FA 2024-001 Strengthen Controls over Expenditures Compliance Requirement: Procurement and Suspension and Debarment Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 10.553 – School Breakfast Program 10.555 – National School Lunch Program Federal Award Numbers: 235GA324N1099 (Year: 2024), 245GA324N1199 (Year: 2024) Questioned Costs: $46,877.67 Description: A review of expenditures charged to the Child Nutrition Cluster revealed that the School District’s internal control procedures were not operating appropriately to ensure that the School District’s procurement procedures were followed. Background Information: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $1,204,722 were expended and reported on the Terrell County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state in part that “(a) the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations and… (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.” In addition, provisions included in the Uniform Guidance, Section 200.320 – Methods of Procurement to Be Followed provide guidance for procurement through small purchase procedures and state “If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources.” Condition: A sample of 47 procurement transactions was randomly selected for testing using a non-statistical sampling approach. These transactions were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The School District could not provide evidence that an adequate number of rate or price quotations were obtained from qualified sources for 18 small purchase expenditures reviewed. Questioned Costs: Upon testing a sample of $192,188.67 in procurement transactions, known questioned costs of $46,877.67 were identified for expenditures that did not follow the School District’s procurement procedures. Using the total population of $681,669.21 in procurement transactions, we project the likely questioned costs to be approximately $166,269.24. The following Assistance Listing Numbers were affected by known and likely questioned costs: 10.553 and 10.555. Cause: When discussing the issues noted with management, they indicated that School District personnel did not maintain sufficient documentation to support that multiple quotations were obtained. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to appropriately implement procedures to address procurement compliance requirements exposes the School District to unnecessary risk of error and misuse of federal funds and could result in the expenditure of federal funds with unqualified vendors. In addition, this deficiency could lead to the return of funding associated with unallowable expenditures. Recommendation: The School District should evaluate and improve internal control procedures to ensure that required procurement methods are properly identified and followed. In addition, management should develop a monitoring process to ensure that these procedures are operating appropriately. Views of Responsible Officials: We concur with this finding.
2024-005 Inadequate Contract Retention and Suspension/Debarment Verification (Material Weakness) Federal Agency: Department of Education Pass-through Agency: New Hampshire Department of Education Cluster/Program: Special Education Cluster Assistance Listing Number(s): 84.027, 84.173, 84.027X, 84.173X Passed-through Identification: 20220039, 20221010, 20221035, 20221036, 20221037, 20230209, 20230211, 20230212, 20230214, 20230215, 20230231, 20230232, 2024188, 20240189, 20240190, 20240191, 20240191, 20240199, 20240308 Compliance Requirement: Procurement and Suspension and Debarment Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: Federal regulations require that non-federal entities, including school administrative units (SAUs), maintain adequate documentation for all procurement transactions and ensure that vendors are eligible to participate in federal programs. Specifically, 2 CFR 200.318–200.327 outlines standards for procurement, including maintaining documentation that demonstrates compliance with federal requirements, ensuring fair and open competition, and retaining executed contracts and related procurement records. Additionally, 2 CFR 180 and 2 CFR 200.213 require verification that vendors are not suspended, debarred, or otherwise excluded from participation in federal programs prior to entering into a contract. Federal guidance emphasizes that all procurement documentation, including executed contracts, bid evaluations, and vendor eligibility verification, must be retained to provide an audit trail demonstrating compliance and prudent use of federal funds. Maintaining proper documentation and performing required verification steps helps prevent the risk of fraud, waste, or improper payments and ensures transparency and accountability in the use of public resources. Condition: During testing of procurement activities, we noted that two signed and executed contracts could not be located. Furthermore, for all vendors reviewed except one, there was no evidence that the School Administrative Unit (SAU) performed procedures to verify that the vendors were not suspended or debarred. Cause: The SAU did not have a consistent process for retaining executed contracts or for documenting the verification of vendor eligibility under suspension/debarment requirements. Staff were not aware of the federal verification requirements or lacked formal procedures to ensure compliance. Effect: The absence of executed contracts and verification procedures increases the risk of noncompliance with federal procurement regulations. This could potentially result in questioned costs during a federal audit and may expose the SAU to financial or reputational risk if funds were improperly paid to ineligible vendors. Questioned Costs: $679,147 Identification as Repeat Finding: This is not a repeat finding. Recommendation: The SAU should implement a formal procurement policy that ensures all contracts are properly executed, signed, and retained. The policy should also establish a standardized process to verify all vendors against federal suspension and debarment lists prior to awarding contracts, with documentation of all verification steps maintained as part of the procurement record. Additionally, staff should be trained on these procedures to ensure ongoing compliance with federal requirements. Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.
Criteria: 2024 Compliance Supplement stated that the non-federal entity must meet the general procurement standards in 2 CFR section 200.318(a), which indicated that 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 §§ 200.317 through 200.327. Condition/Context: As a result of our audit procedures, we noted that Eden's current purchasing (procurement) policy does not include the elements required by the Uniform Guidance. In particular, the policy should address the procurement methods outlined in the procurement claw (i.e. micro-purchases, small purchases, competitive bidding, etc.). Repeat Finding from Prior Year(s): No Cause and Effect: This issue arose from Eden’s limited understanding of the Uniform Guidance’s procurement requirements, which contributed to non-compliance with program requirements. Questioned Cost: None Recommendation: We recommend that management revisit its procurement policies to incorporate the necessary elements required by the Uniform Guidance. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding that the agency did not have policies for Procurement or Suspension and Debarment. The agency intends to adopt a procurement policy and procedures that meets the general procurement standards in 2 CFR section 200.318(a) and the State of California. The agency is also creating policies and procedures to ensure vendors are not suspended or debarred from work on federally funded projects.
FINDING REFERENCE NUMBER 2024-009 FEDERAL PROGRAMS (ALN – 84.027) SPECIAL EDUCATION – GRANTS TO STATES (IDEA, PART B) – SPECIAL EDUCATION CLUSTER (IDEA) (ALN – 84.173) SPECIAL EDUCATION – PRESCHOOL GRANTS (IDEA PRESCHOOL) – SPECIAL EDUCATION CLUSTER (IDEA) (ALN – 84.938A) HURRICANE EDUCATION RECOVERY – INMMEDIATE AID TO RESTART SCHOOL OPERATIONS (RESTART) U.S. DEPARTMENT OF EDUCATION AWARD NUMBERS H027A220003 (07/01/2022 – 09/30/2023); H027A230003 (07/01/2023 – 09/30/2024); H173A220003 (07/01/2022 – 09/30/2023); H173A230003 (07/01/2023 – 09/30/2024); S938A180002 (04/26/2018 – 09/30/2025). COMPLIANCE REQUIREMENT PROCUREMENT AND SUSPENSION AND DEBARMENT TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA 2 CFR Section 200.317, establishes that when conducting procurement transactions under a Federal award, a State or Indian Tribe must follow the same policies and procedures it uses for procurements with non-Federal funds. 2 CFR §200.318(a)(i) establishes that 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 §§ 200.317 through 200.327. 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. STATEMENT OF CONDITION For the ALN 84.938A Restart program, we selected the same sample determined to audit the compliance requirement activities allowed or unallowed/allowable costs/cost principle of forty (40) disbursements from a population of six hundred eighty-three (683) disbursements to suppliers made during the fiscal year 2023-2024. For these forty (40) disbursements, we evaluated the procurement process, and we found the following deficiencies: For nineteen (19) of the cases, the PRDE did not provide either all the necessary documentation or, in some instances, only partial information, preventing a proper assessment of the procurement process for each authorized disbursement. In relation to the IDEA Cluster Program (ALNs 84.027 and 84.173), we requested a list of all procurement procedures performed related to professional services and direct services to participants. No information was provided related to procurement procedures. In addition, we selected a sample of twenty-five (25) transactions for which a quotation process should have been performed, no evidence of quotation process was provided. This represents a scope limitation. QUESTIONED COSTS None. PERSPECTIVE INFORMATION After we requested all the supporting information related to procurement processes, the PRDE was not be able to provide the basic documentation for the procurement performed during the reasonable period of time. STATEMENT OF CAUSE In relation to the IDEA Cluster, the program performs a procurement process related to specific services for which no evidence of the procurement performed was provided. In addition, quotations for some purchases are performed through the Purchase Department of the PRDE. Evidence of the sample selection was not provided for evaluation For the ALN 84.938A, due to the lack of an adequate archiving process for the documentation of the procurement processes, the evidence could not be provided for our evaluation POSSIBLE ASSERTED EFFECT Due to the lack of filing documentation related to the procurements performed program ALN 84.938A Restart, we were unable to properly ascertain if compliance with the procurement process was performed. In relation to the IDEA Cluster, we were unable to ascertain compliance with the procurement compliance requirements. IDENTIFICATION OF REPEAT FINDING This is a repeat finding (Finding Reference Number 2023-007). RECOMMENDATIONS We recommend that the PRDE review its internal control procedures for filings to ensure that all procurement documentation is readily available to any auditor or entity tasked with assessing the procurement process. VIEWS OF RESPONSIBLE OFFICIALS Management agrees with the audit finding. The Puerto Rico Department of Education (PRDE) acknowledges that the requested procurement documentation was not fully available at the time of the auditors’ review. However, management made every effort to gather and reconstruct the information for all the selected transactions, and the complete documentation will be available. Furthermore, the PRDE is taking actions to improve the accessibility and organization of procurement files to ensure that all documentation is readily available for review in a timely manner. Internal controls over document retention and filing procedures are being reinforced to prevent recurrence of this situation. It is important to note that the procurement processes followed by the PRDE comply with the applicable requirements established under the Code of Federal Regulations (2 CFR Part 200 – Uniform Guidance). Management remains committed to strengthening its internal controls, ensuring full compliance with federal and state requirements, and maintaining complete and timely documentation to support all procurement activities. IMPLEMENTATION DATE Current Fiscal Year. RESPONSIBLE PERSON María de los A. Lizardi Valdés Office of Federal Affairs Director Edgar Delgado Serrano Office of Federal Affairs Associate Director
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 #: 20H80CS00111, 24H80CS00111, 21H8FCS40976, 23H8GCS47647 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 any purchases 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.
NONCOMPLIANCE WITH PROCUREMENT AND SUSPENSION AND DEBARMENT REQUIREMENTS, CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS, ASSISTANCE LISTING No. 21.027, DIRECT ALLOCATION, GRANT No. AM-23-0295, YEAR ENDED JUNE 30, 2024 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 action: The government agrees with this finding and will adhere to the attached corrective action plan.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Opioid STR Assistance Listing Number: 93.788 Federal Award Identification Number and Year: 167552 - 2024 Pass-Through Agency: Oregon Health Authority Pass-Through Number(s): 167552 Award Period: January 4, 2021, through September 29, 2024 Type of Finding: Material Weakness in Internal Controls over Compliance and Material Noncompliance: Procurement, Suspension and Debarment Criteria or specific requirement: 2 CFR Part 200 sections 200.214 and 200.318-327 outlines the required general procurement standards, competition, and methods of procurement to be followed. These elements must be incorporated into an organization’s procurement policies and must be followed to ensure procurements are supported and covered transactions are only entered into with entities that are not federally suspended or debarred. Condition: The Alliance does not have formal procurement or suspension and debarment policy. For the sampled procurement transactions, documentation was not retained supporting the determination that the vendors were single source providers, as required by Uniform Guidance. In addition, a suspension and debarment check was not performed before entering into the covered transaction. Questioned costs: Yes Known: $9,239 Likely: $39,740 Context: The Organization does not have written procurement policies nor suspension and debarment policies. CLA tested six procurement transactions charged to the major program. For the sampled procurement transactions, documentation was not retained detailing the history of the procurement, including: the rationale for the method of procurement, selection of contract type, basis for contractor selection, and the basis for the contract price. Documentation should be retained to evidence the adequate number of price comparisons, price analyses, and rationale of acquisition, including to limit competition where competition is limited or contractor is single source. In addition, five covered transactions were tested for suspension and debarment. Documentation was not retained showing selected entities were checked for suspension and debarment prior to entering into the covered transactions. Cause: Due to a lack of knowledge about federal procurement, suspension and debarment, and documentation requirements. Effect: There is an increased possibility of entering into a covered transaction with vendors/contractors who are federally suspended or debarred. Without adequate records retained, the Alliance is at risk of noncompliance with federal suspension and debarment requirements. Repeat Finding: No Recommendation: CLA recommends the Alliance to develop the procurement policy compliance in with Uniform Guidance, including such documentation as the procurement threshold of the transaction, price comparisons and analyses made, bids obtained, proof of any limited competition, dated vendor screenings and signed authorization of the appropriate program personnel. CLA also recommends emphasizing the importance of the procurement standards and established policy to all authorized purchasers within the Alliance. The Alliance also needs to ensure that the policy includes suspension, and debarment checks, and it should be done prior to entering into the program. Each type of disbursement that leaves the Alliance (check, ACH, EFT, credit card, etc.) to improve documentary evidence that costs are being reviewed and approved for appropriateness. Views of responsible officials: There is no disagreement with the audit finding.
Finding 2024-001: Significant Deficiency – Lack of Procurement Policy and Documentation on Sole Source Contracts and Verification of Vendors Federal Grantor: Department of Health and Human Services Condition: The Organization does not have a procurement policy in place that complies with Uniform Guidance. The Organization contracted with a vendor on a sole-source basis and did not document justification for the use of a sole source vendor. In addition, the Organization did not verify that the vendor was not on the list of vendors suspended or debarred from federal contracting before contracting with the vendor. Criteria: Entities are required to have written standards of conduct that cover conflicts of interest and govern the performance of its employees engaged in the selection, award, and administration of contracts (2 CFR section 200.318(c) and 48 CFR sections 52.203-13 and 52.303-16). Entities are required to follow the procurement standards in 2 CFR sections 200.318 through 200.327, including ensuring that the procurement method used for the contracts are appropriate based on the dollar amount and conditions specified in 2 CFR section 200.320 and noncompetitive procurements. Entities also must comply with 2 CFR Part 1326 that prohibits entities that have been debarred, suspended or voluntarily excluded from participating in Federal procurement. Cause: The Organization does not have a procurement policy that addresses sole source contracting and verifying vendor certification that they are not debarred, suspended, ineligible or voluntarily excluded from Federal procurements. Effect: The Department of Health and Human Services may impose additional conditions on the receipt of a subsequent tranche of future award funds, if any, or take other available remedies as set forth in 2 C.F.C. section 200.339. Recommendation: We recommend the Organization review policies with staff to ensure procurement requirements are followed, and that staff are familiar with federal procurement requirements. Management’s Response: The Organization will develop a procurement policy that complies with federal requirements and will document its justification for vendor selections.
The Ohio County Fiscal Court failed to publicly advertise for bids for all but two of the work site projects for the Emergency Watershed Protection Program project. While the county advertised a pre-bid meeting in the local newspaper for prospective companies to get an opportunity to learn about the project, the actual request for bids should have also been advertised in the local newspaper to ensure fair and cost effective procurement procedures. The total of the amount paid for services not properly advertised was $555,000. A total of $766,100 was spent for this program in the audit year. Per the emergency management staff, this was likely due to a misunderstanding and oversight of what was advertised. They had maintained documentation of the pre-bid meeting being advertised and thought that the actual bid request was advertised as well, but it appears it was not. By not following proper bidding procedures, the public was not made aware of the request for bids for this project and did not have an opportunity to apply to provide services for the project. Only those who attended the pre-bid meeting knew of the bidding procedures and the specifications for the projects. KRS 46.010(2) requires, “each county treasurer, and each county officer who receives or disburses state funds, to keep an accurate account of receipts and disbursements, showing a daily balance of receipts and disbursements.” KRS 46.010(3) requires, “all county officers handling state funds, other than taxes, to make an annual report to the Department for Local Government showing receipts and disbursements, and to make other financial statements as the Department for Local Government requires.” Strong internal controls require management to monitor disbursements to ensure compliance with procurement laws, and to keep good records of all bids and other procurement transactions. KRS 424.260 requires that all contractual services other than professional involving expenditures of greater than $40,000 to be advertised in the local newspaper for bids. In addition, 2 CFR section 200.318 (a) states “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 §§ 200.317 through 200.327." Repeat Finding: This is not a repeat finding from the previous year.
Finding #SA2024-004 Compliance with Procurement Requirements Assistance Listing Number: 21.027 Assistance Listing Title: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency: Department of Treasury Pass Through Entity: California State Water Resources Control Board Federal Award Identification Number: A-00216-01 Criteria: Section I, Procurement and Suspension and Debarment, of the May 2024 OMB Compliance Supplement includes the following: In July 2022, Treasury released Final Rule FAQ 13.15, which explains that only a subset of the requirements in Subparts D and E of the Uniform Guidance apply to recipients’ use of award funds under the revenue loss eligible use category. The requirements of 2 CFR sections 200.318 through 200.327 are not included in the list of requirements applicable to such funds. The FAQ 13.15 referenced indicates “In general, these requirements provide that recipients should not deviate from their established practices and policies regarding the incurrence of costs, and that they should expend and account for the funds in accordance with laws and procedures for expending and accounting for the recipient’s own funds.” Condition: We selected seven services and supplies transactions under the revenue loss category to test for allowability under the program and compliance with the City’s procurement policies and noted two vehicle purchases in the amounts of $60,762 and $54,383 were accompanied by sole source purchase documentation, in lieu of formal bidding, but the sole source forms were not signed as approved by the Department Director. Cause: We understand City staff could not locate the authorized forms for the two vehicle purchases. Effect: The City is not in compliance with the procurement requirements of the CSLFRF program. Recommendation: The City must develop procedures to ensure that the procurement files contain documentation to demonstrate compliance with the bidding/quote, contract and sole source requirements, as well as City Council approval requirements, to ensure compliance not only with its own policies, but with the procurement requirements of the CSLFRF grant. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.
2024-001 – Procurement, Debarment and Suspension Federal Program Information: US Department of the Treasury, passed through State of Maine Efficiency Maine 21.027 - Coronavirus State Local Fiscal Recovery Funds Criteria: The following CFR(s) apply to this finding: 2 CFR section 200.318 through 200.327. Condition: During audit procedures it was identified that the Town did not check sam.gov to confirm the contractor was not debarred or suspended from receiving federal funds nor did they request a Suspension and Debarment certification from the contractor. It was also identified that the contract was missing several required provisions, including but not limited to, Davis Bacon requirement, Clean Air Act, Federal Water Pollution Act, and the procurement file did not have the cost or price analysis documented. Cause: The Town did not follow their adopted procurement policy. Effect: There is a possibility that the contractor could have been debarred or suspended from working on federally funded projects. Funding may have been erroneously paid to a debarred or suspended contractor resulting in a material misstatement. Identification of Questioned Costs: $290,843 Context: The entire population of 12 months of reimbursements from the fiscal year were examined. Only two disbursements were made during the fiscal year, both were examined. Repeat Finding: This is a not a repeat finding. Recommendation: It is recommended that the Town implement internal control processes and procedures to ensure that federal procurement requirements are understood, including those requirements of recipients, subrecipients, contractors and how to determine who is a recipient, subrecipient and/or contractor. Views of Responsible Officials and Corrective Action Plan: Please see the Corrective Action Plan.
2024-001 – Procurement, Debarment and Suspension Federal Program Information: US Department of the Treasury, passed through State of Maine Efficiency Maine 21.027 - Coronavirus State Local Fiscal Recovery Funds Criteria: The following CFR(s) apply to this finding: 2 CFR section 200.318 through 200.327. Condition: During audit procedures it was identified that the Town did not check sam.gov to confirm the contractor was not debarred or suspended from receiving federal funds nor did they request a Suspension and Debarment certification from the contractor. It was also identified that the contract was missing several required provisions, including but not limited to, Davis Bacon requirement, Clean Air Act, Federal Water Pollution Act, and the procurement file did not have the cost or price analysis documented. Cause: The Town did not follow their adopted procurement policy. Effect: There is a possibility that the contractor could have been debarred or suspended from working on federally funded projects. Funding may have been erroneously paid to a debarred or suspended contractor resulting in a material misstatement. Identification of Questioned Costs: $290,843 Context: The entire population of 12 months of reimbursements from the fiscal year were examined. Only two disbursements were made during the fiscal year, both were examined. Repeat Finding: This is a not a repeat finding. Recommendation: It is recommended that the Town implement internal control processes and procedures to ensure that federal procurement requirements are understood, including those requirements of recipients, subrecipients, contractors and how to determine who is a recipient, subrecipient and/or contractor. Views of Responsible Officials and Corrective Action Plan: Please see the Corrective Action Plan.
FA 2024-001 Improve Controls over Procurement Compliance Requirement: Procurement and Suspension and Debarment Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 10.553 – School Breakfast Program 10.555 – National School Lunch Program COVID-19 - 10.555 – National School Lunch Program 10.582 – Fresh Fruit and Vegetable Program Federal Award Numbers: 245GA324N1199 (Year: 2024) 245GA324L1603 (Year: 2024) 245GA324L1603 (Year: 2024) Questioned Costs: $5,380.74 Description: A review of expenditures charged to the Child Nutrition Cluster revealed that the School District’s internal control procedures were not operating appropriately to ensure that the School District’s procurement procedures were followed. Background Information: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $450,874.38 were expended and reported on the Quitman County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state in part that “(a) the non-Federal entity must use its own documented procurement procedures, which reflects applicable State and local laws and regulations and… (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.” In addition, provisions included in the Uniform Guidance, Section 200.320 – Methods of Procurement to Be Followed provide guidance for procurement through small purchase procedures and state “If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources…” Condition: A sample of 22 procurement transactions was randomly selected for testing using a non-statistical sampling approach. These transactions were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The School District could not provide evidence that an adequate number of rate or price quotations were obtained from qualified sources for ten small purchase expenditures. Questioned Costs: Upon testing a sample of $25,223.43 in procurement transactions, known questioned costs of $5,380.74 were identified for expenditures that did not follow the School District’s procurement procedures. Using the total population of $302,197.99 in procurement transactions, we project the likely questioned costs to be approximately $64,465.81. The following Assistance Listing Numbers were affected by known and likely questioned costs: 10.553, 10.555, and 10.582. Cause: In discussing these deficiencies with the School District, they indicated the errors occurred due to oversight in following board-approved policies related to procurement. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to appropriately implement procedures to address procurement compliance requirements exposes the School District to unnecessary risk of error and misuse of federal funds and could result in the expenditure of federal funds with unqualified vendors. In addition, this deficiency could lead to the return of grant funds associated with unallowable expenditures in the future. Recommendation: The School District should evaluate and improve internal control procedures to ensure that required procurement methods are properly identified and followed and appropriate procurement documentation is obtained and retained on-file. In addition, management should develop a monitoring process to ensure that these procedures are operating appropriately. Views of Responsible Officials: We concur with this finding
2 CFR § 400.1 gives regulatory effect to the Department of Agriculture for 2 CFR § 200.318 through 200.327 which describe specific procedures non-Federal entities must follow when making procurement transactions using Federal funds. 2 CFR § 200.318(a) indicates that a non-Federal entity must use its own documented procurement procedures which reflect applicable State and local laws and regulations, provided that such procurements conform to applicable Federal law and standards. 2 CFR § 200.320 indicates the non-Federal entity must use one of the following methods of procurement: (a) procurement by micro-purchases, which are acquisitions of supplies or services for which the aggregate dollar amount does not exceed the micro-purchase threshold; (b) procurement by small purchase procedures, which are relatively simple and informal procurements that do 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; (c) procurement by sealed bids, which are purchases made through publicly solicited bids and result in a firm fixed-price contract (lump-sum or unit price) awarded to the lowest responsive and responsible bidder whose bid conforms to all material terms and conditions of the invitation for bids. This method is appropriate when a complete, adequate, and realistic specification or purchase description is available, two or more responsible bidders are willing and able to compete effectively for the business, and the procurement lends itself to a firm fixed-price contract with the selection of the successful bidder made principally on price; (d) procurement by competitive proposals, which is appropriate when purchases are large and competitive bidding is not appropriate; or (e) procurement by noncompetitive proposals, which are appropriate when the item is available only from a single source, the noncompetitive procurement is expressly authorized in the Federal award, competition is deemed inadequate after solicitation of multiple sources, or the item must be purchased without delay due to a public emergency or exigent circumstances. 2 CFR § 200.318(i) indicates the non-Federal entity must maintain records sufficient to detail the history of procurement. Such records must include, but are not necessarily limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Maple Heights City School District Board Policy EAG – Administration of Federal Grant Funds requires that all purchases of property and services using federal funds be conducted in accordance with applicable federal, state, and local laws and regulations, the Uniform Guidance, and the District’s written policies and procedures. The policy also requires the District to perform a cost or price analysis for every procurement exceeding the simplified acquisition threshold. In addition, purchasing records must be maintained in sufficient detail to document the history of each procurement, including at a minimum: the rationale for the method of procurement, the selection of contract type, the contractor selected or rejected, the basis for the contract price, and verification that the contractor is not suspended or debarred. Although the District provided verbal justification for the four vendors selected during procurement testing for the Child Nutrition Cluster, it did not maintain written documentation sufficient to detail the history of the procurements, as required by federal regulations and District procurement policy. The procurements tested were below the simplified acquisition threshold; however, for three of the four procurements, required price or rate quotations from an adequate number of qualified sources were not documented. As a result, the District could not demonstrate compliance with federal procurement requirements. Failure to follow Uniform Guidance requirements and district federal procurement policies could lead to reduced future federal funding and questioned costs. The District should adopt and implement procedures to ensure that the history of each procurement is documented, including the rationale for the method of procurement, vendor selection, cost or price analysis, if applicable, and the justification for limiting competition, such as the use of a sole source provider or procurement due to emergency or exigent circumstances.
Finding: 2024-006 Procurement, Suspension, and Debarment (Significant Deficiency) Information on the Federal Programs: ALN #10.937 Partnerships for Climate-Smart Commodities Criteria or Specific Requirement (including Statutory, Regulatory, or Other Citation): 2 CFR 200.320(a)(1)(iv) allows for an increased micro-purchase threshold of up to $50,000 only if the non-Federal entity self-certifies that it meets specific conditions, including internal controls, organizational risk, and procurement oversight capacity. 2 CFR 200.214 prohibits contracting with or making subawards to parties that are suspended or debarred, and entities are required to verify that contractors are not listed on the System for Award Management (SAM.gov) at the time of contact/award. 2 CFR 200.318(c)(1) requires non-Federal entities to maintain written standards of conduct covering conflicts of interest and governing the performance of employees engaged in the selection, award, and administration of contracts. Condition: Our testing identified the following exceptions: 1. CIF did not maintain a comprehensive written procurement, suspension, and debarment policy during the fiscal year under audit. A draft policy was developed during the audit planning phase and is pending approval from the Board of Directors. 2. The draft policy self-certified a micro-purchase threshold of $50,000, which is not appropriate given that CIF does not meet all criteria required under 2 CFR 200.320(a)(1)(iv), and the elevated threshold is excessive relative to the size and scope of the Organization’s operations. 3. CIF provided SAM.gov suspension and debarment checks for contractors in our sample; however, the checks were undated, and we were unable to confirm that the verification was performed at the time of contract execution. 4. CIF did not maintain a conflict of interest policy during the fiscal year under audit, as required by 2 CFR 200.318(c)(1). While a draft conflict of interest policy was included in the draft procurement policy, it was not in effect during the year under audit. Cause: These conditions occurred because the Organization did not have formalized procurement policies and procedures in place throughout the year.Effect or Potential Effect: Failure to maintain compliant procurement and conflict of interest policies and procedures increases the risk that Federal funds may be spent in a manner inconsistent with Uniform Guidance requirements. Questioned Costs: $96,051 (all contractual expenses changed to ALN #10.937) Context: We tested a statistically valid sample of contractual relationships charged to Federal awards. The deficiencies noted were consistent across the sample population, indicating a systemic issue rather than isolated exceptions. Identification as a Repeat Finding, if Applicable: N/A Recommendation: We recommend that management: 1. Finalize and implement a comprehensive procurement, suspension, and debarment policy that incorporates all requirements of 2 CFR 200.318–200.320. 2. Amend the draft policy to adopt a micro-purchase threshold appropriate for the Organization’s size and risk profile, consistent with 2 CFR 200.320(a)(1)(iv). 3. Ensure that SAM.gov checks are performed and documented with date-stamps at the time of contract execution. 4. Adopt and enforce a formal conflict of interest policy as required by 2 CFR 200.318(c)(1), and amend the policy to require annual (written) reaffirmations from all employees and Board members.
Condition: The County’s procurement policy is not in compliance with the requirements set forth in the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) at 2 CFR Part 200. Controls are ineffective to prevent failures in compliance with procurement requirements. Criteria: The Uniform Guidance at 2 CFR Part 200, specifically sections 200.318 to 200.326, establishes procurement standards and requirements for federal awards. The key principles include ensuring competition, maintaining written procurement policies, and avoiding conflicts of interest in procurement decisions. Effect: The lack of sufficient controls over procurement may result in noncompliance with federal requirements, potentially leading to disallowed costs, audit findings, and reduced funding. Recommendation: We recommend that the County revise its procurement policy (including internal control policies and procedures specific to the County) to align with the Uniform Guidance requirements. We also recommend the County provide its procurement policy in written form and regularly updated to each of its federal and state program managers to ensure proper compliance and consistent implementation. Response/Corrective Action Plan: We concur with the finding and will revise the procurement policy as well as the internal control policies and procedures specific to the County to be in alignment with the Uniform Guidance requirements. Upon completion, the new policy will be provided to all department heads to ensure proper compliance in the utilization and disbursement of federal funds.
CHILD NUTRITION CLUSTER – PROCUREMENT U.S. Department of Agriculture Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Passed Through Minnesota Department of Education Pass Through Number: 10.CNC Award Period: July 1, 2023 – June 30, 2024 Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance (Modified Opinion) Criteria or specific requirement: Non-federal entities other than states must follow the procurement standards set out at CFR section 200.318 through 200.326. This includes utilizing one of the five allowable procurement methods, including small purchase guidelines for items over the micro-purchase threshold and sealed bids, competitive proposals, or noncompetitive proposals when items exceed the simplified acquisition threshold. In addition, the Uniform Guidance requires the entity maintain records sufficient to detail the history of the procurement. Condition: During our testing of the District’s procurements within the Child Nutrition program, it was noted that none of the selected procurements had sufficient documentation of the history of the transaction. Context: Forty procurement transactions were selected for testing. Federal regulations require that purchases follow documented procurement procedures, including evidence of open competition and retention of contract documentation for those procurement transactions over the District’s $3,500 micropurchase threshold. The District did not provide documentation of an open and competitive process for any of these purchases. Questioned costs: None Cause: Time pressure led to this requirement being missed. Effect: Lack of proper documentation could lead to using vendors for small purchase acquisition without ensuring comparable pricing from other vendors and justifying costs. Repeat finding: No Recommendation: We recommend that the District ensure quotes are obtained for all procurements that are above the micro-purchase threshold, and that this process is documented along with their assessments of cost analysis performed. Views of responsible officials: There is no disagreement with the finding.
SPECIAL EDUCATION CLUSTER – PROCUREMENT U.S. Department of Education Special Education Cluster Assistance Listing Number: 84.027 & 84.173 Passed Through Minnesota Department of Education Pass Through Number: H027A220087 Award Period: July 1, 2023 – June 30, 2024 Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance (Modified Opinion) Criteria or specific requirement: Non-federal entities other than states must follow the procurement standards set out at CFR section 200.318 through 200.326. This includes utilizing one of the five allowable procurement methods, including small purchase guidelines for items over the micro-purchase threshold and sealed bids, competitive proposals, or noncompetitive proposals when items exceed the simplified acquisition threshold. In addition, the Uniform Guidance requires the entity maintain records sufficient to detail the history of the procurement. Condition: During our testing of the District’s procurements within the Special Education program, it was noted not all procurements followed the appropriate method and history of the transaction was not sufficiently documented. Context: Five selections over the $3,500 micropurchase threshold were selected for testing. Federal regulations require that purchases above this threshold follow documented procurement procedures, including evidence of open competition and retention of contract documentation. The District did not provide documentation of an open and competitive process for four of these purchases and did not maintain the executed contract for one purchase. Questioned costs: None Cause: Time pressure led to this requirement being missed. Effect: Lack of proper documentation could lead to using vendors for small purchase acquisition without ensuring comparable pricing from other vendors and justifying costs. Repeat finding: Yes – 2023-006. Recommendation: We recommend that the District ensure quotes are obtained for all procurements that are above the micro-purchase threshold, and that this process is documented along with their assessments of cost analysis performed. Views of responsible officials: There is no disagreement with the finding.
FINDING 2024-010 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 21611-045-PN01, 22611-045-PN01, 22611-045-ARP, 21619-045-PN01, 22619-045-PN01, 22619-045-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to the Procurement and Suspension and Debarment compliance requirement. Procurement - Small Purchases 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, the informal procurement method is 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. The population for those procurements that fell within the small purchase range consisted of three vendors with a total purchased amount from those vendors of $75,284. The School Corporation did not provide adequate documentation detailing the history of procurement, which must include the reason for the procurement method used, for all three vendors. 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 SAM exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. One vendor provided contracted services paid with Special Education Grant funds during the audit period totaling $44,827. Upon inquiry of the School Corporation, it was determined that the School Corporation did not verify that the contractor was not suspended, debarred, or otherwise excluded. INDIANA STATE BOARD OF ACCOUNTS 36 NORTH LAWRENCE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of effective 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. . . ." 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. (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. . . ." INDIANA STATE BOARD OF ACCOUNTS 37 NORTH LAWRENCE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Indiana Code 5-22-8-3 states in part: "(a) . . . if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000). . . . (d) . . . the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 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 A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to affect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, procurement procedures for goods and services were not adhered to, and vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. INDIANA STATE BOARD OF ACCOUNTS 38 NORTH LAWRENCE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
DEPARTMENT OF EDUCATION-FINDING 2024-002 – PROCUREMENT PROCEDURES-AMERICAN RESCUE PLAN (ARP) ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF FUND (ESSER III) - ALN 84.425U-CONDITION: During my review of the District’s compliance with the requirements for noncompetitive procurement, I noted the District did not document its rationale for purchases made from ‘Associates in Counseling’. This is a repeat finding 2023-002 from the prior fiscal year-CRITERIA: In accordance with Section 2 CFR 200.318(i) of the Uniform Guidance, the District must maintain records sufficient to detail the history of procurement. These records include but are not limited to the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Furthermore, Section 2 CFR 200.320(c’) of the Uniform Guidance details five (5) circumstances in which noncompetitive procurement can be used.-EFFECT: The District did not comply with Section 2 CFR 200.318(i) and Section 2CFR 200.320(c’) of the Uniform Guidance, and District Procurement Policy #626, regarding the proper documentation required for noncompetitive procurement.-QUESTIONED COST: $163,315-CAUSE: The District utilized this vendor as they felt these professional services best fit the needs of the District. However, the additional procedures addressed in its Procurement Policy for Federal Programs (#626) which addresses the issue of noncompetitive procurement as outlined in Section 2 CFR 200.320(c’), were inadvertently not performed.-RECOMMENDATION: I recommend that for all future purchases involving noncompetitive procurement, that the District adhere to the requirements of 1) the District’s Procurement Policy for Federal Programs (#626), and 2) Section 2 CFR 200.320(c) of the Uniform Guidance.-VIEWS OF RESPONSIBLE OFFICIALS: Management of the School District has reviewed the above noted finding and recommendation and have developed a corresponding ‘Corrective Action Plan’ to address this matter (See Corrective Action Plan).
Significant Deficiencies 2024-004 - Procurement, Suspension and Debarment Federal Program Information: Department of Transportation – ALN: - 20.500, 20.507, 20.525 & 20.526 – Federal Transit Cluster Criteria: The following CFR(s) apply to this finding: 2 CFR 200.318 to 327. Condition: During audit procedures, it was identified that the Committee did not follow policies and procedures as adopted. Cause: The Committee does not have the necessary internal controls over compliance. Effect: Insufficient controls could result in unallowable expenses being charged to the program and subsequently improperly reimbursed by federal funds. Identification of Questioned Costs: None identified. Context: While reviewing the procurement policies and procedures, the auditor requested the micro and small purchases form, as found in the procurement policies and procedures documents, but none could be provided for the samples originally requested. Repeat Finding: This is a repeat finding of 2023-004. Recommendation: The auditor recommends that the Committee update its procurement policy and implement internal control processes and procedures to ensure that they are following the criteria above. Views of Responsible Officials and Corrective Action Plan: See attached Corrective Action Plan.
Finding 2024-005 – Inadequate Procurement Documentation (Material Weakness) Name of Federal Agency: U.S. Environmental Protection Agency Federal Program Name: Nonpoint Source Implementation Grants Assistance Listing Numbers: 66.460 Pass-Through Entity: Oregon Department of Environmental Quality Name of Federal Agency: U.S. Department of Commerce – National Oceanic and Atmospheric Administration Federal Program Name: Pacific Coast Salmon Recovery Program Assistance Listing Numbers: 11.438, 15.015, 15.244 Pass-Through Entity: State of Oregon – Oregon Watershed Enhancement Board (OWEB) Name of Federal Agency: U.S. Department of Agriculture Federal Program Name: National Fish and Wildlife Foundation Assistance Listing Numbers: 10.665 Pass-Through Entity: U.S. Forest Service Name of Federal Agency: U.S. Department of Agriculture Federal Program Name: Natural Resources Conservation Service Assistance Listing Numbers: 10.905 Pass-Through Entity: U.S. Forest Service Name of Federal Agency: U.S. Department of the Interior Federal Program Name: Wildlife, Sport Fish and Restoration Program Assistance Listing Numbers: 15.244 Pass-Through Entity: Bureau of Land Management Name of Federal Agency: U.S. Department of the InteriorFederal Program Name: Secure Rural Schools and community Self-Determination – Watershed and water-quality improvements Assistance Listing Numbers: 15.234 Pass-Through Entity: Bureau of Land Management Criteria: Federal procurement standards require non-Federal entities to maintain records sufficient to detail the history of procurement, including the method of procurement, selection of contract type, contractor selection or rejection, and basis for the contract price. Competitive procurement must follow the entity’s written procedures consistent with 2 CFR §§200.317-200.327, including: Written procedures for procurement (§200.318(a)). Full and open competition requirements (§200.319). Methods of procurement (sealed bids, proposal requirements, and required documentation (§200.320). Contract cost and price justification, (§200.324). Suspension/debarment verification for covered transactions (§200.214; §200.213). Condition: During the audit period, the Entity did not retain sufficient procurement documentation for several contracts funded under the above Assistance Listings. Specifically, files lacked one or more of the following: Evidence of the procurement method used. Price or cost analysis. Suspension/debarment checks for vendors where required. Documentation of competition. Conflict-of-interest attestations. Cause: Partnership for the Umpqua Rivers procurement procedures were not sufficiently detailed or consistently applied to federal purchases. No evidence of procedures or review for procurement or suspension / debarment was provided to auditors. Turnover and limited training on Uniform Guidance procurement standards contributed to the inconsistent file completeness. Effect or Potential Effect: Without complete procurement documentation, the Entity cannot demonstrate compliance with federal procurement requirements, increasing the risk of: Noncompetitive awards or unreasonable prices. Unallowable costs for the award requirements. Potential disallowance or repayment of federal funds. Findings in federal or pass-through monitoring and future audits. Questioned Cost: Yes, $902,496 related to expenditures that had no procurement support or detail. Context: During our audit, it was found that the Partnership for the Umpqua Rivers had experienced complete staff turnover in Financial Management for the year being audited. No current finance employees had worked for the organization during the year being audited. Award files provided to auditors did not contain information related to procurement, suspension or debarment procedures or processes. Repeat of a Prior-Year Finding: No, Prior- year did not require a Single Audit. Recommendation: We recommend that Partnership for the Umpqua Rivers: Update Written Procurement Procedures o Incorporate Uniform Guidance thresholds and methods (§200.320), competition requirements (§200.319), and documentation expectations (history of procurement). o Embed steps for suspension / debarment checks and Appendix II Contract clauses. Standardized Procurement Checklist o Pre-award checklist that verifies: method, competition evidence, cost/price analysis, conflict of interest attestations, SAM exclusion check, and required federal clauses. o Post -award checklist ensuring complete contract file (award memo, bid tab / evaluation, signed agreement, clause verification). Cost/Price Analysis Guidance o Require documented price reasonableness for small purchases, formal cost or price analysis for larger or sole-source awards, per (§200.324). Training & Accountability o Provide targeted training to procurement and program staff on 2 CFR §§200.317- 20.327 and Assistance Listing award conditions. o Implement supervisory pre-award review and periodic file audits. District Response: Partnership for the Umpqua Rivers acknowledges the deficiencies. Corrective Action Plan: ____________ (To be completed by Partnership for the Umpqua Rivers) Planned Implementation Date: _____________ Responsible Person: Partnership for the Umpqua Rivers Finance Manager
Finding 2024-008: Procurement – Significant Deficiency Information on the federal program: Federal program is American Rescue Plan Act - Violence Prevention and Reduction Grant Portfolio from the U.S. Department of Treasury passed through the Justice Advisory Council. Criteria: Non-federal entities other than states must follow the procurement standards set out in 2 CFR sections 200.318 through 200.327. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statues and the procurement requirements identified in 2 CFR Part 200. Condition: The Organization does not maintain a formal procurement policy and procedures that meets the requirements of the Uniform Guidance, including procedures addressing allowable costs exceeding the small purchase threshold. The lack of such a formal policy increases the risk that purchases are made that do not comply with Uniform Guidance. Cause: The Organization has not implemented a formal procurement policy and procedures that meets the requirements for the Uniform Guidance. Effect: The lack of such a formal policy increases the risk that purchases are made that do not comply with Uniform Guidance requirements. Questioned Costs: None. Context: As part of our testing over procurement standards under the Uniform Guidance, we requested documentation supporting the Organization’s procurement policies and procedures, including thresholds, required competition, documentation requirements, and approval processes. The Organization was unable to provide a formalized or adopted procurement policy. Additionally, procurement documentation reviewed during the audit indicated that purchases were made without evidence of compliance with federal procurement standards, confirming that the deficiency was systemic and not limited to a single transaction or department. Identification as a Repeat Finding: 2023-009 Recommendation: We recommend that management implement a formal procurement policy and procedures that meets the requirements of the Uniform Guidance. Views of responsible officials and planned corrective actions: While Saint Anthony Hospital has a procurement policy in place, we need to order computers within a certain time frame in order to secure funds from the grant and utilize our main supplier. Thus, we did not get more than 1 quote for the computers. The procurement policy as well as all policies are reviewed every three years to comply with Joint Commission Standards. Saint Anthony will review its existing procurement policy to ensure that all elements required by the Uniform Guidance are incorporated. The review was completed on March 28, 2025.
2024-003 Documented Procurement Policy Federal Program - U.S. Department of the Treasury – Coronavirus State and Local Fiscal Recovery Funds (ALN 21.027) Federal Award Number - SLFRP0136 Compliance Requirement - Procurement, Suspension, and Debarment Repeat Finding - This is a repeat finding of 2023-003. Corrective action was not completed prior to or during the audit period due to the timing of audit completion and recommendations to management. Criteria - Per 2 C.F.R. § 200.318(a), non-federal entities must use documented procurement procedures that reflect applicable state and local laws and regulations and conform to applicable federal laws and the procurement standards identified in the Uniform Guidance, including those set forth in §§ 200.317 through 200.327. Condition - During our audit, we noted that the Organization did not have a documented procurement policy in place that complies with the Uniform Guidance. Cause - The Organization has historically had a low volume of procurement activity and has not formalized written procurement procedures. Effect - Without a documented procurement policy, there is an increased risk that future procurements may not comply with applicable federal requirements, which could result in unallowable costs or other compliance issues. Questioned Costs - None noted. Context - This condition was identified during our testing of internal controls over compliance for the Procurement, Suspension, and Debarment requirement. Although the Organization did not enter into any contracts or purchases during the audit period that exceeded the micro-purchase threshold, the absence of a required policy represents a significant deficiency in internal control over compliance. Recommendation - We recommend that the Organization develop and implement a written procurement policy that complies with 2 C.F.R. §§ 200.318–.327 and ensure that staff are trained on its provisions. View of Responsible Officials - We agree with the finding. The organization lacked a formal procurement policy that was effective for the fiscal year ended June 30, 2024. A procurement policy which included all required elements was drafted and implemented with an effective date of July 1, 2025.
2024-013 (2023-008) PROCUREMENT, ABOVE SIMPLE ACQUISITION THRESHOLD Federal Agency: U.S. Department of Energy Federal Program Title and Assistance Listing Number: Environmental Remediation and Waste Processing and Disposal, 81.104 Type of Finding: Significant Deficiency in Internal Controls over Compliance Compliance Area: Procurement and suspension and debarment Federal Award Year: 2024 Questioned Costs: None Condition During our review of procurement testing, the College acquired a training simulator through a sole source procurement. The College displayed on their website the “vendor’s determination”, not the “College’s determination”. In 2024, the College prepaid $1,577,250 on this procurement. Criteria Per 2 CFR 200.303(a), the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.318(i), non-federal entities must retain documentation sufficient to detail the history of procurement decisions. Cause The College did not provide their own independent sole source determination. Effect The College may unintentionally charge expenses to the program that do not qualify and in turn lead to questioned costs and/or repayment of funds to the grantor agency.
Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Period of Performance Procurement and Suspension and Debarment Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Number and Title: 84.371C – Comprehensive Literacy Development Federal Award Number: S371C190016-19A (Years: 2017-21) Questioned Costs: $12,921.61 Repeat of Prior Year Findings: FA 2022-002, FA 2023-001 Description: A review of expenditures and journal entries charged to the Comprehensive Literacy Development program revealed that the School District’s internal control procedures were not operating to ensure that appropriate reviews and approvals occurred and the School District’s procurement procedures were followed. Background Information: The Comprehensive Literacy Development Program (CLD) was authorized under Sections 2222-2225 of the Elementary and Secondary Education Act of 1965 to create a comprehensive literacy program to advance literacy skills, including pre-literacy skills, reading, and writing, for children from birth to grade 12, with an emphasis on disadvantaged children, including children living in poverty, English learners, and children with disabilities. CLD funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the expenditure of funds by LEAs. CLD funds totaling $454,278.20 were expended and reported on the Burke County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented, (h) Cost must be incurred during the approved budget period…” Lastly, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state in part that “(a) the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations and… (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.” In addition, provisions included in the Uniform Guidance, Section 200.320 – Methods of Procurement to Be Followed provide guidance for procurement through small purchase procedures and state “If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources.” Condition: Auditors performed a review of various expenditure activity associated with the CLD program to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The following deficiencies were identified: • A sample of 60 expenditures was randomly selected for testing using a non-statistical sampling approach. Evidence of review and approval was not reflected for 17 expenditures, and adequate evidence of receipt was not maintained for 20 expenditures. • A sample of two journal entries was randomly selected for testing using a non-statistical sampling approach. Evidence of review to ensure that the activity was allowable and occurred during the period of performance was not reflected for either journal entry tested. • A sample of 45 procurement transactions was randomly selected for testing using a non-statistical sampling approach. Four procurement transactions did not reflect evidence of supervisory review and approval, and the School District could not provide evidence that an adequate number of rate or price quotations were obtained from qualified sources for 13 small purchase procurements reviewed. Questioned Costs: Upon testing a sample of $45,625.42 in procurement transactions, known questioned costs of $12,921.61 were identified for expenditures that did not follow the School District’s procurement procedures. Using the total population of $327,567.83 in procurement transactions, we project the likely questioned costs to be approximately $92,770.73. Cause: The School District did not maintain evidence of review and approval of expenditures, journal entries, and procurement transactions as a result of oversight. Small purchase procurement transactions did not follow the School District’s procurement policy because the Federal Programs Director was unaware that it was necessary to follow these procedures for the purchase of instructional materials. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to review expenditures for allowability and journal entries for allowability and period of performance compliance exposes the School District to unnecessary risk of error and misuse of federal funds. In addition, failure to appropriately follow applicable procurement procedures exposes the School District to unnecessary risk of error and misuse of federal funds. Lastly, this deficiency could lead to the return of grant funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to the CLD program. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all expenditures, journal entries, and procurement transactions reflect evidence of review for associated compliance requirements. In addition, expenditure voucher packages should contain all required components. Furthermore, the School District should evaluate and improve internal control procedures to ensure that required procurement methods are properly identified and followed and required procurement documentation is properly identified, safeguarded, and retained. Management should develop a monitoring process to ensure that these procedures are operating appropriately. Views of Responsible Officials: The finding states evidence of review and approval was not reflected for 17 expenditures. While 3 invoices were not approved, 14 were approved by multiple levels including the building level Principal, Central Office Director, including the Director in charge of the grant, and/or the Superintendent. Additionally, all expenditures charged to the grant were submitted to the Georgia Department of Education for review and approval for reimbursement of expenditures. All expenditures were approved and reimbursed. The finding states adequate evidence of receipt was not maintained for 20 expenditures; however, 10 of the expenditures were not for tangible items. Instead, the expenditures were for dues and fees and travel. Dues and fees and travel expenditures do not have packing slips due to the nature of the activity. Of the remaining 10, all but 1 were approved by multiple levels including the building level Principal, Central Office Director, including the Director in charge of the grant, and/or the Superintendent. Approval for payment isn’t granted unless items are received. The finding states evidence of review to ensure that the activity was allowable and occurred during the period of performance was not reflected for 2 journal entries. Both of the journal entries were usual in nature and occurred in the normal course of business including a journal entry to reverse accounts receivable from the prior year and a journal entry to record accounts receivable in the current year. Both journal entries are annual, standard journal entries that are required under Generally Accepted Accounting Principles. While not approved by the Director in charge of the grant, the journal entry was appropriate, allowable, and necessary to ensure revenues were accurately recorded in the proper accounting period. The finding states 4 procurement transactions did not reflect evidence of supervisory review and approval. While 4 transactions included invoices that were not approved by the Director in charge of the grant, 2 invoices were approved by the building level Principal and the Superintendent, and 1 was approved by the Superintendent. Three of the transactions included purchase orders that were properly approved by the Director in charge of the grant. Auditor’s Concluding Remarks: Under the Uniform Guidance, auditees are required to implement internal controls over federal awards. Upon completing procedures over internal controls associated with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance, and Procurement and Suspension and Debarment compliance requirements, auditors obtained an understanding of internal controls put in place and subsequently tested those controls. Auditors noted that the internal controls described by the School District were not in place for the transactions identified. Based on this information, we reaffirm our finding and will review the status of the finding during our next audit.
2024-005 - Procurement and Suspension, and Debarment – Internal Control and Compliance over Procurement and Verification Against the System for Award Management (“SAM”) Identification of the Federal Program: Assistance Listing Number: 21.027 Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Funds Federal Agency: U.S. Department of the Treasury Pass-Through Entity: N/A Federal Award Identification Number: N/A Assistance Listing Number: 97.044 Assistance Listing Title: Assistance to Firefighters Grant Federal Agency: Department of Homeland Security Pass-Through Entity: N/A Federal Award Identification Number: EMW-2020-FG-15445, EMW-2021-FG-00268 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Suspension and Debarment, Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include those procurement contracts for goods and services awarded under a nonprocurement 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 nonprocurement transactions entered into by a recipient (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 non-Federal 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) and available at https://www.sam.gov/portal/public/SAM/ (Note: The OMB guidance at 2 CFR part 180 and agency implementing regulations still refer to the SAM Exclusions as the Excluded Parties List System (EPLS)), (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). Pursuant to 2 CFR 200.318 of the Uniform Guidance, the City is required to comply with the procurement standards, when using federal funds. These standards require non‑federal entities to 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 2 CFR 200.317 through 2 CFR 200.327. The City’s purchasing policies require that all purchases charged to the City have an authorized Purchase Order (PO) in place before an order is placed or goods are received. The policy states that if an individual attempts to make a purchase without a City PO number, the vendor must request an authorized PO number and the name and department of the individual. The purchase order number is essential for conducting business with the City and ensures proper authorization, documentation, and payment. Therefore, all transactions including orders of goods or materials regardless of cost or type must be supported by a valid, approved PO prior to purchase activity. Condition: Coronavirus State and Local Fiscal Recovery Funds (ARPA) During our audit, we noted that eleven (11) out of thirty seven (37) suspension and debarment samples tested, the City did not have documentation on verifying the vendors against the SAM to ensure that they were not suspended or debarred from federally funded purchases. We also noted that thirty one (31) out of thirty seven (37) procurement samples tested, the City didn’t have purchase orders for these samples. Assistance to Firefighters Grant During our audit, we noted that two (2) out of two (2) procurement samples tested, the City did not have documentation on verifying the vendors against the SAM to ensure that they were not suspended or debarred from federally funded purchases. Cause: The City did not have a consistent process in place to ensure that the procurement process have been followed and maintained, and to require staff maintain the proof of verification performed on checking the suspension or debarment over vendors that the City makes contracts with federally-funded projects. Effect or Potential Effect: The lack of purchase orders limits transparency into procurement process, approval, and authorization, and weakens internal controls over spending. Without verifying whether vendors are suspended or debarred from working on federally-funded projects, the City could be contracting with vendors that are prohibited from working on federally-funded projects. Questioned Costs: None. Context: See condition above for the context of the finding. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommended the City establish internal control procedures to monitor compliance requirements to ensure the procurement process is implemented and monitored, and vendors are not suspended or debarred from federallyfunded purchases. Views of Responsible Officials: Management concurs with the finding.
MATERIAL WEAKNESS Finding Number: 2024-003 Material Weakness in Internal Control over Compliance Federal Program: 84.027 & 84.173 Special Education Cluster (IDEA) Federal Program: 84.425D/84.425U Education Stabilization Fund Criteria: 2 CFR §200.318(a) requires non-federal entities to establish and maintain effective internal control over procurement transactions to ensure compliance with applicable federal statutes and regulations. 2 CFR §§200.317–200.327 require non-federal entities to maintain written procurement policies and procedures that address procurement methods, documentation requirements, and contract administration. 2 CFR §200.430(i) requires charges to federal awards for salaries and wages to be supported by documentation that accurately reflects the work performed and supports the allowability and allocation of payroll costs.2 CFR §200.302(b)(3) requires financial management systems to maintain records that adequately identify the source and application of funds for federally funded activities. Condition: The entity did not maintain adequate internal controls over procurement and payroll expenditures charged to the federal program. Specifically: • The entity does not have a formally adopted, written procurement policy that complies with federal procurement requirements. • Invoices tested did not include supporting documentation such as purchase orders, executed contracts, or memoranda of understanding (MOUs) to substantiate the procurement of goods or services, approval of the transactions, or the basis for the costs incurred. • Payroll expenditures charged to the federal program lacked sufficient supporting documentation, including employment contracts or documentation identifying the employee’s placement on the applicable salary chart within the Teacher and Support Staff Association agreement. • As a result, the entity was unable to demonstrate that payroll costs were calculated in accordance with approved pay rates and were allowable and properly supported. Cause: The deficiencies resulted from the absence of formal procurement policies and insufficient internal controls over documentation standards and record retention for procurement and payroll transactions. Effect: Due to the lack of written procurement policies and insufficient supporting documentation for procurement and payroll expenditures, the entity is unable to demonstrate compliance with federal procurement and cost principles. These deficiencies increase the risk that unallowable or improperly supported costs could be charged to the federal program and not be detected in a timely manner. Identification of Questioned Costs:None identified. Context: The absence of formal procurement policies and consistent supporting documentation limited the ability to readily demonstrate compliance with federal procurement and cost principles and increased the extent of audit procedures required. Repeat Finding: This is a repeat finding of 2023-03.Recommendation: We recommend that management update its procurement policy to include all current requirements under 2 CFR 200 and implement a process to periodically review and revise the policy to remain compliant with future federal regulation changes. Require that all procurement transactions be supported by purchase orders, executed contracts, MOUs, invoices, and evidence of approval and receipt. Ensure payroll expenditures charged to federal programs are supported by employment contracts and documentation identifying employee placement on the applicable salary schedule in accordance with collective bargaining agreements, as required by 2 CFR §200.430. Implement monitoring and training procedures to ensure consistent compliance with federal documentation requirements. Views of Responsible Officials and Corrective Action Plan: Please see the Corrective Action Plan issued by the entity.
Criteria: The Uniform Guidance 2 CFR Part 200.318 require 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: See management’s corrective action plan.
U.S. Department of Environmental Protection Agency Passed through State Department of Natural Resources and Conservation FFAL# 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Procurement, Suspension and Debarment Material Non-compliance Material Weakness in Internal Control Criteria: • 2 CFR §200.303 requires non-federal entities to establish and maintain effective internal control over federal awards. • 2 CFR §200.318 requires non-federal entities to have and follow written procurement procedures that conform to applicable federal laws and standards. • 2 CFR §200.320 outlines requirements for procurement to be followed depending on the purchase threshold. • 2 CFR §200.213 requires non-federal entities to ensure that entities with which they contract are not suspended or debarred from federal programs. Condition: The District does not have documented internal controls over procurement activities. Additionally, the District did not follow procurement methods including obtaining quotes or bids as necessary or perform any of the required suspension and debarment procedures for vendors, such as verifying that vendors were not excluded from federal programs. Further, the District does not have a written procurement policy as required by Uniform Guidance. Cause: The District has not implemented documented internal controls or written procurement policies and did not perform suspension and debarment checks. Effect: Failure to implement these requirements increases the risk of noncompliance with Uniform Guidance and may result in unallowable costs or questioned costs. Questioned Costs: $1,124,156 Context/Sampling: A nonstatistical sample of three vendors were selected for testing. Repeat Finding from Prior Years: No. Recommendation: We recommend the District: • Develop and adopt a written procurement policy that complies with Uniform Guidance requirements. • Implement documented internal controls over procurement activities, including procedures for suspension and debarment checks. • Train staff responsible for procurement to ensure compliance with federal requirements. Views of Responsible Officials: Agree.
Assistance Listing Number, Federal Agency, and Program Name 93.332 U.S. Department of Health and Human Services Navigator Grants Program Federal Award Identification Number and Year NAVCA210431 02, NAVCA210431 03 Pass through Entity N/A Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No 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 $686,325 Identification of How Questioned Costs Were Computed Questioned costs reflect the amount of costs expended under the grant during 2024 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 debarement 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 the 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 Planned Corrective Actions 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 principal investigators (PIs) with awards with direct costs greater than the University's 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 noncompliance 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.
Improve Controls Over Procurement Procedures (Material Weakness, Compliance Finding) Federal Agency: Department of Agriculture Cluster/Program: Child Nutrition Cluster Assistance Listing Number(s): 10.553/10.555/10.559 Award Year: 2024 Compliance Requirement: Procurement Criteria Under 2 CFR 200.318–.326, recipients of federal funds must follow federal, state, and local procurement standards when acquiring goods and services under federal programs. This includes documented procedures, competitive bidding or quotes for procurements over established thresholds, and proper contract management. Condition During fiscal year 2024, the District did not perform proper procurement procedures for a food vendor selected for testing under the Child Nutrition Cluster. Specifically, there was no evidence of competitive bidding or solicitation of multiple quotes as required. Cause The District did not consistently adhere to established procurement policies or federal requirements for competitive procurement under the Child Nutrition Cluster. Effect Failure to follow federal procurement requirements increases the risk of noncompliance with program regulations, potentially resulting in questioned costs or loss of funding. Context This issue appears to be an isolated incident based on our procurement testing. Questioned Costs Although we identified deficiencies in the district’s procurement procedures, we have not identified questioned costs related to this finding. This is because, based on our review, all goods and services procured were received, were necessary for the grant program, and were properly supported by invoices and evidence of payment. While procurement procedures did not fully comply with federal requirements, there was no indication that the costs incurred were unreasonable, unallowable, or unrelated to the federal program. As such, no costs were questioned as a result of this finding. Recommendation We recommend the district ensure that all procurements under federal programs follow the required procedures, including documented solicitation of bids or quotes, vendor selection justification, and retention of procurement records. Staff responsible for procurement should be trained on federal requirements and procurement policies should be periodically reviewed for compliance. View of Responsible Officials and Planned Corrective Actions The District’s corrective action plan is included at the end of this report.
Finding 2024-005: Improve Procurement Procedures Federal Program(s) Information Federal Agency: Department of Education Cluster/Program: Special Education Cluster Award Name: Special Education Grants to States and Special Education Preschool Grants Assistance Listing Number: 84.027/84.173 Award Year: 2024 Compliance Requirement: Procurement Type of Finding - Compliance Internal Control over Compliance – Material Weakness Criteria or Specific Requirement Per 2 CFR 200.318–200.327, non-federal entities must use their 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 set forth in the Uniform Guidance. In some cases, state procurement laws under MGL Chapter 30B are more restrictive than the Uniform Guidance. In the event state procurement laws are less restrictive, non-federal entities must follow the more restrictive requirement under the Uniform Guidance. Condition and Context During our testing of three procurement transactions under the Special Education Cluster, the Town was unable to provide documentation supporting whether procurement policies and procedures were followed for each transaction. Specifically, the Town believed that the contracts were exempt from procurement under MGL Chapter 30B for contracts utilizing special education funding, which is less restrictive than Uniform Guidance requirements in this particular circumstance. As a result, the Town did not comply with the federal procurement standards applicable to these transactions. Cause The Town’s internal controls over procurement did not ensure that federal requirements under Uniform Guidance were followed when state and federal rules differed. The Town applied state-level exemptions rather than adhering to more restrictive federal standards. Effect or Potential Effect The absence of procurement documentation and use of state exemptions rather than federal requirements increase the risk of non-compliance and may result in unallowable costs. Questioned costs are reported as follows over all expenditures with vendors in excess of the micro-purchase threshold of $10,000: AL Number(s): Name of Federal Program or Cluster Questioned Costs 84.027/84.173 Special Education Cluster $759,116 Recommendation We recommend that the Town strengthen its internal controls over procurement to ensure compliance with Uniform Guidance requirements, regardless of state law exemptions. The Town should ensure adequate documentation is retained for all federally funded procurements, and that procurement staff are trained on the distinction between federal and state procurement requirements. Views of Responsible Official See corrective action plan included herein.
Finding 2024-003: Improve Internal Controls Over Procurement Federal Program(s) Information Federal Agency: Department of the Treasury Award Name: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Year: 2024 Compliance Requirement: Procurement Type of Finding - Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement Per 2 CFR 200.318–200.327, non-federal entities must use their 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 set forth in the Uniform Guidance. In some cases, state procurement laws under MGL Chapter 30B are more restrictive than the Uniform Guidance. In the event state procurement laws are less restrictive, non-federal entities must follow the more restrictive requirement under the Uniform Guidance. Condition and Context During our testing of six procurement transactions under the Coronavirus State and Local Fiscal Recovery Funds program, the Town was unable to provide documentation supporting whether procurement policies and procedures were followed for one transaction. Specifically, the Town believed that the contract was exempt from procurement under MGL Chapter 30B for contracts with architects, engineers, and related professionals, which is less restrictive than Uniform Guidance requirements in this particular circumstance. As a result, the Town did not comply with the federal procurement standards applicable to this transaction. Cause The Town’s internal controls over procurement did not ensure that federal requirements under Uniform Guidance were followed when state and federal rules differed. The Town applied state-level exemptions rather than adhering to more restrictive federal standards. Effect or Potential Effect The absence of procurement documentation and use of state exemptions rather than federal requirements increase the risk of non-compliance and may result in unallowable costs. Questioned costs are reported as follows: AL Number(s): Name of Federal Program or Cluster Questioned Costs 21.027 COVID-19 – Coronavirus State and Local Fiscal Recovery Funds $241,400 Recommendation We recommend that the Town strengthen its internal controls over procurement to ensure compliance with Uniform Guidance requirements, regardless of state law exemptions. The Town should ensure adequate documentation is retained for all federally funded procurements, and that procurement staff are trained on the distinction between federal and state procurement requirements. Views of Responsible Official See corrective action plan included herein.
Finding Reference: 2024-006 – I. Procurement, Suspension and Debarment Federal Program Information Federal Agencies: Department of Treasury Awards: Assistance Listing 21.027 – COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award Periods: July 1, 2023 – December 31, 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 2023-001. 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 this program 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.
2024-004 Improve Internal Controls Over Procurement Federal Agency: Department of the Treasury Award Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Year: 2024 Compliance Requirement: Procurement Type of Finding Compliance Internal Control over Compliance – Significant Deficiency Criteria: Per 2 CFR 200.318–200.327, non-federal entities must use their 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 set forth in the Uniform Guidance. For purchases exceeding the micro-purchase threshold, procurement must include documented procedures, full and open competition (unless an exemption applies), and executed contracts. All contracts must be fully executed and amendments provided for any changes to terms or scope. Additionally, any exemption from competitive bidding must be documented, and only applies to the period and scope approved. Suspension and debarment checks must also be performed and documented for covered transactions with vendors. Condition: During our testing of one procurement transaction under the SLFRF program, the Town received an exemption from bidding requirements typically required under Massachusetts’ state law. The exemption was due to an initial emergency procurement; however, expenditures continued to be incurred after the initial emergency ended and the associated contract’s substantial completion date. The Town did not provide contract amendments to extend the contract, nor did it perform additional procurement procedures for expenditures that occurred after the emergency period ended and outside the scope of the exemption. In addition, the contract with the vendor was not countersigned by the Town and therefore a fully executed contract did not exist. Further, suspension and debarment checks for vendors were not retained as required. Cause: The Town did not ensure contracts were fully executed prior to commencement of work, did not maintain documentation or perform procurement for additional expenditures incurred after the completion date of the original contract and outside the scope of the emergency exemption, and did not maintain documentation of required suspension and debarment checks. Effect: Failure to obtain a fully executed contract, perform and document suspension and debarment checks, and appropriately document or procure additional services beyond the contract term increases the risk of noncompliance with federal procurement requirements and may expose the Town to possible unallowable costs, conflicts of interest, or ineligible vendor participation. Recommendation: The Town should implement policies and procedures to ensure all contracts are fully executed prior to work commencement, and any extensions or additional services beyond the original contract are properly documented via contract amendments or appropriate procurement methods in accordance with Uniform Guidance. The Town should also ensure continued monitoring and documentation of procurement exemptions and maintain documentation of all suspension and debarment checks for vendors paid with federal funds. Views of Responsible Official: Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.
Finding 2024-016: Material Weakness in Internal Control and Material Noncompliance – Procurement and Suspension and Debarment Assistance Listing Program Title and Number: Special Education (IDEA) Cluster (84.027, 84.173), COVID 19-Coronavirus State & Local Fiscal Recovery Funds (21.027) Federal Agency: U.S. Department of Education, U.S. Department of Treasury Pass-through Entity: State of Connecticut Department of Education, State of Connecticut Department of Emergency Services and Public Protection Award year: 2023 – 2024 Criteria or specific requirement: The City, which includes Danbury Public Schools (DPS), must follow procurement standards set out at 2 CFR sections 200.318 through 200.326. There are three types of procurement methods described in this section: 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, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319. Additionally, 2 CFR Section 180 requires that recipients of federal awards have policies and procedures in place to verify contracted vendors are not on the federal suspended or debarred parties list. Condition: The DPS Grant Administration did not adhere to the Danbury Public Schools “Bids and Purchases Competitive” procurement policies, that were compliant with Federal Part 3 compliance guidelines. DPS had a procurement policy in place that was consistent with the standards of the aforementioned compliance sections; however, DPS did not follow their own procurement policy in certain instances which consists of obtaining three quotes for a small purchase procurements and advertising for bids publicly for large >$5,000 purchase procurements. They only obtained one quote for small purchases, and they did not use a public bid process for expenditures over $5,000. Additionally, DPS did not have internal controls in place to ensure vendor eligibility was verified prior to entering into a covered transaction with them. Cause: While DPS has a formal policy around required bids, the thresholds have not been updated in several years and there was a lack of controls that ensured the DPS procurement policy was being adhered to in order to be compliant with the compliance standards. Finally, the policy did not address verifying vendors were neither suspended nor debarred. Effect: Possible effects include not awarding the purchase to the lowest qualified bidder or to a vendor on the suspended or debarred parties list. Context: For the Coronavirus State and Local Fiscal Recovery Funds program, there was a population of 183 procurements during the audit period. Of these procurements, there were 29 vendors that were subject to the rules on suspension and debarment. Of those 29 vendors, we sampled eight for testing. Two out of eight vendors tested did not have documentation that DPS verified the vendors were not suspended or debarred prior to entering into a covered transaction with them. The total amount of the two was $438,885 out of the total sample of $996,779. We also selected a sample of 23 procurements totaling $2,698,309 for testing. One sample was a small purchase totaling $2,550 which required three quotes however only one quote was obtained. The sample was not intended to be, and was not, a statistically valid sample. For the IDEA Cluster, there was a population of 251 procurements during the audit period. We sampled 31 procurements for testing totaling $659,075. Three of the procurements tested totaling $293,692 did not follow the DPS procurement policy. Two exceptions (totaling $290,722) were for large purchases which did not follow the policy for procurement through a formal bid process. The other exception was a small purchase totaling $2,970 which did not follow the requirement of obtaining three or more quotes. The sample was not intended to be, and was not, a statistically valid sample. Questioned Costs: For procurement under the Coronavirus State and Local Fiscal Recovery Program- $2,550 For procurement under the IDEA Cluster- $293,692 Repeat Finding: 2023-007 Recommendation: We recommend DPS implement controls that require review of each procurement to ensure DPS obtained the adequate number of quotes or bids for each expenditure. Additionally, we recommend DPS update their procurement thresholds to be more consistent with the compliance minimum requirements. Finally, we recommend DPS modify their policy to address suspension and debarment requirements to ensure they don’t enter into a covered transaction with a suspended or debarred vendor. The policy should require documentation of the search performed. Views of Responsible Officials: Management agrees with the finding.
Information on the Federal Program(s): 14.228 Community Development Block Grants/State’s Program Compliance Requirements: Procurement. Type of Finding: Material Noncompliance. Criteria: 2 CFR § 200.318(c)(1) requires that 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. Condition: We noted that the City did not have written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Cause: The City was not aware of the requirement to have written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Effect: Failure to have written standards of conduct could result in noncompliance with Uniform Guidance requirements. Questioned Costs: There are no questioned costs. Recommendation: We recommend that the City develop written standards of conduct that include the requirements of 2 CFR § 200.318(c)(1). Views of Responsible Officials and Planned Corrective Action: The City will develop written standards of conduct in that satisfy the requirements of 2 CFR § 200.318(c)(1).
Information on the Federal Program(s): 14.228 Community Development Block Grants/State’s Program Compliance Requirements: Procurement. Type of Finding: Material Noncompliance. Criteria: 2 CFR § 200.319(d) requires that the non-Federal entity must maintain written procedures for procurement transactions. Condition: We noted that the City did not have written procedures for procurement transactions that include the provisions required by the Procurement Standards 2 CFR § 200.318 through 2 CFR § 200.327. Cause: The City was not aware of the requirement to have written procedures for procurement transactions. Effect: Failure to have adequate written procedures for procurement transactions could result in the acquisition of goods or services in violation with administrative requirements, federal regulations, other procurement requirements, and Uniform Guidance requirements. Questioned Costs: There are no questioned costs. Recommendation: We recommend that the City identify grants that are subject to Uniform Guidance on a timely basis to ensure all compliance requirements are met and develop adequate written policies and procedures for procurement transactions. Views of Responsible Officials and Planned Corrective Action: The City has identified federal grants subject to the Uniform Guidance and will develop written policies and procedures which include the relevant provisions required by 2 CFR § 200.318 through 2 CFR § 200.326 Contract provisions.
Information on the Federal Program(s): 14.228 Community Development Block Grants/State’s Program Compliance Requirements: Procurement. Type of Finding: Material Weakness in Internal Control Over Compliance. Criteria: Internal controls should be in place to provide reasonable assurance that procurement of goods and services are made in compliance with federal regulations and other procurement requirements, as applicable. Condition: The City lacks sufficient controls over procurement to ensure compliance with federal regulations and other procurement requirements, as applicable. Cause: The City did not design and implement controls over compliance with procurement. Effect or Potential Effect: Failure to have adequate internal controls over compliance with procurement could result in the acquisition of goods or services in violation with administrative requirements, federal regulations, and other procurement requirements. Questioned Costs: There are no questioned costs. Recommendation: We recommend that the City create and adopt an official written policy for procurement and contracts establishing contract files that document significant procurement history; methods of procurement authorized including selection of contract type, contractor selection or rejection, and the basis of contract price; verification that procurements provide full and open competition; requirements for cost or price analysis, including for contract modifications; obtaining and reacting to suspension and debarment certifications; and other applicable requirements for procurements under federal awards are followed. We also recommend that personnel with adequate knowledge and experience of responsibilities for procurements for federal awards review procurement and contracting decisions for compliance with federal procurement policies. Views of Responsible Officials and Planned Corrective Action: Management concurs with the audit finding. The City will develop written policies and procedures for procurement, including the relevant provisions required by 2 CFR § 200.318 through 2 CFR § 200.326 Contract provisions. Management will evaluate the need to contract with local government consultants to perform control procedures where City personnel are not available or qualified to perform.
Finding 2024-003: Documentation of Procurement and Competitive Bidding Procedures Condition During testing of procurement transactions, we noted that a vendor was selected for services without documented evidence that competitive bidding or price quotations were obtained, and the procurement file did not include documentation describing the basis for vendor selection. While Home Start, Inc.’s fiscal policies allow for the use of oral quotes and permit vendor selection based on responsiveness and advantage to the Organization considering factors such as price, quality, and other relevant considerations, the procurement documentation maintained by the Organization did not include evidence that quotes were obtained or documentation supporting the basis for vendor selection. Criteria Under 2 CFR §200.318(a), non-federal entities must establish and maintain effective internal controls over the procurement process to ensure compliance with federal statutes, regulations, and the terms and conditions of federal awards. Additionally, 2 CFR §200.318(i) requires non-federal entities to maintain records sufficient to detail the history of procurement, including documentation of the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Further, 2 CFR §§200.319–200.320 require that procurements be conducted in a manner providing full and open competition, and that appropriate price or rate quotations be obtained depending on the procurement method. Cause The Organization did not consistently maintain documentation supporting the procurement process, including evidence of quotes obtained or documentation explaining the basis for vendor selection when competitive quotes were not documented. Effect The absence of procurement documentation reduces the Organization’s ability to demonstrate compliance with Uniform Guidance procurement requirements and increases the risk that procurements funded with federal awards may not meet federal competition standards. Recommendation We recommend that management strengthen procurement documentation procedures to ensure that procurement files include sufficient documentation of the competitive bidding or quotation process, including: • Evidence of quotes or bids obtained, including oral quotes where permitted by policy. • Documentation supporting the evaluation and selection of vendors. • Written justification when competitive bids or quotes are not obtained, consistent with both Uniform Guidance requirements (2 CFR §200.318(i)) and the Organization’s fiscal policies. Implementing these procedures will help ensure that procurement activities funded by federal awards are adequately documented and compliant with Uniform Guidance procurement standards.
Finding 2024-2 Assistance listing number: 21.027 Program name: Coronavirus State and Local Fiscal Recovery Funds Pass-through entity: State of Michigan EGLE Project numbers: A5817-01 Finding type: Material weakness and material noncompliance with laws and regulations Repeat finding: No Criteria: Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requires non-federal entities to maintain specific written policies to ensure accountability for federal awards. Minimum mandatory policies include procurement procedures, allowability of costs, conflict of interest, cash management, and internal controls. Conditions: The City did not have written policies, as are required by Uniform Guidance, that adhered fully to the requirements of Uniform Guidance. Questioned Costs: None Why Questioned Costs Not Determinable: N/A How Questioned Computed: N/A Context: The City has some written policies or resolutions that address procurement and conflict of interest. The procurement policy, however, did not fully address the requirements of UG Section 200.318. In addition, the City had developed some procedures for cash management, allowability costs and internal control but did not adopt the written policies for cash management, allowability of costs and internal control that would fully address the requirements of UG Sections 200.305, 200.302, 200.400 and 200.303. Cause: The City was not in compliance with the UG requirements to have the correct written policies related to procurement, cash management, allowability costs and internal control. Effect: The absence of those properly prepared written policies increases the potential for further noncompliance because the City’s procedures may not adequately address the relevant compliance requirements. Recommendation: We recommend that the City create and put in place the written policies that address the requirements of 2 CFR 200.318-Procurement, 200.305-Cash Management, 200.302 & 200.400-Allowability of Costs, 200.303-Internal Control. View and Response of Responsible Officials: The City is reviewing existing documents and the requirements of UG for written policies to determine the best course of action to create and put in place the written policies required by UG.
Federal Agency: U.S. Department of Justice Federal Program Title: Crime Victim Assistance Federal Assistance Listing Number: 16.575 Federal Award Identification Number and Year: 15POVC23GG00443ASSI-2024 Pass-Through Agency: Minnesota Office of Justice Programs Pass-Through Number(s): A-CVS-2024-AMS-077 Award Period: 10/01/2023 to 09/30/2025 Type of Finding: • Significant Deficiency in Internal Control over Major Federal Programs and Other Matters Criteria or Specific Requirement: 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. Condition: The Organization did not have a written procurement policy in accordance with Uniform Guidance for a portion of the year. In addition, during our testing, we noted the Organization did not apply the proper procurement procedures for two vendors as they did not perform appropriate procedures nor retain adequate documentation in accordance with Uniform Guidance. Questioned Costs: Unknown Context: Two out of the two procurement selections did not have procurement procedures followed. Cause: Vendors were procured prior to the implementation of a formal procurement policy; therefore, proper documentation was not retained as of the procurement date. Effect: Potential effect of noncompliance with Uniform Guidance when procuring goods and services for expenditures over federal awards. Repeat Finding: This is a repeat finding. Recommendation: The Organization should continue to apply its current procurement policy to new and existing vendors to ensure proper documentation is retained in accordance with said procurement policy and SA UG. Views of Responsible Officials and Planned Corrective Actions: The Organization will apply its current procurement policy to new and existing vendors in order to comply with applicable procurement requirements.
Material Weakness Finding No. 2024-003: Procurement Policies U.S. Department of Health and Human Services Substance Abuse and Mental Health Services Federal Assistance Listing Number 93.243. U.S. Department of Health and Human Services Health Care for Native Hawaiians Federal Assistance Listing Number 93.932. Criteria The Uniform Guidance 2 CFR §200.320 sets forth the methods of procurement to be followed in the acquisition of property or services required under a Federal award or subaward, which includes formal purchase methods such as proposal or bids when the value of the property or services under a Federal financial assistance award exceeds a certain threshold, as defined. Furthermore, 2 CFR §200.320(c) provides specific circumstances in which noncompetitive procurement can be used. Condition During our audit, we noted that the Organization entered into contracts with entities which were subject to a formal purchase method, for which competitive processes for selection were not performed, nor was documentation of the specific criteria of 2 CFR §200.320(c) met to support noncompetitive procurements maintained. Cause Management had not updated its policies and procedures to incorporate certain pertinent sections of the procurement standards of the Uniform Guidance. Effect The lack of procurement standards in accordance with the Uniform Guidance may result in allowable cost issues. Identification of a Repeat Finding This finding was reported as a federal award finding in the immediately previous audit as Finding No. 2023-003. Recommendation We recommend that the Organization incorporate and adhere to the procurement standards of the Uniform Guidance to its policies and procedures manual to ensure compliance with Federal standards, including 2 CFR §200.318(h) which stipulates that sufficient detail of the history of the procurement must be maintained, including the selection of the contractor.
COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Assistance Listing No. 21.027 U.S. Department of Treasury Criteria or specific requirement – Procurement, Suspension and Debarment - 2 CFR 200.318-200.327 Condition – The Hospital does not have formal policies in place for the procurement of goods or services charged to federal awards or to review that vendors are not suspended or debarred. Cause – The Hospital does not have a procurement or suspension/debarment policy. Effect or potential effect – Vendor was not properly procured. Verification that vendor was not suspended or debarred was not performed by the Hospital. Questioned costs - Unknown Context – The sample selected for testing was nonstatistical and not designed to be statistically representative of the population. Accordingly, results of testing cannot be projected to the entire population. A sample of seven procurements were tested out of a population of 64. The sample selected for testing was non-statistical and not designated to be statistically representative of the population. Accordingly, results of the testing cannot be projected to the entire population. All of the samples tested were out of compliance due to the Hospital not having a formal policy for procurement or suspension and debarment that complies with Uniform Guidance requirements Identification as a repeat finding, if applicable – Not applicable Recommendation – The Hospital should create and approve a formal procurement policy and ensure that vendors are being procured according to the policy. In addition, the Hospital should include policies and procedures to verify vendors are not suspended or debarred from federal activities.
Condition: Upon inquiry of county personnel and a test of nineteen (19) disbursements, the following weaknesses were noted: • The County did not advertise bids for at least three weeks. • The County does not have written standards of conduct that cover conflicts of interest and govern the performance of its employees engaged in the selection, award, and administration of contract. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements. Effect of Condition: This condition resulted in noncompliance with grant requirements. Recommendation: OSAI recommends the County gain an understanding of the grant requirements for this program and implement internal controls to ensure compliance with these grant requirements. Management Response: Chairman of the Board of County Commissioners: The Board acknowledges the need to incorporate specific federal clause language and procurement documentation standards into the County’s written procurement policy. • The County procurement policy will be updated to include required federal purchase and Uniform Guidance provisions. • Standardized procurement documentation procedures will be implemented for purchases involving federal funds. • Training will be provided to relevant personnel regarding federal purchasing requirements. • A compliance checklist will be adopted for federal expenditures to ensure documentation consistency. • Federal procurement requirements will be reviewed with personnel prior to project initiation, and documentation will be evaluated at project close out to confirm compliance. No questioned costs were identified in connection with these findings. County Clerk: The County will gain an understanding of the grant requirements for this program and implement internal controls to ensure compliance with these grant requirements. Criteria: 2 CFR § 200.317 through 200.327 General Procurement Standards reads as follows: When procuring property and services under a Federal award, a State must follow the same policies and procedures it uses for procurements from its non-Federal funds. The State will comply with §§ 200.321, 200.322, and 200.323 and ensure that every purchase order or other contract includes any clauses required by § 200.327. All other non-Federal entities, including subrecipients of a State, must follow the procurement standards in §§ 200.318 through 200.327. 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 purchases orders. 2 CFR § 200.320 Sealed bids. This is a procurement method in which bids are publicly solicited through an invitation and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid conforms with all the material terms and conditions of the invitation and is the lowest in price. The sealed bids procurement method is preferred for procuring construction services. (i) For sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders have been identified as willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm-fixed-price contract, and the selection of the successful bidder can be made principally based on price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them with sufficient response time prior to the date set for opening the bids. Unless specified by the Federal agency, the recipient or subrecipient may exercise judgment in determining what number is adequate. For local governments, the invitation for bids must be publicly advertised. (B) The invitation for bids must define the items or services with specific information, including any required specifications, for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids. For local governments, the bids must be opened publicly. (D) A firm-fixed-price contract is awarded in writing to the lowest responsive bid and responsible bidder. When specified in the invitation for bids, factors such as discounts, transportation cost, and life-cycle costs must be considered in determining which bid is the lowest. Payment discounts must only be used to determine the low bid when the recipient or subrecipient determines they are a valid factor based on prior experience. (E) The recipient or subrecipient must document and provide a justification for all bids it rejects.
2024-008 – CORONAVIRUS CAPITAL PROJECT FUND – LACK OF SUPPORT FOR PROCUREMENT – ALN 21.029 - MATERIAL WEAKNESS & MATERIAL NONCOMPLIANCE FINDING TYPE: MATERIAL WEAKNESS & MATERIAL NONCOMPLIANCE Finding 2024-008 Federal Program: Coronavirus Capital Project Fund ALN: 21.029 Federal Award Number(s) and Year(s): CPFFN0155, 2024 Federal Agency: U.S. Department of the Treasury Pass Through Agency: North Dakota Department of Career and Technical Education Questioned Cost: Unknown Condition Williston Basin Public School District No. 7 did not maintain support surrounding the selection process for the construction management at-risk (CMAR) for the CTE Center. Therefore, we were unable to determine if the CMAR selection was properly completed. In addition, Willison Basin Public School did not have a procurement policy. Effect Without support for the selection of the CMAR of the CTE Center, Williston Basin Public School District is unable to demonstrate that contracts were properly awarded. Cause Williston Basin Public School District No. 7 does not have sufficient procedures in place to ensure documentation is maintained to ensure the selection process was completed in accordance with NDCC. Criteria • N.D.C.C. §48-01.2-20 (selection process for construction management at-risk planning and design phase services) includes, but is not limited to, the following requirements: o The selection committee shall establish the content of the request for qualifications, which must include (but is not limited to); the identity of the governing body and a list of the members of the selection committee, description of the proposed public improvement, proposed budget limits of the public improvement, commencement and completion date of the proposed public improvement, and the description of the scope of services to be provided. • 2 CFR 200.318 states: "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." • Under 2 CFR 200.303(a), recipients and subrecipients must "establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award." Context Williston Basin Public School District entered into one contract for the CTE Center with a value of $20,390,114. Repeat Finding No. Recommendation We recommend the Willison Basin Public School District maintain support surrounding the selection process for the construction manager at-risk. We also recommend that a procurement policy is established. Williston Basin Public School District No. 7’s Response See Corrective Action Plan.
FINDING 2024-005 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 22-23, FY 23-24 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 2022-004. Condition and Context Internal control is generally defined as a process affected by an entity's oversight body, management, and other personnel that provides reasonable assurance that the objectives of the entity will be achieved. For federal awards, nonfederal entities, such as the School Corporation, are required to establish and maintain internal control over federal awards to provide reasonable assurance that the entity will comply with applicable federal statutes, regulations, and the terms and conditions of its awards. Internal control is not one event or circumstance, but a dynamic and continual process. The process is based on fundamental principles that operate as whole. The fundamental principles are related to five components of internal controls which are as follows: Control Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring. If a component is not effective, or the components are not operating together in an integrated manner, then an internal control system cannot be effective. Deficiencies as noted below were identified in all five of the components. INDIANA STATE BOARD OF ACCOUNTS 35 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Control Environment The School Corporation had not established a strong foundation for an effective internal control system. There was no demonstrated emphasis on the importance of internal controls or on compliance with federal program requirements. Risk Assessment The School Corporation had not defined objectives necessary to identify risks or determine risk tolerances. Management did not identify, analyze, or respond to risks that could affect the achievement of objectives, including risks arising from significant changes to operations or the potential for fraud. Control Activities - 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. 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 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. The School Corporation did not have internal controls in place to ensure the purchasing method used complied with federal and state requirements. We identified three vendors in fiscal year 2022-2023 and three vendors in 2023-2024 that fell within the small purchase threshold. All vendors were selected for testing. The School Corporation did not obtain price or rate quotes for any of the vendors tested that were less than the simplified acquisition threshold of $150,000 but exceeded the $10,000 micro-purchase threshold. Additionally, the School Corporation did not enter into a contract for two of the six vendors as required by Indiana Code for purchases between $50,000 and $150,000. Finally, documentation detailing the history of the procurement, which must include the reason for the procurement method used, was not available for audit. We identified 125 micro-purchases for the audit period. Of the 125 micro-purchases, 25 were selected for testing. Documentation detailing the history of the procurement, which must include the reason for the procurement method used, was not available for audit for all 25 micro-purchases tested. Control Activities - 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. INDIANA STATE BOARD OF ACCOUNTS 36 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Upon inquiry of the School Corporation 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, the School Corporation disclosed procedures had not been performed to ensure vendors were not suspended or debarred prior to entering into covered transaction. We identified two vendors in 2022-2023 and two vendors in 2023-2024 for which suspension and debarment procedures should have been performed. All vendors were selected for testing. For all vendors, the School Corporation did not perform procedures to ensure the vendors paid with federal grant funds were not suspended or debarred prior to entering into the covered transaction. Information and Communication The School Corporation had not established adequate communication methods or practices to ensure that reliable information was identified, captured, and communicated to the appropriate internal and external parties. Monitoring The School Corporation did not perform ongoing or periodic evaluations to determine whether internal controls were operating effectively or to identify needed improvement. In addition, the School Corporation did not have a process in place to track or to follow-up on corrective actions written in response to audit findings. 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. . . . INDIANA STATE BOARD OF ACCOUNTS 37 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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 procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement . . . (1) Micro-purchases– . . . (ii) Micro-purchase awards. Micro-purchases may be awarded without soliciting competitive price or rate quotations if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. . . . (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 form an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Indiana Code 5-22-8-3(d) states in part: ". . . the purchasing agent shall award a contract to the lowest responsible and responsive offeror . . ." 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 The School Corporation had not implemented an effective system of internal controls. Changes in key financial personnel, along with insufficient employee training, contributed to processes and procedures not being properly developed or consistently followed. Policies and procedures were not properly implemented to ensure that appropriate procurement methods were used, histories of procurements were documented, and price or rate quotes for small purchases were obtained. Additionally, vendors' suspension and debarment statuses were not being verified. INDIANA STATE BOARD OF ACCOUNTS 38 SCOTT COUNTY SCHOOL DISTRICT 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Because the five components of internal control were not properly designed or implemented, the School Corporation's internal control system could not be effective. As a result, general and fraud-related risks, as well as risks arising from significant operational changes, could negatively impact the School Corporation. Existing internal control deficiencies may continue undetected, and additional weaknesses may exist without being identified. Furthermore, by not properly completing the procurement process the School Corporation could have overpaid for goods or services. Additionally, the School Corporation could have made payments to a vendor that was suspended or debarred. Payments to a suspended or debarred vendor are unallowable. Questioned Costs There were no questioned costs identified. Recommendation We recommended the School Corporation design and implement a system of internal controls, which would include policies and procedures related to the five components of internal control. Management should define clear objectives, identify and assess risks, and develop policies and procedures to address those risks. Regular monitoring should be conducted to ensure internal controls are operating effectively and deficiencies are addressed promptly. Additionally, we recommended that the School Corporation's management establish a proper system of internal controls to ensure expenditures made from federal awards use the appropriate procurement method. Finally, we recommended that the School Corporation's management verify applicable vendors are not suspended or debarred prior to making payment. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Federal Agency: Department of Treasury Federal Program: COVID- 19 - Coronavirus State and Local Fiscal Recovery Funds Federal Assistance Listing Number: 21.027 Criteria: Under 2 CFR §§ 200.318 through 200.327, non-Federal entities expending federal awards must establish and follow written procurement procedures that comply with the Uniform Guidance procurement standards. At a minimum, written procurement policies should address standards of conduct, methods of procurement, competition requirements, documentation of procurement actions, cost or price analysis when applicable, suspension and debarment requirements, and contract provisions required by Appendix II to 2 CFR Part 200. Statement of Condition: During our testing, we noted that the Association's written procurement policy did not incorporate all applicable Uniform Guidance procurement requirements. Specifically, the policy did not adequately address procurement methods and dollar thresholds, suspension and debarment verification, and required contract provisions. As a result, the Association's written policy was not fully consistent with the requirements of 2 CFR Part 200. Cause: Management had not updated the Association's procurement policy to reflect the current Uniform Guidance procurement requirements applicable to federal awards. Consequently, the policy did not provide personnel with complete guidance for administering federally funded procurements. Effect: An incomplete procurement policy increases the risk that procurements funded with federal awards may not be conducted in accordance with Uniform Guidance requirements. This could result in noncompliance with federal regulations and increase the risk of questioned costs or other administrative remedies by the federal awarding agency or pass-through entity. Context: The Association’s procurement policy in effect during the audit period governed purchases made with federal award funds; however, the policy did not incorporate all applicable federal procurement requirements under the Uniform Guidance. As a result, procurements made with federal funds during the audit period were subject to policies and procedures that did not fully conform to the applicable Federal procurement standards. Questioned Costs: None. Recommendation: We recommend that management revise and formally adopt a procurement policy that fully incorporates the procurement requirements of 2 CFR §§ 200.317 through 200.327. The revised policy should address all applicable procurement methods, competition requirements, documentation standards, suspension and debarment procedures, and required federal contract provisions. In addition, management should provide training to personnel responsible for procurement activities to ensure consistent application of the updated policy. Management Response: Management acknowledges the auditor's recommendation regarding the enhancement of the Association's procurement policies to ensure full compliance with the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR §§ 200.317–200.327). The Association has initiated a comprehensive review of its existing procurement policies and procedures to ensure they fully incorporate all applicable federal procurement requirements. The revised policy will include provisions addressing procurement methods based on established dollar thresholds, competition requirements, documentation and record retention standards, contractor responsibility determinations, suspension and debarment verification, conflict of interest requirements, and all required federal contract provisions applicable to federally funded awards. Management will also establish standardized procurement documentation and review procedures to promote consistent application of the policy and to ensure compliance is adequately documented for all applicable purchases funded through federal awards. In addition, personnel responsible for procurement and grant administration will receive training on the updated procurement policy and the requirements of 2 CFR Part 200. This training will emphasize proper procurement planning, documentation, competitive purchasing requirements, and compliance with federal regulations to ensure consistent implementation throughout the organization. Management is committed to maintaining strong internal controls over federal awards and will periodically review procurement practices to ensure ongoing compliance with Uniform Guidance requirements.
SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the year ended May 31, 2024 SECTION II – FINANCIAL STATEMENTS FINDINGS No matters were reported. SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Finding Number: 2024-001 Federal Program: 14.267 Continuum of Care Category: Compliance/internal control Criteria: As established in CFR 200.318 of General procurement standards (c)- Conflict of interest - (1) “The recipient or subrecipient 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. No employee, officer, agent, or board member with a real or apparent conflict of interest may participate in the selection, award, or administration of a contract supported by the Federal award. A conflict of interest includes when the employee, officer, agent, or board member, any member of their immediate family, their partner, or an organization that employs or is about to employ any of the parties indicated herein, has a financial or other interest in or a tangible personal benefit from an entity considered for a contract. “ The Conflict-of-Interest policy of the Organization establishes the parameters that define an actual, potential or apparent conflict of interest as follows: • actual conflict of interest - includes any link or relationship between any employee, any Board member and/or any volunteer facing a real and existing conflict • potential conflict of interest - includes any link or relationship between any employee, any Board member and/or any volunteer that could be in a situation that may result in a conflict of interest • apparent conflict of interest - includes any link or relationship between any employee, any Board member and/or any volunteer that could be in a situation that may be perceived having to do with conflict, although in fact it is not Employees, directors, Board members and/or volunteers of the Organization must recognize when they have, could have, or could be thought to have a conflict of interest and must be reported immediately. The Organization can employ relatives, partners and/or spouses of an employee, if the family romantic or marital relationship does not cause a conflict of interest or negative and adversely impact the Organization. In addition, on January 1, 2024, the Organization established a new protocol through an agreement regarding how the working relationships between family members will be managed. The purpose is to reasonably accommodate the supervision status of any immediate family member recruited by the Organization. Specific controls are established for functions such as the performance evaluation process, the disciplinary or reprimand process, evaluation and approval of legal documents, requisition of funds, and programmatic implementation process, among others, to ascertain that any actual, potential or apparent conflict of interest is appropriately mitigated. The agreement needs to be signed by the parties having the relationship and another independent party. Condition: An immediate family member of the Executive Director was promoted to Director of Services and the safeguard measures established in the Conflict-of-Interest policy and the new protocol of the Organization were not followed. The following instances were noted: • The Employment Agreement was signed exclusively by the Executive Director and the Director of Services. • The Reasonable Accommodation of the Supervisory Role of the Director of Services Agreement was signed exclusively by the Executive Director and the Director of Services. In addition, another immediate family member of the Director of Services was hired as a professional contractor. At the moment of the recruitment, the document establishing the relationship was not signed. Subsequently the referred document was signed but it did not specify the existing conflicts with the Director of Services and the Executive Director. Cause: Failure to include a third-party signature in certain legal agreements signed by Executive Director and its immediate family member as established in the new protocol. Failure to follow the Conflict-of-interest policy established policies regarding the timely completion of conflict-ofinterest document, and proper disclosure of such conflict. The conflict of interest between the professional contractor, the Executive Director and the Director of Services was not notified to the Board of Directors to take appropriate remedial action. Context: Not applicable Effect or potential effect: Payments or transactions made between parties that have conflicts of interest and generate economic benefits can occur without being detected. Recommendation: • Review all contracts to ensure that they comply with the conflict-of-interest clause. • In the event of a potential conflict, establish a third-party signature for the Human Resources director or any member of the board executive committee. • Update the employee manual to include the new protocol. Views of responsible officials: Management agrees with the audit findings and is committed to addressing the issues identified to ensure compliance with CFR 200.318, our Conflict-of-Interest policy, and new organizational protocols. We would like to bring to your attention that effective on November 30, 2024, the Executive Director resigned from his position with Corporacion La Fondita de Jesús. We will review and revise our Conflict-of-Interest policy and protocols to ensure they are comprehensive and clear. This includes detailing the steps to be followed when hiring or promoting individuals with familial relationships within the organization. We will establish an independent review and approval process for all employment and promotion agreements involving immediate family members of senior management. This process will include an additional review by a member of the executive committee of the Board of Directors to ensure objectivity and compliance with policies. We will review all contracts to ensure that they comply with the conflict-ofinterest clause.