Coronavirus State and Local Fiscal Recovery Funds Federal Assistance Listing Number: 21.027 Significant Deficiency and Nonmaterial Noncompliance – Procurement Finding 2025-006 – Repeat Finding Criteria: Per Sections 200.318 – 200.327 of the Uniform Grant Guidance, a non-federal entity must have and use documented procurement procedures, consistent with Uniform Grant Guidance Title 2 CFR Section 200.318 for the acquisition of property or services required under a Federal award or subaward. Furthermore, a contract award must not be made to a suspended or debarred party listed on the System for Award Management. Condition: There was one (1) contract out of two (2) contracts tested where Roof Above did not retain documentation demonstrating that the bid was publicly advertised as required under Uniform Grant Guidance procurement standards. Additionally, Roof Above did not perform or retain documentation evidencing verification that the vendor was not suspended or debarred on the System for Award Management (SAM.gov) prior to procuring services. Questioned Costs: None of the nonmaterial noncompliance items resulted in questioned costs. Effect: By not having sufficient documentation, the Organization may not be able to evidence compliance with Uniform Grant Guidance and could have improperly contracted with a vendor. Cause: The Organization did not have formalized procedures in place to ensure procurement requirements under Uniform Grant Guidance were consistently documented and reviewed, including public advertisement of bids and verification of vendor suspension or debarment status, prior to entering into contracts. Recommendation: The Organization should consider implementing a procurement policy in line with Uniform Grant Guidance and ensure proper documentation of the procurement process for all vendors utilized with federal funding. Views of Management: Management agrees with the finding and is implementing procedures to correct this which are further discussed in the Corrective Action Plan. See Corrective Action Plan for more information.
Finding 2025-001 – Material Weakness AL No: 20.205 Highway Planning and Construction Federal Grantor: U.S. Department of Transportation, Federal Highway Administration (FHWA) Passed-through: California Department of Transportation (Caltrans) and the Sacramento Area Council of Governments (SACOG) Passed-through Grantor’s No’s.: SPIL-6085 (091) for Caltrans and #240023 for SACOG. Compliance Requirement: Procurement, Suspension and Debarment Criteria: 2 CFR Part 200, Subpart E (Uniform Guidance) Section 200.318(a) states that the “The recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations and the standards identified in Sections 200.317 through 200.327.” The contract should have conformed to the following sections in the Caltrans Local Assistance Procedures Manual (LAPM): - Section 10.1 provides requirements for federally funded architectural and engineering (A&E) contracts. - Section 10.3 provides requirements for non-A&E contracts. - Section 10.1.9 states that the local public agency (LPA) must “obtain Caltrans approval on the Exhibit 12- F: Cost Effectiveness/Public Interest Finding/A&E Noncompetitive and retain all documents in the project files” for procurements by noncompetitive proposals. - Section 9.7.2 states that the LPA must have a Disadvantaged Business Enterprise (DBE) goal set, and “must have an Exhibit 9-D: DBE Contract Goal Methodology submitted to the” District Local Assistance Engineer (DLAE). “LPAs may not advertise the contract before receiving DLAE feedback on the DBE goal.” Condition: Caltrans notified the Authority that two Next-Generation Facility Project (the Project) consulting contracts were procured in compliance the Federal Transit Administration’s (FTA’s) procurement guidelines but did not conform with the State of California LAPM. Caltrans indicated that the AECOM A&E consultant contract procurement did not comply with Sections 10.01 and 10.1.9 of the LAPM, including not including a Public Interest Finding for the sole source procurement of the agreement, and the LeFlore Group, LLC non-A&E consultant contract procurement did not comply with Section 10.3 of the LAPM. In addition, a Disadvantaged Business Enterprise goal was not requested nor completed as part of the advertisement for the project, which was required under Section 9.7.2 of the Caltrans LAPM. Effect: The Authority was not in compliance with the Caltrans LAPM and as a result, the Authority was required to halt work and repay Caltrans and SACOG for funds already reimbursed to the Project of $300,000 under AL 20.205. Cause: Caltrans and SACOG are both pass-through agencies for this grant, with the Authority being the final subrecipient. SACOG was not aware that the procurement requirements under this grant follow U.S. Department of Transportation, Federal Highway Administration requirements that differ from U.S. Department of Transportation, Federal Transit Administration requirements, which are administered by a different Caltrans department. As a result, the additional requirements in the LAPM were not communicated to the Authority and the Authority was not aware of the requirements and failed to comply with the LAPM. Context: The Authority submitted the procurement to the Caltrans Federal Transit Administration Programs Procurement Oversight Branch for approval prior to contracting with the consultants and the procurement was approved. However, the grant was provided through the Federal Highway Administration (FHWA) and Caltrans has a different oversight Branch for FHWA funded projects, which was not made clear to the Authority by either passthrough agency. AL 20.205 was originally reported on the SEFA and was selected for testing a major program as it was a high-risk Type B program under which the Authority incurred $300,000 of grant expenses and received the grant proceeds prior to June 30, 2025. Caltrans issued a sanction letter on December 9, 2025, which required the grant funds to be returned to Caltrans. As a result, the Authority removed the expenses from the SEFA, but the program is reported as a major program to report the procurement finding on the schedule of findings and questioned costs. - Questioned Costs: $300,000 Recommendation: We recommend the Authority add additional language to its Procurement Policy documenting the requirement to follow Section 10 of the LAPM and the criteria under which it applies when grants are received from the FHWA. Management’s Response: Management’s response is included in the attached Corrective Action Plan. Report on Internal Control over Compliance See finding 2025-001 above, which is also considered to be an internal control over compliance finding in the Major Federal Awards Program Audit.
U.S. Department of Treasury Passed through the Colorado Department of Human Services Federal Financial Assistance Listing 21.027 Award 24 IBEH 18932 Coronavirus State and Local Fiscal Recovery Funds Procurement, Suspension, and Debarment Material Weakness in Internal Control over Compliance and Material Non-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. This includes the requirements of a procurement policy and the processes that are to be followed when entering into contracts subject to procurement, suspension, and debarment. Condition: In our testing of procurement, suspension and debarment it was identified that the Organization did not have a written policy on procurement that satisfied the requirements of 2 CFR sections 200.318 through 200.326 implemented at the beginning of the fiscal year. In addition, there was no formal review of vendors to ensure they are not suspended or debarred prior to entering into transactions. Cause: Identification of the specific requirements under the Uniform Guidance and applicable CFR sections was made during the prior year audit, which occurred during fiscal year 2025. This resulted in a period of time in the fiscal year in which transactions were entered into without a compliant policy. Effect: Due to the timing of the implementation of a compliant policy, a material contract was entered into without following procurement, suspension, and debarment processes as required by Uniform Guidance. Questioned Costs: $292,562 Context/Sampling: One contract was identified as subject to procurement, suspension, and debarment requirements. That one contract was selected for testing. Repeat Finding from Prior Year: Yes, prior year findings 2024-03 and 2024-04. Recommendation: We recommend that management continuously review the now implemented policy to ensure it is in compliance with Uniform Guidance and being implemented throughout the Organization for all levels of transactions.
Section III - Findings and Questioned Costs - Major Federal Award Program Audit Finding Reference Number: 2025-001 Title and Assistance Listing Number of Federal Program: Economic Development Initiative, Community_x0004_ Project Funding, and Miscellaneous Grants - 14.251 Type of Finding: Federal Award Finding Finding Resolution Status: In Process Information on Universe Population Size: N/A Sample Size Information: N/A Identification of Repeat Finding and Finding Reference Number: Not a repeat finding Criteria: Under 2 CFR 200.318(a), non-federal entities must establish and maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders. As required under 2 CFR Subpart D (§§200.317–200.327), organizations must follow written procurement procedures that reflect applicable state, local, and tribal laws and regulations, provided that the procurements conform to applicable federal law and the standards in the Uniform Guidance. Statement of Condition: United Playaz, Inc. and Subsidiary (the "Organization") does not have a documented procurement policy that complies with the procurement standards in 2 CFR 200.317–200.327. The Organization has purchasing policies, but no written procedures addressing required elements such as procurement methods, competition, conflicts of interest, domestic preferences, price/cost analysis, or contractor oversight. Cause: The absence of a compliant procurement policy appears to stem from insufficient familiarity with the detailed procurement requirements in the Uniform Guidance, as this was their first award and audit under these standards. Management utilized other local government procurement policies to perform their procurement procedures. Effect or Potential Effect: While no procurement errors were identified during the audit and no questioned costs resulted from this condition, the lack of required written procedures increases the risk of: -Noncompliance with Federal procurement standards -Inadequate competition and pricing documentation -Increased susceptibility to conflict of interest risks -Potential future questioned costs or disallowed expenditures Failure to maintain documented procedures also impairs the organization’s ability to demonstrate compliance to Federal agencies and pass through entities. Auditor Non-Compliance Code: S - Internal control deficiencies Questioned Costs: $- Reportable Views of Responsible Officials: While United Playaz did not have their own policy compliant with federal standards, the organization has historically used procurement guidelines as required by the San Francisco Mayor’s Office of Housing and Community Development (MOHCD) which complies to the Federal standards and guidelines administered and approved by HUD. In addition, the general contractor procurement process was completed prior to the initiation and receipt of the HUD award. _x0004__x0004_Management acknowledges that, while procurement activities were performed using established external guidelines, the Organization did not have a formally adopted written procurement policy that fully complies with the requirements of 2 CFR 200.317–200.327 at the time of the audit. Management has since identified this gap and is in the process of developing a compliant written procurement policy. Context: For procurement processes, the Organization has historically utilized procurement guidelines required by the San Francisco Mayor’s Office of Housing and Community Development and other applicable local government procurement frameworks. In addition, the general contractor procurement process was completed prior to the initiation and receipt of the federal award. Recommendations: 1. Develop and formally adopt a written procurement policy that complies with 2 CFR 200.317–200.327 addressing at minimum: -Procurement methods and applicable dollar thresholds -Full and open competition requirements -Standards of conduct and conflicts of interest -Price or cost analysis (200.324) -Domestic preference (200.322) -Use of small/minority owned businesses (200.321) -Required contract provisions (200.327) 2. Train staff involved in procurement to ensure consistent understanding and implementation. 3. Periodically review and update the policy to remain compliant as Federal requirements evolve Auditors’ Summary of the Auditee’s Comments on the Findings and Recommendations: Response Indicator: Agree Completion Date: 6/30/2026 Response: The Organization is in the process of developing, and will formally adopt and implement, a written procurement policy that complies with the requirements of 2 CFR 200.317–200.327. The policy will address, at a minimum, procurement methods, competition requirements, standards of conduct and conflicts of interest, price or cost analysis, domestic preference requirements, and required contract provisions. In addition, management will provide formal training to personnel involved in procurement to ensure consistent application of the policy and ongoing compliance with Federal procurement standards.
Finding Reference: 2025-003 – I. Procurement, Suspension and Debarment Federal Program Information Federal Agencies: Department of Health and Human Services Department of Justice Awards: Assistance Listing 93.078 – Strengthening Emergency Care Delivery in the United States Healthcare System through Health Information and Promotion Assistance Listing 16.753 – Congressionally Recommended Awards Award Periods: September 30, 2023 – September 29, 2025 July 1, 2024 – September 30, 2026 Description: Incomplete Federal Requirements within Procurement Policies Criteria In accordance with Title 2 U.S. Code of Federal Regulations, Part 200.303, Internal controls, “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).” Part 200.320 Methods of procurement to be followed states the following: “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” regarding the methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. Condition As part of our testing over the operating effectiveness of internal controls over the Procurement, Suspension and Debarment assertion for our major programs, we noted that the Corporation did not have a procurement policy that conforms to all applicable standards contained in the Uniform Guidance, when purchasing goods or services with the federal funds. Cause The Corporation did not comply and maintain a procurement policy that conforms to the provisions required by the Uniform Guidance upon receiving such federal funds related to their federal programs. Effect or potential effect Purchasing of goods and/or servicing with the major federal programs may not be in compliance with the Uniform Guidance. Questioned costs None. Identification of a repeat finding This is a repeat finding of Finding 2024-006. Context Management has not established a procurement policy in line with the applicable standards contained in the Uniform Guidance based on review of the existing policy and discussions with management, however, no other instances of noncompliance with procurement standards identified in 2 CFR part 200 were noted as the amount of purchases exceeding the micro-purchase threshold was not direct and material to these programs and therefore no further testing over procurement was performed. Recommendation The Corporation should update its procurement policy to include the provisions required by the Uniform Guidance for purchasing goods and/or services with federal funds. View of responsible officials There is no disagreement with the audit finding.
Federal Program: Maternal, Infant and Early Childhood Home Visiting Grant (including COVID-19) - ALN 93.870; Federal Award # 24853633; passed through Texas Department of Family and Protective Services; passed through Texas Health and Human Services Commission. State Programs: Texas Home Visiting (THV) Program Grant - Award # 24853633; direct funding from Texas Department of Family and Protective Services. Texas Home Visiting (THV) Program Grant - Award # 24853633; direct funding from Texas Health and Human Services Commission. Criteria: Uniform Guidance (2 CFR 200.318 - 200.327) and TxGMS (General Procurement Standards) requires non-federal entities to ensure procurements are conducted using appropriate methods based on dollar thresholds and retain supporting documentation, including an adequate number of quotations from qualified sources for simplified acquisitions (formerly small purchases). Condition /Context: During testing of procurement transactions, two instances were identified in which management incorrectly classified procurements as sole source without adequate justification in accordance with Uniform Guidance or TxGMS, as applicable. Additionally, in these two instances tested, management did not retain sufficient documentation of quotes to support that procurements were conducted in compliance with simplified acquisition requirements (formerly small purchase). Questioned Costs: None Effect: Noncompliance with procurement requirements of Uniform Guidance and TxGMS, which increases the risk that purchases were not conducted in a manner providing full and open competition and may result in disallowed costs or increased scrutiny from grantor agencies. Cause: The condition resulted from inadequate procurement controls, including a lack of formalized review procedures for determining and documenting appropriate procurement methods. This resulted in United Way ATX not retaining the required supporting documentation for competitive procurements. Recommendations: United Way ATX should strengthen procurement controls by performing supervisory review of procurement classification and supporting documentation prior to approval and payment. In addition, management should implement standardized documentation requirements, including identification of procurement methods used and retention of quotes or bids for applicable procurements.
NONCOMPLIANCE WITH PROCUREMENT AND SUSPENSION AND DEBARMENT REQUIREMENTS, CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS, ASSISTANCE LISTING No. 21.027, Direct Allocation, AM-23-0256, AM-23-0255, YEAR ENDED JUNE 30, 2025 Criteria: Per 2 CFR 200.214, non-Federal entities are subject to the non-procurement, debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Condition: The city did not comply with the procurement standards outlined in 2 CFR §200.318-§200.327, which require competitive procurement processes and verification that contractors are not suspended or debarred. Specifically, the city did not verify the eligibility of program recipients/participants/contractors through the System for Award Management (SAM) or equivalent documentation in order to verify that they were not suspended, debarred, or otherwise excluded from participation in the program. Cause: The city does not have procurement policies and procedures in place that allow it to comply with procurement standards outlined in the Uniform Guidance. Effect: Non-compliance with program terms and conditions. Questioned costs: None. Recommendation: Management should develop procedures that will provide reasonable assurance that procurement of goods and services are made in compliance with applicable federal regulations and other procurement requirements specific to a federal award or subaward, and that no subaward, contract, or agreement for purchase of goods or services is made with any suspended or debarred party. Views of responsible officials and planned corrective actions: The government agrees with this finding and will adhere to the attached corrective action plan.
2025-001 Improve Procurement Process Federal Agency: U.S. Department of Education Cluster/Program: Child Nutrition Cluster AL Number(s): 10.553/10.555 Award Year: 2025 Federal Agency: U.S. Department of Education Cluster/Program: Special Education Cluster AL Number(s): 84.027/84.173 Award Year: 2025 Compliance Requirement: Procurement Type of Finding - Compliance Internal Control over Compliance – Material Weakness Criteria or Specific Requirement Uniform Guidance (2 CFR § 200.318–200.320) requires recipients of federal funds to follow their own documented procurement procedures, which must conform to applicable federal and state laws and promote full and open competition. For large purchases, Uniform Guidance and Massachusetts General Law (MGL) require obtaining competitive proposal or sealed bids. Additionally, proper contract documentation must be maintained for vendor relationships. Condition and Context The primary vendor tested for procurement under the Child Nutrition Cluster program did not have a signed contract or proof of the competitive procurement process for fiscal year 2025. Further, the Special Education Cluster did not have quotes for vendors tested or recent sole source letters on file. Effect or Potential Effect Noncompliance with policies and procedures regarding required procurement practices with vendors increases the risk of noncompliance with federal procurement requirements, lack of competition, and unallowable costs. Questioned Costs: None. Cause The District did not implement adequate controls to ensure compliance with procurement policies for obtaining sufficient quotes or competitive bids and did not formalize vendor relationships with contracts as required. Recommendation The District should strengthen its procurement controls by ensuring that the Uniform Guidance and MGL procurement practices are followed. Views of Responsible Official and Planned Corrective Action Management’s views and Corrective Action Plan are included at the end of this report.
Material Weakness in Internal Control over Compliance and Material Noncompliance - Child Nutrition Cluster Criteria: Federal regulations require non-federal entities to follow specific procurement standards when making purchases with federal award funds: • 2 CFR 200.320 requires the use of specific procurement methods (micro-purchase, small purchase, sealed bids, competitive proposals, etc.) based on the value of the transaction. • 2 CFR 200.318 requires the District to maintain oversight that ensures contractors perform in accordance with terms, conditions, and specifications. • 2 CFR 200.319 requires full and open competition and prohibits practices that restrict competition. • 2 CFR 200.324 requires cost or price analysis for certain procurements. • 2 CFR 200.213 requires verification that contractors are not suspended or debarred Condition: During testing of procurement transactions charged to the Child Nutrition Cluster, we noted that the District did not consistently follow the federal procurement standards required by 2 CFR 200.318-327. Specifically: The District did not obtain the required number of price or rate quotations for purchases exceeding the micro-purchase threshold. • For procurements that exceeded the simplified acquisition threshold, the District did not maintain documentation supporting full and open competition. • In several cases, the District was unable to provide evidence that vendors were verified against the SAM.gov exclusion list prior to contract award. • Procurement files did not contain required elements such as cost/price analysis, written procurement method selection, or justification for sole-source procurements. The transactions identified totaled approximately $50,000, which represents a material portion of federal expenditures tested under this major program. Cause: The District did not employ adequate internal controls to ensure that all federally funded procurements consistently followed the federal procurement standards. Staff turnover and insufficient training regarding federal procurement requirements also contributed to the deficiencies. Recommendation: We recommend that the School District design and follow internal controls to ensure proper procurement procedures are followed to comply with Uniform Guidance standards. Effect: Failure to follow federal procurement requirements increases the risk of: • Noncompliance with the Uniform Guidance, • Potential favoritism or lack of competition, • Unallowable costs being charged to federal programs, and • Federal funds being used inefficiently or in a manner inconsistent with federal regulations. The nature and extent of the exceptions identified represent a material weakness in internal control and material noncompliance with procurement requirements. Views of Responsible Official and Planned Corrective Action: See corrective action plan included in this report package.
2025-005 – Procurement Federal program information: Funding agency: U.S. Department of Health and Human Services Title: All major programs Assistance listing numbers: 93.696, 93.912 Award year: 7/1/2024 – 6/30/2025 Criteria: According to 2 CFR Part 200.318 through 200.327, non-federal entities 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. SFRC’s P&P Manual requires two written quotes for purchases between $10,000 and $250,000. Purchases over $250,000 require advertisement in the local newspaper, bid opening/evaluation, and the Board of Directors shall approve purchases in excess of $250,000 prior to contract signing. Condition: For one vendor paid in excess of $10,000 during fiscal year 2025, no written quotes were obtained for the services. There was also no purchase order approved with this vendor and there is no evidence that the Board of Directors approved the purchase. The contract signed with this vendor exceeded $250,000, and there is also no evidence that the Board of Directors approved this contract. One additional vendor was also paid in excess of $10,000 during fiscal year 2025, and there were no written quotes were obtained for the goods purchased. Context: One of ten vendors tested under ALN 93.696 and two of ten vendors tested under ALN 93.912. Questioned Costs: None Cause: SFRC has not implemented the requirements of its P&P Manual over procurement. Effect: SFRC is not in compliance with its P&P Manual and SFRC could be paying more for goods and services than if bids/quotes had been obtained. Auditor’s Recommendation: SFRC should enforce internal control procedures to ensure that all purchases are made in a manner consistent with its P&P Manual. Management’s Response: Management reviewed existing accounting staffing structure, revised position descriptions, and have advertised to fill two of three open positions; Accounts Payable Specialist and Controller. Management feels with these revised position descriptions, more focus on accounting operations, procedures, and property and equipment management.
NONCOMPLIANCE WITH PROCUREMENT AND SUSPENSION AND DEBARMENT REQUIREMENTS, CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS, ASSISTANCE LISTING No. 21.027, Direct Allocation, MT-ARPA-CG-23-613, RRG-22-1864A, AMC-22-0137, YEAR ENDED JUNE 30, 2025 Criteria: Per 2 CFR 200.214, non-Federal entities are subject to the non-procurement, debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Condition: The city did not comply with the procurement standards outlined in 2 CFR §200.318-§200.327, which require competitive procurement processes and verification that contractors are not suspended or debarred. Specifically, the city did not verify the eligibility of program recipients/participants/contractors through the System for Award Management (SAM) or equivalent documentation in order to verify that they were not suspended, debarred, or otherwise excluded from participation in the program. Cause: The city does not have procurement policies and procedures in place that allow it to comply with procurement standards outlined in the Uniform Guidance. Effect: Non-compliance with program terms and conditions. Questioned costs: None. Recommendation: Management should develop procedures that will provide reasonable assurance that procurement of goods and services are made in compliance with applicable federal regulations and other procurement requirements specific to a federal award or subaward, and that no subaward, contract, or agreement for purchase of goods or services is made with any suspended or debarred party. Views of responsible officials and planned corrective actions: The government agrees with this finding and will adhere to the attached corrective action plan.
Coronavirus State and Local Fiscal Recovery Funds Criteria: Under 2 CFR 200.214, recipients and subrecipients are subject to procurement suspension and debarment requirements, which prohibit entering into covered transactions with parties that are suspended, debarred, or otherwise excluded from participation in federal programs. These requirements apply to contracts and subawards funded with federal financial assistance. In addition, 200.318–200.327 requires non federal entities to follow procurement standards applicable to federal awards, which include maintaining adequate oversight and compliance with applicable federal requirements, including suspension and debarment provisions. Condition: During our review of procurement transactions charged to federal awards, we noted that the Town did not document verification that vendors used for information technology and phone system upgrades and for the purchase of tasers and body worn cameras were not suspended or debarred at the time the contracts or purchase orders were executed. Specifically, the Town did not perform or retain evidence of a search of the System for Award Management (SAM.gov) or obtain vendor certifications demonstrating compliance with federal suspension and debarment requirements for these procurements. we did not identify any vendors that were suspended or debarred at the time of procurement. We did not identify any vendors that were suspended or debarred at the time of procurement. Universe/ Population: Four contracts totaling $7,347,577 were subjected to compliance testing. For two of the four contracts totaling $90,955, the Town did not perform or retain evidence of a search SAM.gov or obtain vendor certifications demonstrating compliance with federal suspension and debarment requirements. Cause: The Town did not have written procurement procedures or internal controls that required suspension and debarment verification to be performed and documented prior to awarding contracts or issuing purchase orders funded with federal awards. As a result, procurement staff relied on informal practices that did not include consistent SAM.gov verification. Questioned Costs: No questioned costs were identified. Effect: Without performing and documenting suspension and debarment checks, the Entity increases the risk of awarding contracts to vendors that are ineligible to participate in federally funded transactions. This noncompliance exposes the Town to potential cost disallowance, increased federal oversight, and audit findings related to procurement and internal controls. Further, questioned costs could arise if future review determines that payments were made to ineligible vendors. Recommendation: We recommend that the Town: 1. Update its written procurement policies and procedures to require verification of vendor eligibility through SAM.gov prior to awarding any contract or issuing any purchase order funded with federal awards. 2. Require procurement staff to retain documentation of the suspension and debarment verification (e.g., dated SAM.gov search results or vendor certifications). 3. Provide training to relevant personnel on federal procurement requirements, including suspension and debarment compliance under 2 CFR Part 200. 4. Require that all contracts pertaining to federally funded transactions include language that addresses termination for cause as well as other requirements stipulated in 2 CFR Part 200. View of Responsible Official: Management concurs with the finding.
Coronavirus State and Local Fiscal Recovery Funds Criteria: Under 2 CFR 200.320(a), recipients and subrecipients may use informal procurement methods for small purchases when the value of the procurement does not exceed the Simplified Acquisition Threshold. However, small purchase procedures require the solicitation of price or rate quotations from an adequate number of qualified sources and documentation supporting the procurement decision. In addition, 2 CFR 200.318(a) requires recipients and subrecipients to maintain and use documented procurement procedures that conform to federal procurement standards and applicable state and local laws and regulations. Condition: During our review of procurement transactions charged to federal awards, we noted that the Town did not follow required small purchase (informal procurement) procedures for certain purchases. Specifically, for selected procurement transactions with values above the micro purchase threshold but below the Simplified Acquisition Threshold, the Town did not solicit price or rate quotations from an adequate number of qualified sources and did not retain documentation to support price reasonableness, as required by federal procurement standards. Universe/Population: Four contracts totaling $7,347,577 were subjected to compliance testing. For two of the four contracts totaling $90,955 that were below the Simplified Acquisition threshold were subjected to compliance testing. The Town did not solicit price or rate quotations from an adequate number of qualified sources for one contract and did not retain documentation to support price reasonableness, as required by federal procurement standards, for the other contract. Cause: The Entity did not have written procurement procedures or internal controls as required by 2 CFR 200.318(a). As a result, inconsistent application of small purchase requirements, including the failure to obtain and document required price or rate quotations and support for price reasonableness, occurred. Questioned Costs: No questioned costs were identified. Effect: Failure to follow small purchase procedures increases the risk that procurements are not conducted in a manner that ensures full and open competition and cost reasonableness. This noncompliance exposes the Town to potential questioned costs, cost disallowance, and increased federal or pass through oversight. Recommendation:. We recommend that the Town: 1. Update its written procurement policies and procedures to clearly define small purchase requirements, including quotation thresholds and documentation standards. 2. Require procurement staff to solicit and retain documentation of price or rate quotations from an adequate number of qualified sources for all small purchases. 3. Provide training to relevant personnel on federal procurement requirements under 2 CFR Part 200, including informal procurement methods. 4. Implement supervisory review of procurement files to ensure compliance prior to payment. View of Responsible Official: Management concurs with the finding.
Federal agency: Department of Housing and Urban Development Federal program title: Continuum of Care Program FALN Number: 14.267 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: December 1, 2024 – November 30, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance and Immaterial Noncompliance Criteria or specific requirement: 2 CFR sections 200.212 and 200.318(h); 2 CFR section 180.300; 48 CFR section 52.209-6 outlines that the non-Federal entity must verify that the agency in which it is entering into a contract is not suspended or debarred or otherwise excluded from participating in the transaction. Condition: The Organization did not verify that a vendor utilized was not suspended, debarred, or otherwise excluded prior to entering into a transaction. Questioned costs: None Context: This condition impacted one (1) of one (1) transaction selected for testing. During the audit, the vendor was checked via SAM.gov and determined to not be included as suspend or debarred. Cause: Oversight. Effect: The Organization could potentially enter into a transaction with an entity that has been suspended or debarred. Repeat Finding: No Recommendation: We recommend that the Organization retain documentation that SAM.gov was used to verify that vendors are not suspended, debarred, or otherwise excluded from participating in the transaction prior to contract. To the extent practicable, the Organization can engage with a third party that will verify any new and existing vendors have not been suspended or debarred on a monthly basis. Views of responsible officials: There is no disagreement with the audit finding.
Finding No. 2025-066 Federal Awarding Agency: USDOT Impact: Significant Deficiency, Noncompliance AL Number and Title: 20.205 HPC Federal Award Number: 0A41(034), 0902(042), 0A31(035), 0772(001) Applicable Compliance Requirement: Special Tests and Provisions Condition: Contractor certified payrolls for four of 11 construction projects tested were not submitted during FY 25. Context: All laborers and mechanics employed by contractors or subcontractors that perform work on construction projects in excess of $2,000 financed by federal funds must be paid wages not less than the prevailing wage rates established by the Department of Labor and Workforce Development for a project’s locality. To ensure compliance with federal regulations, required provisions for federal-aid construction contracts are included in the contractors’ contract. The provision outlines the frequency and method for submission of certified payrolls to the contracting agency and requires contractors and subcontractors to submit a certified copy of payrolls for each week of contract work. Contractors and subcontractors submit payroll submissions electronically to DOTPF using AASHTOWare. Cause: DOTPF lacked adequate procedures for project staff to oversee contractors’ and subcontractors’ submission of certified payrolls to ensure federal requirements were met. According to DOTPF programming staff, AASHTOWare lacked the ability to automatically send notifications to contractors for missing certified payrolls. Although training was provided to project staff to help ensure certified payrolls were appropriately reviewed, approved, or rejected; due to competing priorities, project staff did not regularly generate payroll status reports and follow up on missing certified payrolls. Criteria: Title 29 CFR 3.4 requires that each certified payroll be delivered by the contractor or subcontractor within 7 days after the regular payment date of the payroll period. Title 2 CFR 200.318(b) requires that recipients and subrecipients maintain oversight to ensure contractors perform in accordance with the terms, conditions, and specifications of their contracts. Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Effect: Federal agencies may suspend future payments, advances, or guarantee of future funds if a state does not comply with prevailing wage rate requirements. Questioned Costs: None Recommendation: DOTPF’s Division of Statewide Design and Engineering Services director should implement procedures and continue to provide training to ensure project staff perform timely review of contractors’ and subcontractors’ payroll submission to comply with federal requirements. Views of Responsible Officials: Management agrees with this finding.
SIGNIFICANT DEFICIENCY; CRITERIA: 2 CFR §200.318(a) requires non‑Federal entities to maintain and follow written procurement procedures that are consistent with Federal laws, the Uniform Guidance, and applicable state laws. State procurement rules also require local governments to follow competitive purchasing and contracting procedures when expending public funds.; CONDITION: The Town’s written procurement policies have not been updated to reflect current Federal procurement standards under 2 CFR §§200.317–200.327 or applicable state procurement requirements. ; EFFECT: Because the Town’s procurement policies are not current with Federal and state requirements, the Town risks noncompliance with Federal procurement standards which increases the likelihood of questioned costs for federally funded purchases. Noncurrent policies could allow insufficient competition, incomplete documentation, or use of unallowable contract types. FEMA or other Federal agencies could determine costs to be ineligible, resulting in reimbursement reductions or the need for the Town to repay Federal funds.; CAUSE: The Town had not conducted a recent review of its procurement policies and procedures and was unaware of necessary updates. Limited staffing in the finance and administrative functions contributed to the delay in updating the written policies.; RECOMMENDATION: The Town should update its written procurement policies to fully incorporate the current Federal procurement standards under 2 CFR §200.317–§200.327 and applicable state laws. The Town should provide staff training on the revised procurement procedures and establish a periodic review schedule to ensure ongoing compliance with Federal and state requirements.; VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS: The Town of Spruce Pine agrees with this finding. Procurement policies and procedures will be updated to be compliant with federal and state laws. Staff will be trained on new procedures, and the policy will be reviewed on an annual basis.
2025-002 Procurement Policy Condition: The Organization has not adopted a written procurement policy. Criteria: Per Code of Federal Regulations 2 CFR 200.318 ("2CFR 200.318"), the Organization must maintain and use documented procedures for procurement transactions under a Federal award or subaward. Cause: The Organization has not yet created a standalone procurement policy in accordance with 2 CFR 200.318. Effect: The Organization does not have documented procurement procedures, which could cause procurement requirements outlined in 2 CFR 200.318 to not be followed. Recommendation: RBT recommends that the Organization formally adopt a written procurement policy that complies with procurement requirements in 2 CFR 200.318. Management's Response: See corrective action plan.
2 C.F.R. § 3474.1 gives regulatory effect to the Department of Education for 2 C.F.R. § 200. 2 C.F.R. § 200.318(a) requires that the recipient or subrecipient must maintain and use documented procedures for procurement transactions under the Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations and the standards identified in §§ 200.317 through 200.327. 2 C.F.R. § 200.318(i) requires that 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 C.F.R § 200.320 provides three types of procurement methods: informal procurement methods (for micro-purchases and simplified acquisitions); formal procurement methods (through sealed bids or proposals); and noncompetitive procurement methods. For any of these methods, the recipient or subrecipient must maintain and use documented procurement procedures. 2 C.F.R. § 200.320(a)(2) provides the requirements for simplified acquisitions. The aggregate dollar amount of the procurement transaction is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If simplified acquisition procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. New Philadelphia City School District Federal Purchasing Procedures documents small purchases are those from $10,001 to $25,000. The policy stipulates that quotes for small purchases must be obtained from at least two vendors. Quotes may be obtained in writing, verbally, or from a website. Documentation of all quotes must be maintained. While price must be a consideration, other criteria such as quality, availability, service and expertise must also be considered. The rational for the recommended vendor must be documented on the Rubric. The School District did not have the proper internal controls in place to maintain supporting documentation for the procurement history for one of the three selected vendors. During fiscal year 2025 the School District made one procurement falling within the simplified acquisition dollar threshold (formerly referred to as a small purchase) which was for the renewal of a contract for individualized education instruction (IEP) software. However, documentation was not available to support the procurement process for this fiscal year 2025 purchase. Failing to have appropriate controls in place may result in the School District not entering procurement transactions with the most appropriate vendor. The School District should review their policies and procedures and take steps necessary to ensure that procurement procedures are properly followed. The School District should also ensure they comply with the applicable Uniform Guidance requirements, ensuring open competition through procurement.
Finding Reference Number: 2025-002 Reportable finding considered a significant deficiency - Inadequate Controls over Procurement documentation retention Program name and CFDA: Supportive Services for Veteran Families (SSVF) 64.033 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) 21.027 Federal award identification number: SSVF – 23-CA-437 CSLFRF – UNKNOWN Federal award year: SSVF – 10/1/2022-9/30/2025 CSLFRF – 8/1/2024-6/30/2025 Federal awarding agency: SSVF – Department of Veterans Affairs CSLFRF – Department of the Treasury Name of pass-through entity: SSVF – None CSLFRF – Alameda County Criteria Federal procurement requirements under 2 CFR 200.318–200.320 outline expectations for maintaining documentation to show procurement activity aligns with written procedures and promotes full and open competition. Additionally, 2 CFR 180.300, incorporated by 2 CFR 200.214, requires organizations to verify that vendors are not suspended or debarred before entering into an agreement. This verification can be completed by checking SAM.gov or obtaining a vendor certification. Statement of Condition Organization has written procurement procedures and consistently performs cost analyses for rental assistance-related procurements. Audit testing also confirmed that none of the vendors involved were suspended or debarred. However, the Organization was not able to provide documentation showing that suspension/debarment checks were performed before onboarding these vendors. While the procedures appear to be followed in practice, the documentation step was not retained. Cause It appears that documentation was not transitioned between staff members when the individual who initially performed these procedures left the organization. Effect or Potential Effect Without documentation of these checks, the Organization cannot fully demonstrate compliance with federal procurement and suspension/debarment requirements. Although no ineligible vendors were used, the missing documentation increases the risk that future procurements could be questioned or require additional follow-up. Questioned Costs None Recommendation We recommend the Organization take a few steps to strengthen this process going forward: Incorporate a simple, consistent step for keeping documentation of SAM.gov checks or vendor certifications in each procurement file. Communicate this requirement to the staff performing vendor onboarding so expectations are clear. Periodically review procurement files to make sure documentation is being consistently retained. These adjustments should help ensure the strong practices already in place are fully supported by required documentation. Reportable Views of Responsible Officials See corrective action plan.
Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Repeat Finding: No Criteria or Specific Requirement Lincoln Public Schools must comply with procurement standards set out at 2 CFR sections 200.303 and 200.318 through 200.326 within Uniform Guidance. Condition Lincoln Public Schools purchasing policy does not include all elements as outlined in 2 CFR sections 200.303 and 200.318 through 200.326 noted above. Questioned Costs None Context Although Lincoln Public Schools purchasing policies do not include all elements as outlined in 2 CFR sections 200.303 and 200.318 through 200.326, we did not identify transactions where contracts were awarded without proper justification in 1 of 1 procurement transactions tested. Cause Management was not aware of the procurement standards set out at 2 CFR sections 200.303 and 200.318 through 200.326 within Uniform Guidance. Effect Lincoln Public Schools is at risk for noncompliance with Federal grants as it relates to procurement. Repeat Finding No Recommendation We recommend that Lincoln Public Schools update its procurement policies to include all elements identified in 2 CFR sections 200.303 and 200.318 through 200.326. Views of Responsible Officials and Planned Corrective Action Management is working with our current auditors to update the Lincoln Public Schools procurement policies to be in compliance with the Uniform Guidance.
Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform guidance) requires non-federal entities other than States to follow 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 sections 200.318 through 200.326. This includes using the small purchase methods only for procurements that meet the applicable criteria under 2 CFR sections 200.320(b). Condition, Cause, and Effect/Potential Effect: Internal controls at the County were not sufficient to ensure full and open competition on grant-funded contracts. Individuals involved in the procurement process incorrectly relied on NRS requirements instead of the County’s procurement policy and federal procurement guidelines. Questioned Costs: None noted. Context: A nonstatistical sample of the procurement transactions funded with the ARPA Coronavirus State and Local Recovery Funds revealed that the County did not conduct procurement transactions in a manner providing fair and open competition on two construction contracts. Recommendation: We recommend that the County provide additional training to grantoversight personnel and ensure controls are sufficiently enhanced to ensure procurement policies are followed on federal grant-funded purchases. Views of Responsible Officials and Planned Corrective Actions: We agree with this finding and will enhance control procedures as recommended. Repeat Finding from Prior Year: Yes; 2024-008.
Finding 2025-001 – COVID 19 – Coronavirus State and Local Fiscal Recovery Fund - AL No. 21.027 U.S. Department of Treasury Other Matters Related to Internal Control over Compliance of the Major Program Criteria: Non‐federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. Condition and Context: During our testing as it related to compliance with procurement we noted that an expense for engineering services for the Waste Water Treatment Assessment services charged to the major program would have required a formal bidding process as the project exceeded the simplified acquisition threshold. The Town had selected the engineering company for “On Call” engineering services as it related to the DPW through a request for qualifications process. The contract does include as part of the services to be provided Waste Water Treatment Assessment services. However, the contract is not specific to federally funded projects. The Town of Medfield had submitted the request for qualifications documentation as well as the executed contracted for “On Call” services to both the Town’s consulting service and the pass through entity for approval of the Waste Water Treatment Assessment. The pass through entity and the pass through entities Auditors did not have any concerns with the request for qualifications as it relates to the Waste Water Treatment Assessment project. Questioned Costs: $175,500 Cause: Based on the judgement of the pass through entity (Norfolk County) and their auditors, the Town was approved to procure engineering services for the Waste Water Treatment Assessment as part of a larger “On Call” services contract. The Town did select the contractor through a competitive request for qualifications process, but did not initiate a separate procurement for the sub-project. Effect or Potential Effect: There is risk that amounts charged to the federal awards major program may not be in accordance with procurement, suspension, and debarment principles. Identification as a Repeat Finding: 2024-001 Recommendation: Going forward, the Town of Medfield should consider a separate bidding process for expenses related to federal grant funds. Management Response: Due to the differences in the interpretation of federal requirements regarding competitive procurement, the Town will follow the more restrictive one on an ongoing basis. New projects paid for by federal grants will have separate procurements.
Federal Procurement Regulations Significant Deficiency U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES ALN #: 93.224 - Health Centers Program and 93.527 - Grants for New and Expanded Services under the Health Center Program Federal Award Identification #: H80CS00111 Condition: During the Health Centers Program audit, it was noted that HAH did not follow their procurement policies as required by the Uniform Guidance 2 CFR 200.318. Criteria: 2 CFR 200.318 Questioned Costs: $0 Context: During the audit, it was noted that while the majority of program expenditures are salary and benefits, HAH did not follow their policies for procurement for other goods and services, and did not obtain multiple bids or sole source justification for three out of eight vendors selected for testing that exceeded the micro-purchases threshold. Cause: Turnover at HAH, who separated from the parent entity in FY24 resulting in changes in procedures. Effect: Lack of internal control to ensure program requirements Identification as repeat finding, if applicable: Not applicable. Recommendation: We recommend that HAH establish an updated procurement policy and designate an individual to review all purchases over the micro-purchases threshold and review procurement documentation to ensure it is sufficient before expenses are approved for payment. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding. See corrective action plan.
Criteria: Nonfederal entities other than States, including those operating Federal programs as subrecipients of States, must follow the procurement standards set out at 2 CFR Sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR Part 200. Nonfederal entities other than States, including those operating Federal programs as subrecipients of States, must follow the suspension and debarment standards set out at 2 CFR Part 180, which implements Executive Orders 12549 and 12689, “Debarment and Suspension,” federal awarding agency regulations in Title 2 of the CFR adopting/implementing the OMB guidance in 2 CFR Part 180; program legislation; and the terms and conditions of the award. Condition: During transactional testing, the following was noted: • 4 out of 8 vendors reviewed did not have evidence of multiple competitive bids being obtained. Additionally, there are no consistent processes in place to check to ensure vendors are not suspended or debarred prior to conducting business. • 4 out of 8 vendors reviewed did not have evidence or processes in place to check to ensure vendors were not suspended or debarred prior to conducting business. None of the 6 vendors were suspended or debarred. Context: The audit findings represent a systematic problem, see condition above. Cause: There were ineffective controls in place during the period over procurement, along with lack of management oversight. Effect: The Clinic is not enacting fair competition in the procurement process nor are they following their policies by making sure bidding support is provided before the appropriate officials sign the Purchase Order. Additionally, the Clinic may be paying vendors that are suspended and debarred which would be an unallowable cost. Questioned Costs: AL#: 93.441 Known: Procurement- $60,729 Repeat Finding: Yes, 2022-007, 2023-004, and 2024-002. Recommendation: We recommend the Clinic conduct training for staff and program managers to review the Clinic’s procurement and suspension and debarment policies and procedures along with federal regulations. Views of Responsible Officials: The Clinic will review the procurement standards set forth at 2 CFR part 200 and will update the procurement and purchasing policies to comply with all required purchasing standards. All vendors will be required to submit and certify a statement regarding debarment and suspension prior to contract award.
Criteria: The Uniform Guidance 2 CFR Part 200.318 requires that the Agency have documented procurement procedures for procurement transactions under a Federal award or subaward. Condition: The Agency has a procurement policy in place; however, it is not fully aligned with the procurement standards set forth in 2 CFR Part 200.317–200.327 of the Uniform Guidance. Specifically, the policy does not incorporate all required procurement methods or procedures, such as competitive bidding (sealed bids), even though no purchases during the audit period met the threshold requiring formal bidding. Cause: The Agency's current policy has not been updated to fully address the specific requirements of 2 CFR Part 200.317–200.327 of the Uniform Guidance. Effect: The Agency is not in compliance with 2 CFR Part 200.317–200.327 of the Uniform Guidance. Questioned Costs: None reported. Context: Not applicable. Repeat Finding: Not applicable. Recommendation: Although there were no purchases in the audit period meeting the threshold for competitive bidding, we recommend that the Agency review and revise its procurement policy to ensure compliance. This should include procedures for all procurement methods including sealed bids. View of Responsible Officials: Refer to management’s corrective action plan.
Identification of the Federal Program: Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grants Cluster - Entitlement/Special Purpose Federal Agency: U.S. Department of the Housing and Urban Development Pass-through Entity: County of Orange Community Resources Department Pass-through Identification Number: J2JWJVWQBEA6 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): For federally funded programs, recipients are required to establish and maintain effective internal control over compliance in accordance with 2 CFR §200.303. These controls should provide reasonable assurance that federal awards are managed in compliance with applicable laws, regulations, and the provisions of contracts or grant agreements. Pursuant to 2 CFR §§200.403 through 200.405, costs charged to federal programs must be allowable, reasonable, necessary, and adequately documented. Recipients must maintain sufficient documentation to support the nature of expenditures, vendor selection, and cost reasonableness to ensure compliance with allowable cost principles. Additionally, pursuant to 2 CFR §200.318, non-Federal entities are required to use documented procurement procedures that reflect applicable federal, state, and local requirements. These procedures must ensure that procurement activities are conducted in a manner providing for full and open competition, use appropriate procurement methods, and include adequate documentation to support vendor selection and cost reasonableness. Recipients are responsible for ensuring that procurement activities performed by employees, consultants, or contractors on their behalf comply with these requirements. Failure to follow these procedures may result in costs that are not adequately supported as allowable under federal requirements. Further, pursuant to 24 CFR §570.506, when CDBG funds are used for rehabilitation activities, recipients must ensure that work is completed in accordance with applicable laws, codes, and requirements related to housing safety, quality, and habitability. This includes ensuring that required permits are obtained and inspections are performed in accordance with local building and safety requirements prior to and throughout construction activities. Condition: During our audit of the CDBG program, we identified the following deficiencies related to internal control and compliance over compliance requirements: Allowable Costs/Cost Principles: The City did not maintain sufficient documentation to support compliance with federal requirements related to CDBG-funded rehabilitation activities. Specifically, the City did not maintain adequate documentation to support vendor selection, cost reasonableness, or the basis for contractor procurement. In addition, the City did not maintain evidence demonstrating that procurement-related activities performed by a consultant on its behalf were conducted in accordance with established procedures. Special Tests and Provisions – Rehabilitation: During our testing of nine CDBG-funded rehabilitation projects, we noted that one project had a building permit on file that expired in 2008 and was not renewed prior to or during construction. Additionally, five projects had building permits that were issued after construction activities had already commenced, indicating that required permits were not obtained prior to the start of rehabilitation work. Cause: The City has not established and implemented effective internal controls and monitoring procedures over its CDBG program to ensure compliance with all federal requirements. Effect or Potential Effect: The City did not maintain sufficient documentation to support expenditures, limiting its ability to demonstrate that costs charged to the program are allowable, reasonable, and adequately supported in accordance with federal requirements. As a result, there is an increased risk that costs may be questioned or disallowed. Additionally, failure to obtain and maintain valid permits prior to construction increases the risk of noncompliance with rehabilitation requirements and may result in ineligible activities. Questioned Costs: None. Context: See condition above for the context of the finding. Recommendation: We recommend that the City strengthen its internal control system over the CDBG program by implementing and documenting formal policies and procedures to ensure compliance with federal requirements. This includes maintaining sufficient documentation to support vendor selection, cost reasonableness, and overall allowability of costs, as well as ensuring appropriate oversight of consultants performing activities on the City’s behalf. Additionally, the City should enhance its monitoring procedures over rehabilitation activities by maintaining sufficient documentation to support that work was performed in accordance with program requirements, including evidence of inspections and completion of approved work; permits or local approvals alone should not be relied upon as sole evidence of compliance. The City should provide training to staff involved in program administration and implement ongoing monitoring procedures to ensure compliance with federal requirements. Views of Responsible Officials: Management concurs with the finding and agrees to implement necessary corrective procedures.