2023-001 The City’s internal controls were inadequate for ensuring compliance with federal requirements for procurement and suspension and debarment. Assistance Listing Number and Title: 21.027, COVID – 19 – Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: N/A Pass-through Entity Name: Yakima County Pass-through Award/Contract Number: ARPA-1012 Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The purpose of the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) is to respond to the COVID-19 pandemic’s negative effects on public health and the economy, provide premium pay to essential workers during the pandemic, provide government services to the extent COVID-19 caused a reduction in revenues collected and make necessary investments in water, sewer or broadband infrastructure. In 2023, the City spent $1,029,238 in program funds for government services and investments in infrastructure from its direct award. The City also spent $61,560 from an award passed through from Yakima County to purchase a camera system. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Procurement Federal regulations require recipients to follow their own documented procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR § 200.318-327. When using federal funds to procure goods and services, governments must apply the most restrictive federal requirements, state law or local policies by obtaining quotes or following a competitive procurement process, depending on the estimated cost of the procurement activity. Suspension and Debarment Federal requirements prohibit recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the City enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the contractors are not suspended, debarred or otherwise excluded. The City may verify this by collecting a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at SAM.gov. The City must verify this before entering into the contract or purchasing goods and services, and it must maintain documentation demonstrating compliance with this federal requirement. Description of Condition Procurement Although the City has an established written procurement policy that includes procurement thresholds, it does not include all required methods and procedures to follow when procuring architectural and engineering services. Additionally, the City’s policy does not include other required procedures for procuring transactions, such as contracting with small and minority business owners, women’s business enterprise and labor surplus area firms, domestic preferences, recovered materials, contract cost or price analysis and more. Our audit found the City did not have adequate controls to ensure it complied with procurement requirements. Specifically, the City did not follow the most restrictive requirements when using federal funds to procure an architect and engineer, public works project and equipment. The City: Used its on-call engineer for two public works projects totaling $436,017, rather than advertising for each proposal Received quotes from multiple subcontractors instead of formally procuring the police facility upgrade public works project, totaling $131,153, as one project Did not formally procure the purchase of playground equipment totaling $101,122 and camera system upgrade totaling $61,560 Suspension and Debarment Our audit found the City did not have adequate controls to verify that three of five contractors it paid more than $25,000 in federal funds were not suspended or debarred from participating in federal programs. We consider these deficiencies in internal controls to be material weaknesses, which lead to material noncompliance. Cause of Condition Procurement The City had turnover in the departments responsible for procuring goods and services and updating procurement policies, and the City does not regularly receive federal audits. Although the City established a procurement policy, staff were unaware of all elements from Uniform Guidance that they should include in the policy. Without clear and complete procedures, staff misunderstood the requirements when procuring architectural and engineering services, public works, and equipment and did not follow the most restrictive requirements. Additionally, City staff were unaware that they needed to procure the camera system and believed the pass-through agency required them to use a certain contractor for the purchase. Suspension and Debarment City staff were unaware they needed to check for suspension and debarment for contractors used for the purchase of goods and services and believed they only had to check for those contractors performing public works projects. Effect of Condition Procurement Without effective internal controls, the City cannot ensure it allowed for full and open competition, selected the most qualified contractors and received the best price for purchases. Additionally, the City cannot ensure it complied with federal procurement requirements. Suspension and debarment The City did not obtain written certifications from the contractors, insert a clause into the contracts or check for exclusion records at SAM.gov to verify that three contractors it paid $203,379 using federal funds were not suspended or debarred before contracting. Without adequate internal controls, the City cannot ensure the contractors it paid with federal funds were eligible to participate in federal programs. Any program funds the City used to pay contractors that were suspended or debarred would be unallowable, and the awarding agency could potentially recover them. Because we subsequently verified the contractors were not suspended or debarred, we are not questioning costs. Recommendation We recommend the City: Update its procurement policies to conform with federal procurement requirements Establish internal controls over its procurement of architectural and engineering services, public works contracts and purchases to ensure compliance with federal requirements Strengthen internal controls to ensure all contractors it pays $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before contracting with or purchasing from them City’s Response Procurement The City of Grandview will update our procurement policies to comply with federal procurement requirements. The procurement policy update will include other required procedures for procuring transactions, such as contracting with small and minority business owners, women’s business enterprise and labor surplus area firms, domestic preferences, recovered materials, contract cost or price analysis and more. Going forward, the City will establish internal administrative controls to ensure that city staff receive the proper training and are aware of all procurement policies and guidelines. Suspension and Debarment The City of Grandview will establish internal controls on contract proposals exceeding $25,000, must be reviewed to ensure that contractors are not suspended or debarred. The City will verify this by adding a clause or condition into the contract that states the contractor is not suspended or debarred. The City will verify this before entering into a contract or purchasing goods and services, and it will maintain documentation demonstrating compliance with federal requirements. Auditor’s Remarks We thank the City for its cooperation and assistance during the audit and acknowledge its commitment to improving the condition described. We will review the status of this issue during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures and requirements for maintaining records sufficient to detail the history of procurement. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring with Federal funds by non-federal entities. Title 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
2023-001 The City’s internal controls were inadequate for ensuring compliance with federal requirements for procurement and suspension and debarment. Assistance Listing Number and Title: 21.027, COVID – 19 – Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: N/A Pass-through Entity Name: Yakima County Pass-through Award/Contract Number: ARPA-1012 Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The purpose of the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) is to respond to the COVID-19 pandemic’s negative effects on public health and the economy, provide premium pay to essential workers during the pandemic, provide government services to the extent COVID-19 caused a reduction in revenues collected and make necessary investments in water, sewer or broadband infrastructure. In 2023, the City spent $1,029,238 in program funds for government services and investments in infrastructure from its direct award. The City also spent $61,560 from an award passed through from Yakima County to purchase a camera system. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Procurement Federal regulations require recipients to follow their own documented procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR § 200.318-327. When using federal funds to procure goods and services, governments must apply the most restrictive federal requirements, state law or local policies by obtaining quotes or following a competitive procurement process, depending on the estimated cost of the procurement activity. Suspension and Debarment Federal requirements prohibit recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the City enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the contractors are not suspended, debarred or otherwise excluded. The City may verify this by collecting a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at SAM.gov. The City must verify this before entering into the contract or purchasing goods and services, and it must maintain documentation demonstrating compliance with this federal requirement. Description of Condition Procurement Although the City has an established written procurement policy that includes procurement thresholds, it does not include all required methods and procedures to follow when procuring architectural and engineering services. Additionally, the City’s policy does not include other required procedures for procuring transactions, such as contracting with small and minority business owners, women’s business enterprise and labor surplus area firms, domestic preferences, recovered materials, contract cost or price analysis and more. Our audit found the City did not have adequate controls to ensure it complied with procurement requirements. Specifically, the City did not follow the most restrictive requirements when using federal funds to procure an architect and engineer, public works project and equipment. The City: Used its on-call engineer for two public works projects totaling $436,017, rather than advertising for each proposal Received quotes from multiple subcontractors instead of formally procuring the police facility upgrade public works project, totaling $131,153, as one project Did not formally procure the purchase of playground equipment totaling $101,122 and camera system upgrade totaling $61,560 Suspension and Debarment Our audit found the City did not have adequate controls to verify that three of five contractors it paid more than $25,000 in federal funds were not suspended or debarred from participating in federal programs. We consider these deficiencies in internal controls to be material weaknesses, which lead to material noncompliance. Cause of Condition Procurement The City had turnover in the departments responsible for procuring goods and services and updating procurement policies, and the City does not regularly receive federal audits. Although the City established a procurement policy, staff were unaware of all elements from Uniform Guidance that they should include in the policy. Without clear and complete procedures, staff misunderstood the requirements when procuring architectural and engineering services, public works, and equipment and did not follow the most restrictive requirements. Additionally, City staff were unaware that they needed to procure the camera system and believed the pass-through agency required them to use a certain contractor for the purchase. Suspension and Debarment City staff were unaware they needed to check for suspension and debarment for contractors used for the purchase of goods and services and believed they only had to check for those contractors performing public works projects. Effect of Condition Procurement Without effective internal controls, the City cannot ensure it allowed for full and open competition, selected the most qualified contractors and received the best price for purchases. Additionally, the City cannot ensure it complied with federal procurement requirements. Suspension and debarment The City did not obtain written certifications from the contractors, insert a clause into the contracts or check for exclusion records at SAM.gov to verify that three contractors it paid $203,379 using federal funds were not suspended or debarred before contracting. Without adequate internal controls, the City cannot ensure the contractors it paid with federal funds were eligible to participate in federal programs. Any program funds the City used to pay contractors that were suspended or debarred would be unallowable, and the awarding agency could potentially recover them. Because we subsequently verified the contractors were not suspended or debarred, we are not questioning costs. Recommendation We recommend the City: Update its procurement policies to conform with federal procurement requirements Establish internal controls over its procurement of architectural and engineering services, public works contracts and purchases to ensure compliance with federal requirements Strengthen internal controls to ensure all contractors it pays $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before contracting with or purchasing from them City’s Response Procurement The City of Grandview will update our procurement policies to comply with federal procurement requirements. The procurement policy update will include other required procedures for procuring transactions, such as contracting with small and minority business owners, women’s business enterprise and labor surplus area firms, domestic preferences, recovered materials, contract cost or price analysis and more. Going forward, the City will establish internal administrative controls to ensure that city staff receive the proper training and are aware of all procurement policies and guidelines. Suspension and Debarment The City of Grandview will establish internal controls on contract proposals exceeding $25,000, must be reviewed to ensure that contractors are not suspended or debarred. The City will verify this by adding a clause or condition into the contract that states the contractor is not suspended or debarred. The City will verify this before entering into a contract or purchasing goods and services, and it will maintain documentation demonstrating compliance with federal requirements. Auditor’s Remarks We thank the City for its cooperation and assistance during the audit and acknowledge its commitment to improving the condition described. We will review the status of this issue during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures and requirements for maintaining records sufficient to detail the history of procurement. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring with Federal funds by non-federal entities. Title 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
FINDING 2023-001 Information on the federal program: Subject: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds – Procurement and Suspension and Debarment Federal Agency: Department of Treasury Federal Program: COVID 19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Numbers and Years (or Other Identifying Numbers): 65851, CY2021 Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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 section 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. (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… (h) 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 section 200.320 states in part: (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate:… (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Condition: The City contracted a vendor utilizing federal funds without performing a formal bid process for a project exceeding the simplified acquisition threshold of $150,000 no did the City provide documentation supporting a noncompetitive procurement. There was available history of the procurement process, including a lack of documented City Council approval for the contract. The contract entered into also did not include the required Buy America Build America Provisions. Cause: The City’s management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Also, the City does not have written Procurement Policies that comply with the Federal Uniform Guidance requirements for non-Federal entities. The City’s current policy does not address the following requirements: • Written standards of conduct for employees involved in contracting. • Written standards for solicitations to foster full and open competition. • Micro-purchase threshold of $10,000 (listed at $25k) • No formal written or documented City policy or ordinance regarding the City’s procedures for verifying that an entity with which it plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded. Effect: The failure to establish an effective internal control system placed the City at risk of noncompliance with the grant agreement and the compliance requirements. Questioned Costs: There were no questioned costs identified. Context: During the procurement contract testing, the City was unable to provide any procurement history for a selected vendor contract funded through the Coronavirus State and Local Fiscal Recovery Funds grant. The City had entered into the vendor contract based on previous experience with the vendor. Upon inquiry of the City on their purchasing policies and procedures, it was verify the City does not have procurement policies for purchases that conform to the requirements of the Uniform Guidance. Identification as a repeat finding: See Finding 2022-001 Recommendation: We recommend that management of the City establish a proper system of internal controls and develop and implement procurement policies and procedures that adheres of the procurement requirements for purchases with federal awards as required by the 2 CFR 200 Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2023-001 Information on the federal program: Subject: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds – Procurement and Suspension and Debarment Federal Agency: Department of Treasury Federal Program: COVID 19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Numbers and Years (or Other Identifying Numbers): 65851, CY2021 Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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 section 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. (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… (h) 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 section 200.320 states in part: (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate:… (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Condition: The City contracted a vendor utilizing federal funds without performing a formal bid process for a project exceeding the simplified acquisition threshold of $150,000 no did the City provide documentation supporting a noncompetitive procurement. There was available history of the procurement process, including a lack of documented City Council approval for the contract. The contract entered into also did not include the required Buy America Build America Provisions. Cause: The City’s management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Also, the City does not have written Procurement Policies that comply with the Federal Uniform Guidance requirements for non-Federal entities. The City’s current policy does not address the following requirements: • Written standards of conduct for employees involved in contracting. • Written standards for solicitations to foster full and open competition. • Micro-purchase threshold of $10,000 (listed at $25k) • No formal written or documented City policy or ordinance regarding the City’s procedures for verifying that an entity with which it plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded. Effect: The failure to establish an effective internal control system placed the City at risk of noncompliance with the grant agreement and the compliance requirements. Questioned Costs: There were no questioned costs identified. Context: During the procurement contract testing, the City was unable to provide any procurement history for a selected vendor contract funded through the Coronavirus State and Local Fiscal Recovery Funds grant. The City had entered into the vendor contract based on previous experience with the vendor. Upon inquiry of the City on their purchasing policies and procedures, it was verify the City does not have procurement policies for purchases that conform to the requirements of the Uniform Guidance. Identification as a repeat finding: See Finding 2022-001 Recommendation: We recommend that management of the City establish a proper system of internal controls and develop and implement procurement policies and procedures that adheres of the procurement requirements for purchases with federal awards as required by the 2 CFR 200 Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Criteria: 2 CFR 200.303 requires nonfederal entities to establish and maintain effective internal control over federal awards to provide reasonable assurance that organizations who manage the federal award: • Understand and comply with the federal statutes, regulations, and terms and conditions of the award; • Evaluate and monitor compliance; • Take prompt action when instances of noncompliance is identified. 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). Additionally, the Uniform Guidance requires non-federal entities to develop written procedures related to the following areas: 1. Cash Management 2 CFR 200.302(b)(6) states that the financial management system of each non-Federal entity must provide for the written procedures to implement the requirements of 2 CFR 200.305 Federal Payment. 2. Allowability of Costs 2 CFR 200.302(b)(7) states that the financial management system of each non-Federal entity must provide for the Written procedures for determining the allowability of costs in accordance with Subpart E (Cost Principles) of this part and the terms and conditions of the Federal award. 3. Conflict of Interest 2 CFR 200.318(c)(1) states 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. No employee, officer, or agent may participate in the selection, award, or administration of a contract supported by a Federal award if he or she has a real or apparent conflict of interest. Such a conflict of interest would arise when the employee, officer, or agent, any member of his or her immediate family, his or her partner, or an organization which 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 a firm considered for a contract. The officers, employees, and agents of the non-Federal entity may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. However, non-Federal entities may set standards for situations in which the financial interest is not substantial, or the gift is an unsolicited item of nominal value. The standards of conduct must provide for disciplinary actions to be applied for violations of such standards by officers, employees, or agents of the non-Federal entity. In addition, the organizations should ensure that existing written procedures are in compliance with: a. Equipment Management Requirements 2 CFR 200.313(b) states that “A state must use, manage and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures b. General Procurement Standards 2 CFR 200.317 to 200.326 discusses that contracts must be established and managed in accordance with the procurement requirements in 2 CFR Part 200. Grantees must have written procurement policies and procedures that demonstrate a fair and reliable process, with standards of conduct addressing conflicts of interest, for obtaining grant-funded goods and services. Condition The Foundation does not have documented policies and procedures concerning the following key compliances areas which are required by the Uniform Guidance: • Cash Management • Allowability of Cost • Conflict of Interest • Equipment and Real Property Management • Procurement, Suspension & Debarment Cause This is attributed to the insufficient resources or staffing to develop and formalize the policies and procedures. Effect The absence of formal policies and procedures in the key compliance areas could result in non-compliance with federal regulations, which may lead to unnecessary sanctions. Additionally, without formal written policies and procedures, it is difficult to ensure consistent practices across the organization. Questioned Costs None Recommendation The Foundation should develop and implement formal written policies and procedures for the specific areas required by the Uniform Guidance. These policies and procedures must clearly delineate the requirements of the Uniform Guidance. Personnel responsible for these areas should receive adequate training and apply the policies effectively. Regular reviews should be conducted to update the policies and procedures as needed. Views of Responsible Officials and Planned Corrective Action We understand how crucial it is to have strong policies and procedures in place. Here’s how we plan to move forward: 1. Review of Existing Policies and Procedures: We’re currently taking a close look at our existing policies and procedures to ensure they align with the Uniform Guidance. This will help us identify any gaps and make necessary updates so that we’re fully compliant. 2. Development of New Policies: Alongside this review, we will create clear and comprehensive written policies in key areas, such as: • Cash Management: Setting up procedures that comply with 2 CFR 200.305 to ensure timely payments. eCFR :: 2 CFR 200.305 -- Federal payment. • Allowability of Costs: Crafting guidelines that follow Subpart E—Cost Principles, so we can confidently determine which expenses are allowable. https://www.ecfr.gov/current/title-48/chapter-7/subchapter-E/part-731/subpart-731.7/section-731.770. • Conflict of Interest: Establishing standards of conduct that address potential conflicts and promote transparency. • Equipment and Real Property Management: Developing policies for managing equipment acquired under federal awards in line with 2 CFR 200.313(b). eCFR :: 2 CFR 200.313 -- Equipment. • Procurement Procedures: Creating clear procurement guidelines that align with 2 CFR 200.318 through 200.326 to ensure fairness and oversight. eCFR :: 2 CFR 200.318 -- General procurement standards. 3. Training and Communication: The Finance Department will be responsible for training all staff involved in managing federal awards. Training sessions will ensure that everyone understands the requirements and their roles in maintaining compliance. This training will be completed by December 31, 2024. Personnel responsible: Eduardo Cedeno, Director of Finance Anticipated completion date: December 31, 2024
Criteria Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow specific procurement standards set out in 2 CFR sections 200.318 through 200.326, which includes documenting the procurement methods used for vendor selection. These procedures are designed to ensure fair competition, cost-effectiveness, and federal requirements. These procurement standards require, among other provisions, that a non-federal entity must: 1. Meet the general procurement standards in 2 CFR Section 200.318, which include oversight of contractors’ performance, maintaining written standards of conduct for employees involved in contracting, awarding contracts only to reliable contractors, and maintaining records to document the history of procurement. 2. Conduct all procurement transactions for the acquisition of property or services under a federal award in a manner providing full and open competition consistent with the standards of 2 CFR section 200.320. 3. Use documented procurement procedures, consistent with the standards of 2 CFR 200.317 to 320. 2 CFR 200.320 enumerates below the different procurement methods that a non-federal entity should use: a) The micro-purchase and small purchase methods only for procurements that meet the applicable criteria under 2 CFR sections 200.320(a) (1) and (2). Under the micro-purchase method, the aggregate dollar amount does not exceed $50,000. b) Small purchase procedures are used for purchases that exceed the micro-purchase amount but do not exceed the simplified acquisition threshold. The non-Federal entity is responsible for determining an appropriate simplified acquisition threshold based on internal controls, an evaluation of risk and its documented procurement procedures which must not exceed the threshold established in the FAR. When applicable, a lower simplified acquisition threshold used by the non-Federal entity must be authorized or not prohibited under State, local, or tribal laws or regulations. c) Micro-purchases may be awarded without soliciting competitive quotations if the non-federal entity considers the price to be reasonable (2 CFR section 200.320(a)). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR section 200.320(b)). 4. For acquisitions exceeding the simplified acquisition threshold, the non-federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR section 200.320(b) (1); the competitive proposals method under the conditions specified in 2 CFR section 200.320(b) (2); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR section 200.320(c)). 5. Perform a cost or price analysis in connection with every procurement action in excess of the simplified acquisition threshold, including contract modifications (2 CFR section 200.323(a)). The cost plus a percentage of cost and percentage of construction cost methods of contracting must not be used (2 CFR section 200.323(b)). 6. Ensure that every purchase order or other contract includes applicable provisions required by 2 CFR section 200.326. These provisions are described in Appendix II to 2 CFR Part 200, “Contract Provisions for Non-Federal Entity Contracts Under Federal Awards.” Condition During our audit, the Foundation was unable to provide supporting documentation to demonstrate that the required procurement methods under the Uniform Guidance were performed on three out of four vendors tested. The expenditures paid to these vendors ranged from $75,000 to $675,000 in 2023. Cause The lack of documentation is attributed to oversight in maintaining appropriate records of vendor selection and compliance with procurement standards. Effect The absence of procurement documentation raises the risk of non-compliance with federal regulations, which could lead to potential disallowances or unnecessary sanctions. Questioned Costs None Recommendation The Foundation should strengthen its internal controls over procurement by ensuring that all procurement activities, particularly significant expenditures, are properly documented. This includes retaining evidence that procurement methods required by the Uniform Guidance were followed, such as bids, contracts, or justifications for sole-source vendors. The Foundation should also conduct training for staff involved in procurement to ensure awareness and adherence to the policies. Regular internal audits may be implemented to verify compliance with procurement procedures. Views of Responsible Officials and Planned Corrective Action We value your guidance and are committed to enhancing our compliance with the Uniform Guidance. In response, we will: 1. Documentation Procedures: We will implement procedures to properly document procurement activities. This will help us maintain consistency and ensure compliance with the Uniform Guidance. 2. Monitoring and Accountability: Additionally, we will establish a system to regularly monitor our compliance with these policies and procedures. This will enable us to quickly address any issues that may arise. The Finance Department will be responsible for implementing these changes and will have everything ready before the end of 2024. We are dedicated to making these improvements and truly value your support as we work through this process. Personnel responsible: Eduardo Cedeno, Director of Finance Anticipated completion date: December 31, 2024
Federal Program Coronavirus State and Local Fiscal Recovery Funds (21.027) Federal Award Number and Year – SLFRP2882, 2021 Procurement, Suspension, and Debarment Material Weakness Criteria Uniform Guidance requires all non-federal entities, other than states must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. Non-federal entities are also prohibited from entering into a covered transaction equal to or exceeding $25,000 with a vendor who has been suspended or disbarred from receiving federal funds. Condition We noted during testing procurement, suspension, and debarment that the County doesn’t have a procurement policy that follows Uniform Guidance. We also noted during testing for suspension and debarment that 2 of our 2 vendors tested were not reviewed to ensure they were not suspended or disbarred from federal funds. Cause Lack of oversight by management. Questioned Costs None Context Uniform Guidance states “Review the non-federal entity’s procedures for verifying that an entity with which it plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded (2 CFR sections 200.212 and 200.318(h); 2 CFR section 180.300; 48 CFR section 52.2096)”. During this review, we noted that during our testing of procurement, suspension, and debarment that the County doesn’t have a procurement policy that follows Uniform Guidance. We also noted during testing for suspension and debarment that 2 of our 2 vendors tested were not reviewed to ensure they were not suspended or disbarred from federal funds. Effect The County has an increased risk of not being compliance with federal procurement requirements and increased risk of entering into a covered transaction with a vendor who is suspended or disbarred from federal funds. Repeat Finding Yes – see 2022-005 Recommendation The County should update their Procurement Policy to include suspension and debarment verbiage. Views of Responsible Officials See Corrective Action Plan.
Finding 2023-004: Procurement, Suspension, and Debarment (Significant Deficiency) Information on the Federal Programs: Both Major Programs Criteria or Specific Requirement: 2 CFR Section 200.318 requires that the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. In addition, 2 CFR Section 200.214 requires that, for covered transactions, a non-Federal entity must verify that entities are not suspended, debarred or otherwise excluded. This verification may be accomplished by checking the System for Award Management (SAM) website maintained by the General Services Administration. Condition: FCE did not have a documented procurement policy until January 2024. In addition, for all disbursements tested, FCE did not verify, prior to payment, that the vendors were not suspended, debarred or otherwise excluded. However, FCE provided documentation of the verification that occurred after the payments had been made and no exclusion issues were noted with the vendors. Cause: Prior to the implementation of a formal procurement policy in January 2024, FCE did not require that evidence of SAM checks be maintained in its vendor files. However, FCE performed a search after the payments had been made. In this way, FCE was able to verify that the vendors or individuals in our sample were not suspended, debarred or otherwise excluded.Effect or Potential Effect: FCE was not in compliance with the procurement policy and documentation requirements of the Uniform Guidance until January 2024. Questioned Costs: None. Repeat Finding: See Findings 2022-002 and 2022-003. Recommendation: FCE established internal controls in January 2024 to ensure proper documentation is maintained as evidence to support that it performed the required suspension and debarment searches on the SAM website.
Finding 2023-004: Procurement, Suspension, and Debarment (Significant Deficiency) Information on the Federal Programs: Both Major Programs Criteria or Specific Requirement: 2 CFR Section 200.318 requires that the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. In addition, 2 CFR Section 200.214 requires that, for covered transactions, a non-Federal entity must verify that entities are not suspended, debarred or otherwise excluded. This verification may be accomplished by checking the System for Award Management (SAM) website maintained by the General Services Administration. Condition: FCE did not have a documented procurement policy until January 2024. In addition, for all disbursements tested, FCE did not verify, prior to payment, that the vendors were not suspended, debarred or otherwise excluded. However, FCE provided documentation of the verification that occurred after the payments had been made and no exclusion issues were noted with the vendors. Cause: Prior to the implementation of a formal procurement policy in January 2024, FCE did not require that evidence of SAM checks be maintained in its vendor files. However, FCE performed a search after the payments had been made. In this way, FCE was able to verify that the vendors or individuals in our sample were not suspended, debarred or otherwise excluded.Effect or Potential Effect: FCE was not in compliance with the procurement policy and documentation requirements of the Uniform Guidance until January 2024. Questioned Costs: None. Repeat Finding: See Findings 2022-002 and 2022-003. Recommendation: FCE established internal controls in January 2024 to ensure proper documentation is maintained as evidence to support that it performed the required suspension and debarment searches on the SAM website.
Federal Agency: U.S. Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Pass-Through Agency: State of Arizona, the Office of the Governor Pass-Through Number(s): GR-ARPA-HHF-030122-01 and GR-ARPA-090121-01 Award Period: January 1, 2022 – November 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Condition/Context: The Organization did not maintain a formalized and written procurement policy. Criteria or specific requirement: In accordance with the Compliance Supplement, Part 6 – Internal Control, 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. In accordance with 2 CFR 200.318 (a), the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. Questioned costs: None Cause: The Organization did not have formal documented procurement policies in place. Effect: The Organization was not in compliance with the Compliance Supplement and the Code of Federal Regulations related to procurement. Repeat Finding: Yes Recommendation: We recommend that the Organization adopt a formal and written procurement policy. Views of responsible officials: Management agrees with the audit condition.
Federal Program Coronavirus Capital Projects Fund (AL 21.029) Procurement Suspended and Debarred Parties Significant Deficiency Criteria 2 CFR Part 200.318 states that a non-Federal entity must have and use documented procedures, consistent with state, local, and tribal laws and regulations and the standards of 2 CFR part 200.317 through 200.327. Condition Meeker Cooperative Light & Power Association does not have a written procurement policy in place that adheres to Federal minimum standards. Cause Meeker Cooperative Light & Power Association does not have a written procurement policy that adheres to Federal minimum standards. Questioned Costs None Context Per inquiry with Meeker Cooperative Light & Power Association management, they do not have a procurement policy in place that adheres to Federal minimum standards. Effect Non-compliance with Procurement compliance requirements. This could result in Meeker Cooperative Light & Power Association not following state and local regulations as well as 2 CFR Part 200.317 through 200.327. Repeat Finding This is not a repeat finding. Recommendation Recommend for Meeker Cooperative Light & Power Association to create and implement a procurement policy that adheres to state and local regulations as well as 2 CFR Part 200.317 through 200.327. Views of Responsible Officials Meeker Cooperative Light & Power Association agrees with the recommendation.
Federal Program Coronavirus Capital Projects Fund (AL 21.029) Procurement Suspended and Debarred Parties Significant Deficiency Criteria 2 CFR Part 200.318 states that a non-Federal entity must have and use documented procedures, consistent with state, local, and tribal laws and regulations and the standards of 2 CFR part 200.317 through 200.327. Condition Meeker Cooperative Light & Power Association does not have a written procurement policy in place that adheres to Federal minimum standards. Cause Meeker Cooperative Light & Power Association does not have a written procurement policy that adheres to Federal minimum standards. Questioned Costs None Context Per inquiry with Meeker Cooperative Light & Power Association management, they do not have a procurement policy in place that adheres to Federal minimum standards. Effect Non-compliance with Procurement compliance requirements. This could result in Meeker Cooperative Light & Power Association not following state and local regulations as well as 2 CFR Part 200.317 through 200.327. Repeat Finding This is not a repeat finding. Recommendation Recommend for Meeker Cooperative Light & Power Association to create and implement a procurement policy that adheres to state and local regulations as well as 2 CFR Part 200.317 through 200.327. Views of Responsible Officials Meeker Cooperative Light & Power Association agrees with the recommendation.
Finding 2023-003: Material Weakness - Procurement, Suspension and Debarment Federal Program: Water and Waste Disposal Systems for Rural Communities Federal Agency: U.S. Department of Agriculture Assistance Listing Number: 10.760 Criteria: For federal awards after January 1, 2018, guidance provided in 2 CFR part 200.318 requires non-federal entities to establish and follow their own documented procurement procedures that conform to applicable federal law and standards. 2 CFR part 200.320 includes different allowable methods of procurement. There are also requirements to verify the vendors are not suspended or debarred. Condition/Context: During testing for this program, one of two vendors tested did not go through the appropriate procurement process. The vendor was directly awarded the project. The City did not have documentation of ensuring either of the vendors selected for testing were not suspended or debarred before entering in to covered transactions. The sample was not a statistically valid sample. Cause: The City has not historically bid out their engineering services and has used the same vendor for all projects. Due to turnover, the City did not have documentation of the search for suspension or debarment of the vendors. Effect: The City could potentially not have selected an appropriate vendor for the project or vendors could be used who are not eligible to be paid with federal funds. Questioned Costs: None noted. Recommendation: The City should ensure contracts are following the procurement process for selection of vendors for federally funded projects. Program personnel should become familiar with the procurement, suspension and debarment rules for federal programs and implement process changes for future projects and retain documentation of such verifications. Views of Responsible Officials: The City of Rhinelander has had turnover in the mayor, city administrator and public works director positions in recent years. The City will be reviewing its procurement policy to define clearer expectations for the administrative staff to follow.
The non-Federal entity must have and use documented procurement procedures consistent with State, local, and tribal laws and regulations and the standards identified in 2 CFR § 200.318 (c)(1) for the acquisition of property or services required under a Federal award or sub-award. During the audit period, it was noted that the District does not have a formal Conflict of Interest Policy in place. The absence of such a policy indicates a lack of formal procedures to identify, disclose, and manage potential conflicts of interest among employees, board members, and other stakeholders. The District has not yet developed or implemented a Conflict of Interest Policy, which may be due to oversight or a lack of awareness of the importance of such a policy in maintaining ethical standards and regulatory compliance. The absence of a Conflict of Interest Policy increases the risk of potential conflicts of interest going unreported and unmanaged. This could lead to decisions that are not made in the best interest of the District, potential legal or regulatory issues, and damage to the District's reputation.
The non-Federal entity must have and use documented procurement procedures consistent with State, local, and tribal laws and regulations and the standards identified in 2 CFR § 200.318 (c)(1) for the acquisition of property or services required under a Federal award or sub-award. During the audit period, it was noted that the District does not have a formal Conflict of Interest Policy in place. The absence of such a policy indicates a lack of formal procedures to identify, disclose, and manage potential conflicts of interest among employees, board members, and other stakeholders. The District has not yet developed or implemented a Conflict of Interest Policy, which may be due to oversight or a lack of awareness of the importance of such a policy in maintaining ethical standards and regulatory compliance. The absence of a Conflict of Interest Policy increases the risk of potential conflicts of interest going unreported and unmanaged. This could lead to decisions that are not made in the best interest of the District, potential legal or regulatory issues, and damage to the District's reputation.
2 CFR 1000.10 gives regulatory effect to the Department of Treasury for 2 CFR 200.320 that states that the non-Federal entity must have and use documented procurement procedures, consistent with the standards of 2 CFR Sections 200.320, 200.317, 200.318, and 200.319. Furthermore, 2 CFR 200.320(a)(2) states that "small purchases are 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." During testing of the 2023 AL # 21.027 Covid 19 – Coronavirus State and Local Fiscal Recovery Funds, procurements from a vendor exceeded the micro-purchase threshold but did not exceed the Simplified Acquisition threshold, and the Village could not provide documentation supporting that they obtained price or rate quotations from an adequate number of qualified sources. Failure to adhere to the requirements of 2 CFR 200.320 could result in unallowable purchases, misuse of public funds, or Federal funding being used for purchases which are not subject to free and open competition. The Village should ensure they are following the appropriate Federal procurement methods when purchases fall within the small purchase threshold.
Material weakness in internal control over compliance with procurement procedures meeting the requirements of 2 CFR Part 200. Federal Agency: Department of Health and Human Services Program Titles: Community Funded Projects Assistance Listing Number: 93.493 Pass-Through Entity: N/A Award Numbers: H79FG001026 Award Periods: September 30, 2023 through September 29, 2024 Criteria Internal controls requirements contained in Title 2 U.S. Code of Federal Regulations Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (the Uniform Guidance) , Subpart D ‐ Post Federal Award Requirements, Section 200.318 through 200.326 Internal Controls, require that a non‐Federal entity 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. The procurement procedures must include the following: - Using the micro-purchase and small purchase methods only for procurements that meet the applicable criteria under 2 CFR sections 200.320(a) (1) and (2). Under the micro-purchase method, the aggregate dollar amount does not exceed $10,000 ($2,000 in the case of acquisition for construction subject to the Wage Rate Requirements (Davis-Bacon Act)). Small purchase procedures are used for purchases that exceed the micro-purchase amount but do not exceed the simplified acquisition threshold ($250,000). Micro-purchases may be awarded without soliciting competitive quotations if the nonfederal entity considers the price to be reasonable (2 CFR section 200.320(a)). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR section 200.320(b)). - For acquisitions exceeding the simplified acquisition threshold, using one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR section 200.320(b); the competitive proposals method under the conditions specified in 2 CFR section 200.320((b) (2); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of the circumstances are met, in accordance with 2 CFR section 200.320(c)). - Using Noncompetitive procurement only if one or more of the following circumstances apply: · The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; · The item is available only from a single source; · The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; · The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the nonfederal entity; or · After solicitation of a number of sources, competition is determined inadequate PDA’s procurement policy also requires a verification that vendors and sub-recipient are not suspended or debarred by checking the website of the System for Award Management and documentation of such verification maintained by the Finance Office. Condition/Context While PDA has established a procurement policy, it does not fully conform to Federal law and the Uniform Guidance for the following reasons: - Micro purchase threshold is not explicitly defined, although it is mentioned that cost and price analysis shall be made and documented in connection with every procurement action above $5,000. - The policy does not have clear provisions for maintaining detailed procurement records. Such records should include the rationale for the procurement method, the selection of contract type, the contractor selection or rejection process, and the basis for the contract price. - The simplified acquisition threshold is not defined and does not incorporate all relevant elements including sealed bids method. During our testing of 2 procurement transactions out of a total of 18, we observed that, despite management's detailed historical background on each of the selected transactions, the necessary documentation evidencing compliance with PDA’s procurement standards was not retained. All the transactions tested were noncompetitive and thus single sourced. The total misstatement is the entire population amount $208,580 as PDA did not maintain sufficient documentation to evidence history of procurement for all procurements and not just the 2 samples we tested. Furthermore, for these two vendors, which represented a 100% sample, we found no evidence of documentation for suspension and debarment verification. Although discussions with management suggested that all these transactions were properly conceived and evaluated at the time, supporting documentation was not retained. Cause PDA’s procurement policy does not seem to have been reviewed against the Uniform Guidance for compliance. Internal controls over maintaining sufficient records to detail the history of procurement including noncompetitive justification and suspension and debarment verification were found to be insufficient. Effect The absence of a policy that fully conformed to the Uniform Guidance resulted in noncompliance issues such as records sufficient to detail the history of procurement transactions not maintained. Questioned Costs $208,580 Repeat Finding Yes. Recommendation We recommend PDA implement measures to ensure that its procurement policy reflect applicable state and local laws and regulations conforming to applicable federal statutes and requirement in 2 CFR part 200. Management should ensure procurement transactions are documented in such detail to evidence the method of procurement use and vendor verification for suspension and debarment.
Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 2 CFR 200.318 through 200.317 which also requires documentation to be retained to detail the history of procurements. Condition: The organization has not adopted a procurement policy containing required provisions in accordance with 2 CFR 200.318. For each of the 5 vendors selected for testing there was no documentation retained to support the rationale for the method of procurement. Additionally, the Organization did not consider whether the vendor was suspended or debarred from doing business with the federal government prior to entering the covered transaction for each of the 5 vendors selected for testing. Cause: The Organization has not adopted a procurement policy resulting in the lack of established internal controls over the procurement process. Effect: Without a written procurement policy in accordance with the Uniform Guidance, demonstrating that the program complies with laws, regulations, and other compliance requirements is difficult. Questioned Costs: None reported based on assessment of comparative pricing readily available. Context/Sampling: A nonstatistical sample of 5 vendors out of 15 vendors were selected for testing. Repeat Finding from Prior Year: No. Recommendation: We recommend management review 2 CFR 200.318 through 200.327 and adopt a procurement policy containing all required provisions including provisions to check for suspension and debarment. Views of Responsible Officials: Management is in agreement.
Criterial 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 document procurements consistent with the standards of 2 CFR sections 200.318, 200.319, and 200.320. Cause: There are no formally approved written policies and procedures for procurement. Effect or Potential Effect: The cost of the procurements may be disallowed. Recommendation: The organization should become familiar with the procurement standards set out at 2 CFR sections 200.318 through 200.326 and establish written policies and procedures for procurement. Views of Responsible Officials: Management agrees with the finding and is in the process of finalizing written policies and procedures for procurement.
Criterial 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 document procurements consistent with the standards of 2 CFR sections 200.318, 200.319, and 200.320. Cause: There are no formally approved written policies and procedures for procurement. Effect or Potential Effect: The cost of the procurements may be disallowed. Recommendation: The organization should become familiar with the procurement standards set out at 2 CFR sections 200.318 through 200.326 and establish written policies and procedures for procurement. Views of Responsible Officials: Management agrees with the finding and is in the process of finalizing written policies and procedures for procurement.
Criterial 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 document procurements consistent with the standards of 2 CFR sections 200.318, 200.319, and 200.320. Cause: There are no formally approved written policies and procedures for procurement. Effect or Potential Effect: The cost of the procurements may be disallowed. Recommendation: The organization should become familiar with the procurement standards set out at 2 CFR sections 200.318 through 200.326 and establish written policies and procedures for procurement. Views of Responsible Officials: Management agrees with the finding and is in the process of finalizing written policies and procedures for procurement.
Child and Adult Care Food Program - Procurement Information on Federal Program: U.S. Department of Agriculture Child and Adult Care Food Program (Federal Assistance Listing Number 10.558) passed through the New York State Department of Health. Criteria: CFR Section 200.318 stipulates that a non-Federal entity must use its own documented procurement procedures which reflect applicable state, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in Part 200 Subpart D. Additionally, 2 CFR Section 200.213 stipulates that no awards, subawards, or contracts be awarded to parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Statement of Condition: During our discussions with management, we noted that the Organization is not following its procurement procedures for the Child and Adult Care Food Program purchases and it is not verifying the eligibility of vendors to participate in Federal assistance programs on an annual basis. Statement of Cause: The Organization did not review compliance requirements related to procurement outlined in 2 CFR Section 200.318 and Section 200.213. Statement of Effect: The Organization is not in compliance with 2 CFR Section 200.213. The Organization is not performing required procedures, as a result, vendors that are not eligible for participation in Federal assistance programs or activities could be selected or the Organization could be overpaying for goods and services. Questioned Costs: None. Perspective Information: As part of the required procurement testing, a review of a sampling of the vendors charged to the Child and Adult Care Food program and therefore represented purchases with federal dollars was performed. Of the Organization’s vendors charged, none selected were suspended or debarred from participation in Federal assistance programs or activities. Recommendation: We recommend that the Organization review the requirements of 2 CFR Section 200.213 and ensure that their procurement procedures are being followed and that a review of the eligibility of potential vendors to participate in Federal assistance programs or activities is performed prior to disbursing funds to the vendor. Views of responsible officials and planned corrective actions: Brightside Up, Inc. will review the procurement policy and document considerations for any vendors that meet the thresholds and make sure they are in compliance under Sam.gov.
Item: 2023-004 Assistance Listing Number: 21.027 Programs: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Federal Agency: U.S. Department of the Treasury Pass-Through Agencies: Arizona State Office of the Governor; Maricopa County Pass-Through Grantor Identifying Number: Unknown Award Year: January 1, 2022 to December 31, 2024; January 28, 2022 to June 30, 2023 Compliance Requirement: Procurement, suspension and debarment Criteria: In accordance with 2 CFR § 200.318 - General procurement standards - the entity must use its own documented procurement procedures which reflect applicable. State and local laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in 2 CFR § 200.318. Condition: The entity’s procurement policy and related procedures do not address the provisions of 2 CFR § 200.318 Questioned Costs: n/a Context: In a population of over 250 procurements for program costs, we conducted a non-statistical sample of 40 transactions. In our sample of 40 transactions, it was noted that 39 procurements were below the micro-purchase threshold, and 1 procurement was above the micro-purchase threshold but below the small purchase threshold. We noted there was a procurement policy in place however, it was not written in compliance with 2 CFR § 200.318. Additionally, there was a lack of documentation retained by the organization to support procurement transactions. As such, this is deemed to be a material weakness in internal control over compliance. Effect: Undocumented procurement decisions could violate the requirements of 2 CFR § 200.318 Cause: Special Olympics Arizona, Inc. did have a written procurement policy however, it did not conform to 2 CFR § 200.318. Additionally, Special Olympics Arizona, Inc. did not implement controls to ensure adherence to policies that conform to 2 CFR § 200.318. Identification as a Repeat Finding: Repeat finding of 2022-04 Recommendation: The entity should prepare written procurement policies and implement controls to ensure adherence to the policies that conform to 2 CFR § 200.318. Views of Responsible Officials: Management of the Organization concurs with the finding. See Corrective Action Plan.
Item: 2023-004 Assistance Listing Number: 21.027 Programs: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Federal Agency: U.S. Department of the Treasury Pass-Through Agencies: Arizona State Office of the Governor; Maricopa County Pass-Through Grantor Identifying Number: Unknown Award Year: January 1, 2022 to December 31, 2024; January 28, 2022 to June 30, 2023 Compliance Requirement: Procurement, suspension and debarment Criteria: In accordance with 2 CFR § 200.318 - General procurement standards - the entity must use its own documented procurement procedures which reflect applicable. State and local laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in 2 CFR § 200.318. Condition: The entity’s procurement policy and related procedures do not address the provisions of 2 CFR § 200.318 Questioned Costs: n/a Context: In a population of over 250 procurements for program costs, we conducted a non-statistical sample of 40 transactions. In our sample of 40 transactions, it was noted that 39 procurements were below the micro-purchase threshold, and 1 procurement was above the micro-purchase threshold but below the small purchase threshold. We noted there was a procurement policy in place however, it was not written in compliance with 2 CFR § 200.318. Additionally, there was a lack of documentation retained by the organization to support procurement transactions. As such, this is deemed to be a material weakness in internal control over compliance. Effect: Undocumented procurement decisions could violate the requirements of 2 CFR § 200.318 Cause: Special Olympics Arizona, Inc. did have a written procurement policy however, it did not conform to 2 CFR § 200.318. Additionally, Special Olympics Arizona, Inc. did not implement controls to ensure adherence to policies that conform to 2 CFR § 200.318. Identification as a Repeat Finding: Repeat finding of 2022-04 Recommendation: The entity should prepare written procurement policies and implement controls to ensure adherence to the policies that conform to 2 CFR § 200.318. Views of Responsible Officials: Management of the Organization concurs with the finding. See Corrective Action Plan.
The Town’s internal controls were inadequate for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 10.760 – Water and Waste Disposal Systems for Rural Communities Federal Grantor Name: U.S. Department of Agriculture Federal Award/Contract Number: N/A Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: No Background The Water and Waste Disposal Program is designed to help rural communities obtain safe drinking water and adequate waste disposal facilities. The Town spent $4,712,788 in federal funding through this program in 2023. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations also require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR 200.318-327. The procedures must reflect the most restrictive of applicable federal, state or local procurement thresholds and methods when using federal funds to procure goods and services. Additionally, federal regulations require recipients to maintain written standards of conduct covering conflicts of interest and governing the actions of employees involved in selecting, awarding or administering contracts procured with federal funds. Description of Condition Our audit found the Town’s internal controls were ineffective for ensuring compliance with federal procurement requirements. Although the Town has a written procurement policy, it did not ensure its policy conformed to the most restrictive methods and thresholds for procuring public works projects, competitive proposals and small purchases. Additionally, the Town’s policy did not include other required elements such as micro-purchases, piggybacking, requesting proposals for architecture and engineering services, contract cost and price analysis, bonding requirements and more. Also, our audit found the Town does not have a written standards of conduct or conflict-of-interest policy or procedures, as federal regulations require. We consider these deficiencies in internal controls to be a significant deficiency. Cause of Condition The Town has not received a federal compliance audit recently and was unaware of the Uniform Guidance requirements until August 2023, when our Office issued a recommendation during the last accountability audit. The Town updated its procurement policy and its personnel policy that includes conflict-of-interest elements in September and August 2023, which was after the Town procured its public works project in 2022. Effect of Condition Although the Town’s policies and procedures do not conform to federal regulations, it complied with federal requirements for soliciting and awarding public works contracts. However, without written procedures, the Town is at greater risk of noncompliance with the most restrictive of federal, state or local procurement methods and requirements when procuring contractors that it pays all or in part with federal funds. Recommendation We recommend the Town ensure its written procurement procedures conform to the most restrictive of federal, state or local requirements as required. Town’s Response Town Officials will ensure that its procurement procedures conform to the most restrictive of federal, state and local requirements. Auditor’s Remarks We thank the Town for its cooperation and assistance during the audit and acknowledge its commitment to improving the condition described. We will review the status of this issue during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures.
Environmental Protection Agency, passed through State of North Dakota Department of Environmental Quality Federal Financial Assistance Listing #66.468 Capitalization Grants for Drinking Water Procurement, Suspension, and Debarment Material Weakness in Internal Control Over Compliance Criteria - Uniform Guidance and 2 CFR sections 200.318 through 200.326 set forth the procurement standards non-federal entities other than states must follow when operating federal programs and the procurement procedures required. Condition - During the course of our engagement, it was identified that the District did not have a written policy on procurement that satisfied the requirements of 2 CFR sections 200.318 through 200.326. Cause - Lack of oversight, awareness, or understanding of all of the specific requirements under the Uniform Guidance and applicable CFR sections, and controls were not adequately designed to ensure compliance with all of these requirements. Effect - A lack of documented policies increase the overall risk that employees are not aware of the specific requirements with of procurement, suspension, and debarment. Questioned Costs – None reported Context/Sampling - Overall procurement policy. Repeat Finding from Prior Year(s) – No Recommendation - We recommend that management establish a written policy that addresses all of the procurement requirements for federal programs as identified in 2 CFR sections 200.318 through 200.326 and maintain adequate supporting documentation and records to document history and methods of procurement and the procedures performed to comply with these CFR sections. Views of Responsible Officials - There is no disagreement with the audit finding.
Finding 2023-004: Procurement (Significant Deficiency) Information on the Federal Program: ALN 19.663 Global Telecommunications and Emerging Technology Training Criteria: 2 CFR 200.318 states that non-Federal entities must have and use documented procurement procedures consistent with the requirements for procurement regulations included in paragraphs 318 through 327. Condition: We noted procurement procedures are outsourced to a third party, but management is heavily involved in the ultimate decision. However, the procurement policy is not formalized and procurement actions are not documented and maintained in USTTI's vendor files. Cause: USTTI did not have a documented formal procurement policy in accordance with the Uniform Guidance. Effect: A lack of a formal procurement policy is insufficient to meet the requirements of the Uniform Guidance as noted in the Criteria section above. Questioned Costs: None. Context: Because USTTI does not have a formal procurement policy, it is not in compliance with the Uniform Guidance.Context (continued): Our audit work in this area consisted of a test of internal controls over a random sample of expenditures, as well as substantive tests of details over transactions above a defined threshold from select expense accounts that were charged to the Federal program. We consider our samples to be representative of the respective populations, and thus, are statistically valid samples. Due to the timing of the audit for the year ended December 31, 2022, USTTI was not able to formalize a policy for the year ended December 31, 2023. We noted that USTTI has formalized a procurement policy during the year ended December 31, 2024. Identification as a Repeat Finding: Yes. See Finding 2022-03. Recommendation: We recommend USTTI formalize a procurement policy which is in compliance with the Uniform Guidance. We also recommend that USTTI management ensure the procurement policy is distributed and communicated in a formal manner to its employees, and that management properly enforce compliance with the policy. All procurement actions should be clearly documented in writing and maintained in the vendor or contractor files.
Material weakness in internal controls over procurement and material noncompliance related to procurement compliance requirements. Federal Agency: U.S. Department of Treasury Program Title: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Number: HCS-23-AR-2113-058 Award Period: 3/21/21 – 12/31/26 Criteria: 2 U.S. Code of Federal Regulations (CFR) 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requires a non-Federal entity that has expended federal awards to have written policies pertaining to its federal grants for procurement and that the history of each procurement is documented in accordance with 2 CFR section 200.318(i). Condition/Context for Evaluation: The Organization received and utilized the federal award to pay for general contractor services for a construction project that was ongoing at the time of the award. The Organization had entered the procurement of general contractor service prior to receiving the federal award and in accordance with its existing procurement policy, which included a competitive procurement process with a price analysis. However, there was not a procurement policy in place that specifically covered the criteria required under the Uniform Guidance. As a result, the Organization did not have a procurement policy and process in place that resulted in compliance with the Uniform Guidance including the maintenance of records to detail the history of the procurement in accordance with 2 CFR 200.318(i). Effect or Potential Effect: As a result of not having adequate written procedures, a procurement was entered into that did not meet the minimum Uniform Guidance procurement standards. Questioned Costs: Not applicable. Repeat Finding: Not applicable. Recommendation: We recommend that the Organization create written policies in accordance with and required by the Uniform Guidance.
2023-002 The Port had inadequate internal controls for ensuring compliance with federal procurement and suspension and debarment requirements. Assistance Listing Number and Title: 21.027 – COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Commerce Pass-through Award/Contract Number: 23-7320CO-01 Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Description of Condition The purpose of the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) is to support state, local and tribal governments’ response to and recovery from the COVID-19 public health emergency. In fiscal year 2023, the Port spent $2,121,762 in program funds. The Port used program funds to purchase property and a building and the immediate renovation of that building. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Suspension and Debarment Federal requirements prohibit recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the Port enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the contractors are not suspended or debarred or otherwise excluded from participating in federal programs. The Port may verify this by obtaining a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at SAM.gov. The Port must verify this before entering into the contract, and must maintain documentation demonstrating compliance with this federal requirement. Our audit found the Port did not have adequate controls in place to verify all four contractors it paid more than $25,000 in federal funds were not suspended or debarred from participating in federal programs. Procurement Federal regulations require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR § 200.318-327. The procedures must reflect the most restrictive of applicable federal requirements, state laws and local policies. When using federal funds to procure goods and services, governments must apply the most restrictive of federal requirements, state law or local policies by obtaining quotes or following a competitive procurement process, depending on the estimated cost of the procurement activity. For public works projects, federal regulations require recipients to obtain price or rate quotations for small purchases of $250,000 or less and to use formal procurement methods that are competitive and require public notice if the quotes exceed that amount. Port policy is less restrictive than federal regulations as it allows the use of the Port’s small works roster to obtain price or rate quotations for small purchases of $300,000 or less. Although the Port has a written procurement policy, it does not conform to the most restrictive methods and thresholds for procuring public works projects nor does it reference Uniform Guidance procurement standards set out at 2 CFR 200.318-327 for procurement with federal funds. We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance. Cause of Condition Suspension and Debarment The Port does not typically receive significant federal awards and staff were unaware of the requirement to verify all contractors are not suspended or debarred. Procurement Port staff was unaware of the requirement to update the procurement policy to conform to the procurement standards in Uniform Guidance. Effect of Condition Suspension and Debarment The Port did not obtain written certification from the contractors, insert a clause into the contracts or check for exclusion records at SAM.gov to verify the four contractors it paid $540,534 using federal funds were not suspended or debarred before contracting. Without adequate internal controls, the Port cannot ensure the contractors it paid with federal funds were eligible to participate in federal programs. Any program funds the Port used to pay contractors that were suspended or debarred would be unallowable, and the awarding agency could potentially recover them. Because the Port subsequently verified the contractors were not suspended or debarred, we are not questioning costs. Procurement Since the Port did not update its written policies, it is at greater risk of noncompliance with the most restrictive procedures when procuring public works projects that it will pay fully or partially with federal funds. The Port did not follow the most restrictive procedures when procuring one contract for $283,611. Recommendation We recommend the Port strengthen internal controls to ensure: • All contractors it pays $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before contracting with them or purchasing from them • Written policies and procedures conform to Uniform Guidance (2 CFR 200.318-327) for all procurement activities • It procures goods and services in accordance with federal regulations, state law and its own procurement policies and procedures Port’s Response To address procurement processes and suspension/debarment compliance review, the Port of Willapa Harbor Commission approved the use of Municipal Research Service Center (MRSC) procurement processes and including an MRSC prior review process of contractors subject to suspension or debarment as required Under Title 2 CFR Part 180, 0MB Guidelines on Agencies on Government -wide Debarment and Suspension Auditor’s Remarks We appreciate the steps the Port is taking to resolve this issue. We will review the condition during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring with Federal funds by nonfederal entities. Title 2 CFR Part 180, OMB Guidelines on Agencies on Governmentwide Department and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689
FINDING 2023-004 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY 2023 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The County received a total COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) allocation of $73,674,384 and chose to calculate its own revenue loss allowance, which totaled $35,932,557, to use for government services. Some SLFRF program funds expended in 2023 were expended under the revenue loss eligible use category. Additional program funds expended in 2023 were expended under the other eligible use categories. Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. For funds expended under the revenue loss eligible use category, the above listed procurement requirements do not apply. During the audit period, the County had four vendors with purchases over the $10,000 micropurchase threshold which were expended under an eligible use category other than revenue loss and, as such, were considered small purchase procurements. The County did not provide competitive price quotations for the small purchase procurements for three of the four vendors, which totaled $257,038. Suspension and Debarment Prior to entering into subawards and covered transactions with SLFRF 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 Excluded Parties List System, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. During the engagement, an employee of the Board of County Commissioners stated that verification was completed by checking the Excluded Parties List System when covered transactions were entered into by the County to verify that an entity with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded or disqualified from participating in federal assistance programs or activities. Six covered transactions, totaling $3,952,203, were paid from SLFRF funds to six different vendors for goods or services that equaled or exceeded $25,000 during the audit period. Three of the six covered transactions were selected for testing. For all three transactions tested, documentation was not provided that the vendor's suspension and debarment status was verified. 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). . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . Cause The County was unable to provide documentation to demonstrate it had properly procured services. In addition, the County was unable to provide documentation to demonstrate it had checked the Excluded Parties List System, per the County's procedures, to ensure vendors were not suspended or debarred prior to entering into covered transactions that exceeded $25,000. Effect Without the proper implementation of an effectively designed system of internal controls, the County cannot demonstrate it obtained an adequate number of price or rate quotations prior to selecting a vendor. Therefore, the County could have overpaid for the services obtained. Furthermore, without the proper implementation of an effectively designed system of internal controls, the County cannot ensure the vendors paid with federal funds are eligible to participate in federal programs. Any program funds the County used to pay vendors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Board of County Commissioners strengthen the County's system of internal controls to ensure that an adequate number of price or rate quotations are obtained for small purchase procurements. Additionally, we recommended policies and procedures be strengthened to ensure appropriate supporting documentation for federal programs is retained. Lastly, we recommended that the Board of County Commissioners strengthen the County's system of internal controls to ensure that all vendors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into any covered transactions. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Item 2023-005 – Procurement Significant Deficiency Federal Program – COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number – 21.027 Pass-through Grantor's Numbers – 2159FR0256, 2159FR0212 Federal Award Year – December 31, 2023 Federal Agency – U.S. Department of Treasury Pass-Through Entity – Tulsa County/City of Tulsa Non-federal entities must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326, which stipulates that the organization must have a policy in place to comply with these standards. The Foundation had no documented policies in place over procurement of goods or services with the use of federal awards. As such, evidence was not available to document that federal procurement standards were followed as transactions took place. The Foundation and affiliates lacked a formally documented policy to prevent or detect inappropriate procurement from being entered into. The Foundation may improperly award and/or pay more than what could have been obtained for comparable goods or services for the geographic area. If instances of non-compliance with federal procurement have occurred or occur in the future, it could result in loss of grant funds, additional federal oversight of federal funding, or repayment of overspent federal monies could be requested to be paid by the Foundation. Not applicable. This is not a repeat finding. The Foundation should create a documented procurement policy that follows federal procurement policies and ensure that all affiliates establish and follow that policy. The Foundation and its affiliates should also establish formally documented controls to ensure that the procurement policies are being adhered. Management's response is reported in "Corrective Action Plan" at the end of this report.
Item 2023-005 – Procurement Significant Deficiency Federal Program – COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number – 21.027 Pass-through Grantor's Numbers – 2159FR0256, 2159FR0212 Federal Award Year – December 31, 2023 Federal Agency – U.S. Department of Treasury Pass-Through Entity – Tulsa County/City of Tulsa Non-federal entities must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326, which stipulates that the organization must have a policy in place to comply with these standards. The Foundation had no documented policies in place over procurement of goods or services with the use of federal awards. As such, evidence was not available to document that federal procurement standards were followed as transactions took place. The Foundation and affiliates lacked a formally documented policy to prevent or detect inappropriate procurement from being entered into. The Foundation may improperly award and/or pay more than what could have been obtained for comparable goods or services for the geographic area. If instances of non-compliance with federal procurement have occurred or occur in the future, it could result in loss of grant funds, additional federal oversight of federal funding, or repayment of overspent federal monies could be requested to be paid by the Foundation. Not applicable. This is not a repeat finding. The Foundation should create a documented procurement policy that follows federal procurement policies and ensure that all affiliates establish and follow that policy. The Foundation and its affiliates should also establish formally documented controls to ensure that the procurement policies are being adhered. Management's response is reported in "Corrective Action Plan" at the end of this report.
Item 2023-005 – Procurement Significant Deficiency Federal Program – COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number – 21.027 Pass-through Grantor's Numbers – 2159FR0256, 2159FR0212 Federal Award Year – December 31, 2023 Federal Agency – U.S. Department of Treasury Pass-Through Entity – Tulsa County/City of Tulsa Non-federal entities must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326, which stipulates that the organization must have a policy in place to comply with these standards. The Foundation had no documented policies in place over procurement of goods or services with the use of federal awards. As such, evidence was not available to document that federal procurement standards were followed as transactions took place. The Foundation and affiliates lacked a formally documented policy to prevent or detect inappropriate procurement from being entered into. The Foundation may improperly award and/or pay more than what could have been obtained for comparable goods or services for the geographic area. If instances of non-compliance with federal procurement have occurred or occur in the future, it could result in loss of grant funds, additional federal oversight of federal funding, or repayment of overspent federal monies could be requested to be paid by the Foundation. Not applicable. This is not a repeat finding. The Foundation should create a documented procurement policy that follows federal procurement policies and ensure that all affiliates establish and follow that policy. The Foundation and its affiliates should also establish formally documented controls to ensure that the procurement policies are being adhered. Management's response is reported in "Corrective Action Plan" at the end of this report.
2023-001 The Council’s internal controls were inadequate for ensuring compliance with federal procurement and suspension and debarment requirements. Assistance Listing Number and Title: 20.205 – Highway Planning and Construction Grant Federal Grantor Name: Department of Transportation, Federal Highway Administration Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Transportation Pass-through Award/Contract Number: GCB3510, GCB3871, LA-9282 Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The Council spent $822,938 in federal Highway Planning and Construction program funds awarded from the Federal Highway Administration and passed through the Washington State Department of Transportation. The program’s objective is to provide funds for the planning, design, construction and rehabilitation of highways and bridge transportation systems. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Procurement Federal regulations require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR § 200.318-327. The procedures must reflect the most restrictive of applicable federal requirements, state laws or local policies. When using federal funds to procure goods and services, governments must apply the most restrictive requirements by obtaining quotes or following a competitive procurement process, depending on the estimated cost of the procurement activity. Council policy and federal requirements allow the governing body to waive competitive bidding requirements for purchases that are clearly and legitimately limited to a single source of supply. The Council must prepare and keep documentation supporting the applicable circumstance and rationale for noncompetitive procurement. Suspension and debarment Federal requirements prohibit grant recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the Council enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the contractors are not suspended, debarred or otherwise excluded. This also applies to all subrecipients who received federal subawards from the Council, regardless of the award amount. The Council may verify this by collecting a written certification from the contractor or subrecipient, adding a clause or condition into the contract that states the contractor or subrecipient is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at SAM.gov. The Council must perform this verification before entering into the contract or making the subaward, and it must maintain documentation demonstrating compliance with this federal requirement Description of Condition Procurement Our audit found the Council’s internal controls were ineffective for ensuring compliance with federal procurement requirements. Although the Council has a written procurement policy, it did not ensure its policy conformed to the most restrictive methods and thresholds for procuring public works projects, competitive proposals and small purchases. The Council’s policy also did not include other required elements such as micro-purchases, piggybacking, requesting proposals for architecture and engineering services, contract cost and price analysis, bonding requirements and more. Additionally, the Council’s internal controls were ineffective for ensuring it complied with federal procurement requirements for personal services. The Council paid one contractor $79,519 and designated it as sole source purchase; however, the Council did not retain enough documentation to demonstrate compliance for this procurement exemption. Further, the Council reentered into a contract with an existing contractor for $30,577 without competitively procuring for these services. Suspension and debarment Our audit found the Council did not have adequate controls to verify two contractors it paid more than $25,000 in federal funds were not suspended or debarred from participating in federal programs. We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance. Cause of Condition Procurement Council staff were unaware of the requirement to update the Council’s procurement policies to conform to federal procurement standards and to retain documentation to show that the procurement exemptions met the procurement policy requirements. Additionally, this was the Council’s first federal audit and staff were not aware of the requirements to reevaluate an existing contract to determine if they needed to reprocure it. Suspension and debarment Council staff responsible for these purchases said they were not aware of the federal requirements for suspension and debarment. Effect of Condition Procurement Without updated written procedures, the Council is at greater risk of noncompliance with following the most restrictive procurement methods when procuring contractors it paid all or in part with federal funds. In 2023, the Council awarded two personal services contracts for traffic flow data and traffic modeling assistance services, totaling $110,097, without competitively procuring them. Without effective internal controls, the Council cannot ensure it allowed for full and open competition, received the best price and complied with federal procurement requirements. Suspension and debarment The Council did not obtain written certifications from the contractors, insert a clause into the contracts or check for exclusion records at SAM.gov to verify that two contractors it paid $110,096 using federal funds were not suspended or debarred before contracting. Without adequate internal controls, the Council cannot ensure the contractors it paid with federal funds were eligible to participate in federal programs. Any program funds the Council used to pay contractors that were suspended or debarred would be unallowable, and the awarding agency could potentially recover them. Because we subsequently verified the contractors were not suspended or debarred, we are not questioning costs. Recommendation We recommend the Council strengthen internal controls to ensure it: • Updates its procurement policy to conform to the most restrictive of federal, state or local requirements and follow the most restrictive procurement requirement • Verifies all contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before contracting with or purchasing from them Council’s Response Yakima Valley Conference of Governments has met with staff regarding procurement standards 2 CFR 200.318-327. We are implementing a purchase request form to be completed by management identifying the purchase requirement(s) to accurately document procurement methods and requirements. The purchase request form will be reviewed and approved by the Executive Director identifying the correct requirement for the purchase based on federal policy. Yakima Valley Conference of Governments has updated their internal policy for procurement to reflect the federal thresholds for purchases. Yakima Valley Conference of Governments has met with staff regarding suspension and debarment for purchases with federal funds. We are implementing a purchase request form to be completed by management requiring verification that the vendor is not suspended or debarred to be included in their purchase request. The purchase request form will be reviewed and approved by the Executive Director verifying documentation is included. Yakima Valley Conference of Governments finance specialist will pull suspension and debarment before the first payment to vendor. The documentation will be attached to the invoice voucher. Auditor’s Remarks We thank the Council for its cooperation and assistance during the audit and acknowledge its commitment to improving the conditions described. We will review the status of this issue during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring with federal funds by nonfederal entities. Title 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.
2023-001 The Council’s internal controls were inadequate for ensuring compliance with federal procurement and suspension and debarment requirements. Assistance Listing Number and Title: 20.205 – Highway Planning and Construction Grant Federal Grantor Name: Department of Transportation, Federal Highway Administration Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Transportation Pass-through Award/Contract Number: GCB3510, GCB3871, LA-9282 Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The Council spent $822,938 in federal Highway Planning and Construction program funds awarded from the Federal Highway Administration and passed through the Washington State Department of Transportation. The program’s objective is to provide funds for the planning, design, construction and rehabilitation of highways and bridge transportation systems. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Procurement Federal regulations require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR § 200.318-327. The procedures must reflect the most restrictive of applicable federal requirements, state laws or local policies. When using federal funds to procure goods and services, governments must apply the most restrictive requirements by obtaining quotes or following a competitive procurement process, depending on the estimated cost of the procurement activity. Council policy and federal requirements allow the governing body to waive competitive bidding requirements for purchases that are clearly and legitimately limited to a single source of supply. The Council must prepare and keep documentation supporting the applicable circumstance and rationale for noncompetitive procurement. Suspension and debarment Federal requirements prohibit grant recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the Council enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the contractors are not suspended, debarred or otherwise excluded. This also applies to all subrecipients who received federal subawards from the Council, regardless of the award amount. The Council may verify this by collecting a written certification from the contractor or subrecipient, adding a clause or condition into the contract that states the contractor or subrecipient is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at SAM.gov. The Council must perform this verification before entering into the contract or making the subaward, and it must maintain documentation demonstrating compliance with this federal requirement Description of Condition Procurement Our audit found the Council’s internal controls were ineffective for ensuring compliance with federal procurement requirements. Although the Council has a written procurement policy, it did not ensure its policy conformed to the most restrictive methods and thresholds for procuring public works projects, competitive proposals and small purchases. The Council’s policy also did not include other required elements such as micro-purchases, piggybacking, requesting proposals for architecture and engineering services, contract cost and price analysis, bonding requirements and more. Additionally, the Council’s internal controls were ineffective for ensuring it complied with federal procurement requirements for personal services. The Council paid one contractor $79,519 and designated it as sole source purchase; however, the Council did not retain enough documentation to demonstrate compliance for this procurement exemption. Further, the Council reentered into a contract with an existing contractor for $30,577 without competitively procuring for these services. Suspension and debarment Our audit found the Council did not have adequate controls to verify two contractors it paid more than $25,000 in federal funds were not suspended or debarred from participating in federal programs. We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance. Cause of Condition Procurement Council staff were unaware of the requirement to update the Council’s procurement policies to conform to federal procurement standards and to retain documentation to show that the procurement exemptions met the procurement policy requirements. Additionally, this was the Council’s first federal audit and staff were not aware of the requirements to reevaluate an existing contract to determine if they needed to reprocure it. Suspension and debarment Council staff responsible for these purchases said they were not aware of the federal requirements for suspension and debarment. Effect of Condition Procurement Without updated written procedures, the Council is at greater risk of noncompliance with following the most restrictive procurement methods when procuring contractors it paid all or in part with federal funds. In 2023, the Council awarded two personal services contracts for traffic flow data and traffic modeling assistance services, totaling $110,097, without competitively procuring them. Without effective internal controls, the Council cannot ensure it allowed for full and open competition, received the best price and complied with federal procurement requirements. Suspension and debarment The Council did not obtain written certifications from the contractors, insert a clause into the contracts or check for exclusion records at SAM.gov to verify that two contractors it paid $110,096 using federal funds were not suspended or debarred before contracting. Without adequate internal controls, the Council cannot ensure the contractors it paid with federal funds were eligible to participate in federal programs. Any program funds the Council used to pay contractors that were suspended or debarred would be unallowable, and the awarding agency could potentially recover them. Because we subsequently verified the contractors were not suspended or debarred, we are not questioning costs. Recommendation We recommend the Council strengthen internal controls to ensure it: • Updates its procurement policy to conform to the most restrictive of federal, state or local requirements and follow the most restrictive procurement requirement • Verifies all contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before contracting with or purchasing from them Council’s Response Yakima Valley Conference of Governments has met with staff regarding procurement standards 2 CFR 200.318-327. We are implementing a purchase request form to be completed by management identifying the purchase requirement(s) to accurately document procurement methods and requirements. The purchase request form will be reviewed and approved by the Executive Director identifying the correct requirement for the purchase based on federal policy. Yakima Valley Conference of Governments has updated their internal policy for procurement to reflect the federal thresholds for purchases. Yakima Valley Conference of Governments has met with staff regarding suspension and debarment for purchases with federal funds. We are implementing a purchase request form to be completed by management requiring verification that the vendor is not suspended or debarred to be included in their purchase request. The purchase request form will be reviewed and approved by the Executive Director verifying documentation is included. Yakima Valley Conference of Governments finance specialist will pull suspension and debarment before the first payment to vendor. The documentation will be attached to the invoice voucher. Auditor’s Remarks We thank the Council for its cooperation and assistance during the audit and acknowledge its commitment to improving the conditions described. We will review the status of this issue during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring with federal funds by nonfederal entities. Title 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.
2023-001 The Council’s internal controls were inadequate for ensuring compliance with federal procurement and suspension and debarment requirements. Assistance Listing Number and Title: 20.205 – Highway Planning and Construction Grant Federal Grantor Name: Department of Transportation, Federal Highway Administration Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Transportation Pass-through Award/Contract Number: GCB3510, GCB3871, LA-9282 Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The Council spent $822,938 in federal Highway Planning and Construction program funds awarded from the Federal Highway Administration and passed through the Washington State Department of Transportation. The program’s objective is to provide funds for the planning, design, construction and rehabilitation of highways and bridge transportation systems. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Procurement Federal regulations require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR § 200.318-327. The procedures must reflect the most restrictive of applicable federal requirements, state laws or local policies. When using federal funds to procure goods and services, governments must apply the most restrictive requirements by obtaining quotes or following a competitive procurement process, depending on the estimated cost of the procurement activity. Council policy and federal requirements allow the governing body to waive competitive bidding requirements for purchases that are clearly and legitimately limited to a single source of supply. The Council must prepare and keep documentation supporting the applicable circumstance and rationale for noncompetitive procurement. Suspension and debarment Federal requirements prohibit grant recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the Council enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the contractors are not suspended, debarred or otherwise excluded. This also applies to all subrecipients who received federal subawards from the Council, regardless of the award amount. The Council may verify this by collecting a written certification from the contractor or subrecipient, adding a clause or condition into the contract that states the contractor or subrecipient is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at SAM.gov. The Council must perform this verification before entering into the contract or making the subaward, and it must maintain documentation demonstrating compliance with this federal requirement Description of Condition Procurement Our audit found the Council’s internal controls were ineffective for ensuring compliance with federal procurement requirements. Although the Council has a written procurement policy, it did not ensure its policy conformed to the most restrictive methods and thresholds for procuring public works projects, competitive proposals and small purchases. The Council’s policy also did not include other required elements such as micro-purchases, piggybacking, requesting proposals for architecture and engineering services, contract cost and price analysis, bonding requirements and more. Additionally, the Council’s internal controls were ineffective for ensuring it complied with federal procurement requirements for personal services. The Council paid one contractor $79,519 and designated it as sole source purchase; however, the Council did not retain enough documentation to demonstrate compliance for this procurement exemption. Further, the Council reentered into a contract with an existing contractor for $30,577 without competitively procuring for these services. Suspension and debarment Our audit found the Council did not have adequate controls to verify two contractors it paid more than $25,000 in federal funds were not suspended or debarred from participating in federal programs. We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance. Cause of Condition Procurement Council staff were unaware of the requirement to update the Council’s procurement policies to conform to federal procurement standards and to retain documentation to show that the procurement exemptions met the procurement policy requirements. Additionally, this was the Council’s first federal audit and staff were not aware of the requirements to reevaluate an existing contract to determine if they needed to reprocure it. Suspension and debarment Council staff responsible for these purchases said they were not aware of the federal requirements for suspension and debarment. Effect of Condition Procurement Without updated written procedures, the Council is at greater risk of noncompliance with following the most restrictive procurement methods when procuring contractors it paid all or in part with federal funds. In 2023, the Council awarded two personal services contracts for traffic flow data and traffic modeling assistance services, totaling $110,097, without competitively procuring them. Without effective internal controls, the Council cannot ensure it allowed for full and open competition, received the best price and complied with federal procurement requirements. Suspension and debarment The Council did not obtain written certifications from the contractors, insert a clause into the contracts or check for exclusion records at SAM.gov to verify that two contractors it paid $110,096 using federal funds were not suspended or debarred before contracting. Without adequate internal controls, the Council cannot ensure the contractors it paid with federal funds were eligible to participate in federal programs. Any program funds the Council used to pay contractors that were suspended or debarred would be unallowable, and the awarding agency could potentially recover them. Because we subsequently verified the contractors were not suspended or debarred, we are not questioning costs. Recommendation We recommend the Council strengthen internal controls to ensure it: • Updates its procurement policy to conform to the most restrictive of federal, state or local requirements and follow the most restrictive procurement requirement • Verifies all contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before contracting with or purchasing from them Council’s Response Yakima Valley Conference of Governments has met with staff regarding procurement standards 2 CFR 200.318-327. We are implementing a purchase request form to be completed by management identifying the purchase requirement(s) to accurately document procurement methods and requirements. The purchase request form will be reviewed and approved by the Executive Director identifying the correct requirement for the purchase based on federal policy. Yakima Valley Conference of Governments has updated their internal policy for procurement to reflect the federal thresholds for purchases. Yakima Valley Conference of Governments has met with staff regarding suspension and debarment for purchases with federal funds. We are implementing a purchase request form to be completed by management requiring verification that the vendor is not suspended or debarred to be included in their purchase request. The purchase request form will be reviewed and approved by the Executive Director verifying documentation is included. Yakima Valley Conference of Governments finance specialist will pull suspension and debarment before the first payment to vendor. The documentation will be attached to the invoice voucher. Auditor’s Remarks We thank the Council for its cooperation and assistance during the audit and acknowledge its commitment to improving the conditions described. We will review the status of this issue during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring with federal funds by nonfederal entities. Title 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.
2023-001 The Council’s internal controls were inadequate for ensuring compliance with federal procurement and suspension and debarment requirements. Assistance Listing Number and Title: 20.205 – Highway Planning and Construction Grant Federal Grantor Name: Department of Transportation, Federal Highway Administration Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Transportation Pass-through Award/Contract Number: GCB3510, GCB3871, LA-9282 Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The Council spent $822,938 in federal Highway Planning and Construction program funds awarded from the Federal Highway Administration and passed through the Washington State Department of Transportation. The program’s objective is to provide funds for the planning, design, construction and rehabilitation of highways and bridge transportation systems. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Procurement Federal regulations require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR § 200.318-327. The procedures must reflect the most restrictive of applicable federal requirements, state laws or local policies. When using federal funds to procure goods and services, governments must apply the most restrictive requirements by obtaining quotes or following a competitive procurement process, depending on the estimated cost of the procurement activity. Council policy and federal requirements allow the governing body to waive competitive bidding requirements for purchases that are clearly and legitimately limited to a single source of supply. The Council must prepare and keep documentation supporting the applicable circumstance and rationale for noncompetitive procurement. Suspension and debarment Federal requirements prohibit grant recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the Council enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the contractors are not suspended, debarred or otherwise excluded. This also applies to all subrecipients who received federal subawards from the Council, regardless of the award amount. The Council may verify this by collecting a written certification from the contractor or subrecipient, adding a clause or condition into the contract that states the contractor or subrecipient is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at SAM.gov. The Council must perform this verification before entering into the contract or making the subaward, and it must maintain documentation demonstrating compliance with this federal requirement Description of Condition Procurement Our audit found the Council’s internal controls were ineffective for ensuring compliance with federal procurement requirements. Although the Council has a written procurement policy, it did not ensure its policy conformed to the most restrictive methods and thresholds for procuring public works projects, competitive proposals and small purchases. The Council’s policy also did not include other required elements such as micro-purchases, piggybacking, requesting proposals for architecture and engineering services, contract cost and price analysis, bonding requirements and more. Additionally, the Council’s internal controls were ineffective for ensuring it complied with federal procurement requirements for personal services. The Council paid one contractor $79,519 and designated it as sole source purchase; however, the Council did not retain enough documentation to demonstrate compliance for this procurement exemption. Further, the Council reentered into a contract with an existing contractor for $30,577 without competitively procuring for these services. Suspension and debarment Our audit found the Council did not have adequate controls to verify two contractors it paid more than $25,000 in federal funds were not suspended or debarred from participating in federal programs. We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance. Cause of Condition Procurement Council staff were unaware of the requirement to update the Council’s procurement policies to conform to federal procurement standards and to retain documentation to show that the procurement exemptions met the procurement policy requirements. Additionally, this was the Council’s first federal audit and staff were not aware of the requirements to reevaluate an existing contract to determine if they needed to reprocure it. Suspension and debarment Council staff responsible for these purchases said they were not aware of the federal requirements for suspension and debarment. Effect of Condition Procurement Without updated written procedures, the Council is at greater risk of noncompliance with following the most restrictive procurement methods when procuring contractors it paid all or in part with federal funds. In 2023, the Council awarded two personal services contracts for traffic flow data and traffic modeling assistance services, totaling $110,097, without competitively procuring them. Without effective internal controls, the Council cannot ensure it allowed for full and open competition, received the best price and complied with federal procurement requirements. Suspension and debarment The Council did not obtain written certifications from the contractors, insert a clause into the contracts or check for exclusion records at SAM.gov to verify that two contractors it paid $110,096 using federal funds were not suspended or debarred before contracting. Without adequate internal controls, the Council cannot ensure the contractors it paid with federal funds were eligible to participate in federal programs. Any program funds the Council used to pay contractors that were suspended or debarred would be unallowable, and the awarding agency could potentially recover them. Because we subsequently verified the contractors were not suspended or debarred, we are not questioning costs. Recommendation We recommend the Council strengthen internal controls to ensure it: • Updates its procurement policy to conform to the most restrictive of federal, state or local requirements and follow the most restrictive procurement requirement • Verifies all contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before contracting with or purchasing from them Council’s Response Yakima Valley Conference of Governments has met with staff regarding procurement standards 2 CFR 200.318-327. We are implementing a purchase request form to be completed by management identifying the purchase requirement(s) to accurately document procurement methods and requirements. The purchase request form will be reviewed and approved by the Executive Director identifying the correct requirement for the purchase based on federal policy. Yakima Valley Conference of Governments has updated their internal policy for procurement to reflect the federal thresholds for purchases. Yakima Valley Conference of Governments has met with staff regarding suspension and debarment for purchases with federal funds. We are implementing a purchase request form to be completed by management requiring verification that the vendor is not suspended or debarred to be included in their purchase request. The purchase request form will be reviewed and approved by the Executive Director verifying documentation is included. Yakima Valley Conference of Governments finance specialist will pull suspension and debarment before the first payment to vendor. The documentation will be attached to the invoice voucher. Auditor’s Remarks We thank the Council for its cooperation and assistance during the audit and acknowledge its commitment to improving the conditions described. We will review the status of this issue during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring with federal funds by nonfederal entities. Title 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.
2023-001 The Council’s internal controls were inadequate for ensuring compliance with federal procurement and suspension and debarment requirements. Assistance Listing Number and Title: 20.205 – Highway Planning and Construction Grant Federal Grantor Name: Department of Transportation, Federal Highway Administration Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Transportation Pass-through Award/Contract Number: GCB3510, GCB3871, LA-9282 Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The Council spent $822,938 in federal Highway Planning and Construction program funds awarded from the Federal Highway Administration and passed through the Washington State Department of Transportation. The program’s objective is to provide funds for the planning, design, construction and rehabilitation of highways and bridge transportation systems. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Procurement Federal regulations require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR § 200.318-327. The procedures must reflect the most restrictive of applicable federal requirements, state laws or local policies. When using federal funds to procure goods and services, governments must apply the most restrictive requirements by obtaining quotes or following a competitive procurement process, depending on the estimated cost of the procurement activity. Council policy and federal requirements allow the governing body to waive competitive bidding requirements for purchases that are clearly and legitimately limited to a single source of supply. The Council must prepare and keep documentation supporting the applicable circumstance and rationale for noncompetitive procurement. Suspension and debarment Federal requirements prohibit grant recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the Council enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the contractors are not suspended, debarred or otherwise excluded. This also applies to all subrecipients who received federal subawards from the Council, regardless of the award amount. The Council may verify this by collecting a written certification from the contractor or subrecipient, adding a clause or condition into the contract that states the contractor or subrecipient is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at SAM.gov. The Council must perform this verification before entering into the contract or making the subaward, and it must maintain documentation demonstrating compliance with this federal requirement Description of Condition Procurement Our audit found the Council’s internal controls were ineffective for ensuring compliance with federal procurement requirements. Although the Council has a written procurement policy, it did not ensure its policy conformed to the most restrictive methods and thresholds for procuring public works projects, competitive proposals and small purchases. The Council’s policy also did not include other required elements such as micro-purchases, piggybacking, requesting proposals for architecture and engineering services, contract cost and price analysis, bonding requirements and more. Additionally, the Council’s internal controls were ineffective for ensuring it complied with federal procurement requirements for personal services. The Council paid one contractor $79,519 and designated it as sole source purchase; however, the Council did not retain enough documentation to demonstrate compliance for this procurement exemption. Further, the Council reentered into a contract with an existing contractor for $30,577 without competitively procuring for these services. Suspension and debarment Our audit found the Council did not have adequate controls to verify two contractors it paid more than $25,000 in federal funds were not suspended or debarred from participating in federal programs. We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance. Cause of Condition Procurement Council staff were unaware of the requirement to update the Council’s procurement policies to conform to federal procurement standards and to retain documentation to show that the procurement exemptions met the procurement policy requirements. Additionally, this was the Council’s first federal audit and staff were not aware of the requirements to reevaluate an existing contract to determine if they needed to reprocure it. Suspension and debarment Council staff responsible for these purchases said they were not aware of the federal requirements for suspension and debarment. Effect of Condition Procurement Without updated written procedures, the Council is at greater risk of noncompliance with following the most restrictive procurement methods when procuring contractors it paid all or in part with federal funds. In 2023, the Council awarded two personal services contracts for traffic flow data and traffic modeling assistance services, totaling $110,097, without competitively procuring them. Without effective internal controls, the Council cannot ensure it allowed for full and open competition, received the best price and complied with federal procurement requirements. Suspension and debarment The Council did not obtain written certifications from the contractors, insert a clause into the contracts or check for exclusion records at SAM.gov to verify that two contractors it paid $110,096 using federal funds were not suspended or debarred before contracting. Without adequate internal controls, the Council cannot ensure the contractors it paid with federal funds were eligible to participate in federal programs. Any program funds the Council used to pay contractors that were suspended or debarred would be unallowable, and the awarding agency could potentially recover them. Because we subsequently verified the contractors were not suspended or debarred, we are not questioning costs. Recommendation We recommend the Council strengthen internal controls to ensure it: • Updates its procurement policy to conform to the most restrictive of federal, state or local requirements and follow the most restrictive procurement requirement • Verifies all contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before contracting with or purchasing from them Council’s Response Yakima Valley Conference of Governments has met with staff regarding procurement standards 2 CFR 200.318-327. We are implementing a purchase request form to be completed by management identifying the purchase requirement(s) to accurately document procurement methods and requirements. The purchase request form will be reviewed and approved by the Executive Director identifying the correct requirement for the purchase based on federal policy. Yakima Valley Conference of Governments has updated their internal policy for procurement to reflect the federal thresholds for purchases. Yakima Valley Conference of Governments has met with staff regarding suspension and debarment for purchases with federal funds. We are implementing a purchase request form to be completed by management requiring verification that the vendor is not suspended or debarred to be included in their purchase request. The purchase request form will be reviewed and approved by the Executive Director verifying documentation is included. Yakima Valley Conference of Governments finance specialist will pull suspension and debarment before the first payment to vendor. The documentation will be attached to the invoice voucher. Auditor’s Remarks We thank the Council for its cooperation and assistance during the audit and acknowledge its commitment to improving the conditions described. We will review the status of this issue during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring with federal funds by nonfederal entities. Title 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.
2023-002 The Council’s internal controls were inadequate for ensuring compliance with federal procurement and suspension and debarment requirements. Assistance Listing Number and Title: 21.027 – COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: Department of the Treasury Federal Award/Contract Number: N/A Pass-through Entity Name: Yakima County Pass-through Award/Contract Number: ARPA-COVID-19-37826 Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The purpose of the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) is to respond to the COVID-19 pandemic’s negative effects on public health and the economy, provide premium pay to essential workers during the pandemic, provide government services to the extent COVID-19 caused a reduction in revenues collected, and make necessary investments in water, sewer or broadband infrastructure. In 2023, the Council spent $1,208,591 in program funds for the provision of government services, which was passed through from Yakima County. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Procurement Federal regulations require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR § 200.318-327. The procedures must reflect the most restrictive of applicable federal requirements, state laws or local policies. When using federal funds to procure goods and services, governments must apply the most restrictive requirements by obtaining quotes or following a competitive procurement process, depending on the estimated cost of the procurement activity. Suspension and debarment Federal requirements prohibit grant recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the Council enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the contractors are not suspended, debarred or otherwise excluded. This also applies to all subrecipients who have received federal subawards from the Council, regardless of the award amount. The Council may verify this by collecting a written certification from the contractor or subrecipient, adding a clause or condition into the contract that states the contractor or subrecipient is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at SAM.gov. The Council must verify this before entering into the contract or making the subaward, and it must maintain documentation demonstrating compliance with this federal requirement. Description of Condition Procurement Our audit found the Council’s internal controls were ineffective for ensuring compliance with federal procurement requirements. Although the Council has a written procurement policy, it did not ensure its policy conformed to the most restrictive methods and thresholds for procuring public works projects, competitive proposals and small purchases. The Council’s policy also did not include other required elements such as micro-purchases, piggybacking, requesting proposals for architecture and engineering services, contract cost and price analysis, bonding requirements and more. Additionally, the Council’s internal controls were ineffective for ensuring it complied with federal procurement requirements for purchases and purchased services. The Council did not competitively procure one purchase totaling $99,441 and two service contractors it paid $78,350. Suspension and Debarment Our audit found the Council did not have adequate controls to verify six contractors it paid more than $25,000 in federal funds were not suspended or debarred from participating in federal programs. We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance. Cause of Condition Procurement Council staff were unaware of the requirement to update the Council’s procurement policies to conform to federal procurement standards. This was the Council first federal audit, and it did not retain documentation to show the purchases met the procurement policy requirements. Additionally, Council staff thought they were not required to follow the procurement policies if the Board approved of such. Suspension and Debarment Council staff responsible for these purchases said they were not aware of the federal requirements for suspension and debarment. Effect of Condition Procurement Without updated written procedures, the Council is at greater risk of noncompliance with following the most restrictive procurement methods when procuring contractors it paid all or in part with federal funds. In 2023, the Council awarded three contracts for software and equipment, totaling $177,791, without competitively procuring them. Without effective internal controls, the Council cannot ensure it allowed for full and open competition, received the best price and complied with federal procurement requirements. Suspension and debarment The Council did not obtain written certifications from the contractors, insert a clause into the contracts or check for exclusion records at SAM.gov to verify that six contractors it paid $712,885 using federal funds were not suspended or debarred before contracting. Without adequate internal controls, the Council cannot ensure the contractors it paid with federal funds were eligible to participate in federal programs. Any program funds the Council used to pay contractors that were suspended or debarred would be unallowable, and the awarding agency could potentially recover them. Because we subsequently verified the contractor were not suspended or debarred, we are not questioning costs. Recommendation We recommend the Council strengthen internal controls to ensure it: • Updates its procurement policies to conform to the most restrictive of federal, state or local and follow the most restrictive procurement requirement • Verifies all contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before contracting with or purchasing from them Council’s Response Yakima Valley Conference of Governments has met with staff regarding procurement standards 2 CFR 200.318-327. We are implementing a purchase request form to be completed by management identifying the purchase requirement(s) to accurately document procurement methods and requirements. The purchase request form will be reviewed and approved by the Executive Director identifying the correct requirement for the purchase based on federal policy. Yakima Valley Conference of Governments has updated their internal policy for procurement to reflect the federal thresholds for purchases. Yakima Valley Conference of Governments has met with staff regarding suspension and debarment for purchases with federal funds. We are implementing a purchase request form to be completed by management requiring verification that the vendor is not suspended or debarred to be included in their purchase request. The purchase request form will be reviewed and approved by the Executive Director verifying documentation is included. Yakima Valley Conference of Governments finance specialist will pull suspension and debarment before the first payment to vendor. The documentation will be attached to the invoice voucher. Auditor’s Remarks We thank the Council for its cooperation and assistance during the audit and acknowledge its commitment to improving the conditions described. We will review the status of this issue during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring with federal funds by nonfederal entities. Title 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.
Criteria or specific requirement: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. This procurement process must be documented with proper supporting documentation. Condition: The County did not have proper procurement documentation available for the contracts tested in the audit. Questioned costs: None Context: Seven of the seven contracts tested did not have the proper supporting documentation to demonstrate that procurement procedures were followed in accordance with the County’s procurement policy. Cause: The contracts were in process before the funding was assigned to the projects and there was turnover at the County. Effect: Failure to document the procurement process exposes the County to the risk that the County’s procurement policy was not followed before the contracts were awarded. Repeat Finding: Yes, repeat of prior year finding 2022-003. Recommendation: CLA recommends the County follow their internal procurement policy procedures and keep documentation of such procedures to ensure compliance with the federal procurement requirements. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. This procurement process must be documented with proper supporting documentation. Condition: The County did not have proper procurement documentation available for the contracts tested in the audit. Questioned costs: None Context: Seven of the seven contracts tested did not have the proper supporting documentation to demonstrate that procurement procedures were followed in accordance with the County’s procurement policy. Cause: The contracts were in process before the funding was assigned to the projects and there was turnover at the County. Effect: Failure to document the procurement process exposes the County to the risk that the County’s procurement policy was not followed before the contracts were awarded. Repeat Finding: Yes, repeat of prior year finding 2022-003. Recommendation: CLA recommends the County follow their internal procurement policy procedures and keep documentation of such procedures to ensure compliance with the federal procurement requirements. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. This procurement process must be documented with proper supporting documentation. Condition: The County did not have proper procurement documentation available for the contracts tested in the audit. Questioned costs: None Context: Seven of the seven contracts tested did not have the proper supporting documentation to demonstrate that procurement procedures were followed in accordance with the County’s procurement policy. Cause: The contracts were in process before the funding was assigned to the projects and there was turnover at the County. Effect: Failure to document the procurement process exposes the County to the risk that the County’s procurement policy was not followed before the contracts were awarded. Repeat Finding: Yes, repeat of prior year finding 2022-003. Recommendation: CLA recommends the County follow their internal procurement policy procedures and keep documentation of such procedures to ensure compliance with the federal procurement requirements. Views of responsible officials: There is no disagreement with the audit finding.
Assistance Listing Numbers: 10.001, 10.200, 10.215, 10.307, 10.310, 10.311, and 10.912 Name of Federal Program or Cluster: Research and Development Cluster Name of Federal Agency: Department of Agriculture Federal Award Identification Numbers: 58-5090-2-037 2022-38624-38368 2021-38640-34714 2020-38640-31522 2022-38640-37486 2023-51300-40959 2021-68012-35917 2019-68012-29852 2020-68012-31934 2021-49400-35592 NR225F48XXXXG006 Name of Pass-through Entities and Award Periods: Michigan State University-September 1, 2022 through August 31, 2025; Regents of the University of Minnesota- April 1, 2021 through March 31, 2023, March 1, 2022 through February 28, 2025, and April 1, 2023 through March 31, 2025; Board of Regents of the University of Wisconsin System- September 1, 2019 through August 31, 2024, September 1, 2020 through August 31, 2025, and January 1, 2022 through December 31, 2026 Criteria or Specific Requirement: 2 CFR section 200.318(a) requires a non-federal entity to have and use documented procurement procedures, consistent with state, local, and tribal laws and regulations and the standards of 2 CFR sections 200.317 through 200.327. 2 CFR section 200.318(c)(1) requires a non- federal entity to 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. 2 CFR section 200.318(i) requires a non-federal entity to maintain records sufficient to detail the history of procurement including, but not limited to, the: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition: There are no documented procurement procedures that meet the requirements of 2 CFR sections 200.317 through 200.327 that were implemented for the fiscal year. There are no consistently implemented internal controls documented to ensure compliance with 2 CFR sections 200.317 through 200.327. 19 out of 60 procurements did not have documented an internal control over compliance. 1 of 2 simplified acquisition procurements had no documentation of the rationale for the method, documentation to support a required procurement method used, contractor selections or rejections, suspension and debarment, and bases for contract prices. The only support documented are the invoices. No covered transactions were documented as tested for suspension and debarment. Cause: There were no written procedures over procurement and when changes in management and accounting services occurred internal control documentation was not consistent and compliance requirements were not understood. Effect or Potential Effect: Procurement transactions may not be in compliance and disallowed. Questioned Costs: $22,000 – two simplified acquisitions Context: 60 ($76,181) out of 721 ($302,069) procurement transactions were tested. Two of the 721 procurements were simplified acquisitions while the remaining were micro purchases. Repeat Finding: This is a repeat of Finding 2022-005. Recommendation: The Organization should develop and document procurement procedures that meet state, local, and Uniform Guidance requirements. Internal controls should be designed, implemented, and documented within the procurement procedures to ensure compliance with 2 CFR sections 200.317 through 200.327. At a minimum, the procurement history including rationale for the method, procurement method support, contract selections and rejections, suspension and debarment, and bases for contract prices should be documented. Views of Responsible Officials: Management agrees with the finding and will implement procurement procedures.
Assistance Listing Numbers: 10.001, 10.200, 10.215, 10.307, 10.310, 10.311, and 10.912 Name of Federal Program or Cluster: Research and Development Cluster Name of Federal Agency: Department of Agriculture Federal Award Identification Numbers: 58-5090-2-037 2022-38624-38368 2021-38640-34714 2020-38640-31522 2022-38640-37486 2023-51300-40959 2021-68012-35917 2019-68012-29852 2020-68012-31934 2021-49400-35592 NR225F48XXXXG006 Name of Pass-through Entities and Award Periods: Michigan State University-September 1, 2022 through August 31, 2025; Regents of the University of Minnesota- April 1, 2021 through March 31, 2023, March 1, 2022 through February 28, 2025, and April 1, 2023 through March 31, 2025; Board of Regents of the University of Wisconsin System- September 1, 2019 through August 31, 2024, September 1, 2020 through August 31, 2025, and January 1, 2022 through December 31, 2026 Criteria or Specific Requirement: 2 CFR section 200.318(a) requires a non-federal entity to have and use documented procurement procedures, consistent with state, local, and tribal laws and regulations and the standards of 2 CFR sections 200.317 through 200.327. 2 CFR section 200.318(c)(1) requires a non- federal entity to 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. 2 CFR section 200.318(i) requires a non-federal entity to maintain records sufficient to detail the history of procurement including, but not limited to, the: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition: There are no documented procurement procedures that meet the requirements of 2 CFR sections 200.317 through 200.327 that were implemented for the fiscal year. There are no consistently implemented internal controls documented to ensure compliance with 2 CFR sections 200.317 through 200.327. 19 out of 60 procurements did not have documented an internal control over compliance. 1 of 2 simplified acquisition procurements had no documentation of the rationale for the method, documentation to support a required procurement method used, contractor selections or rejections, suspension and debarment, and bases for contract prices. The only support documented are the invoices. No covered transactions were documented as tested for suspension and debarment. Cause: There were no written procedures over procurement and when changes in management and accounting services occurred internal control documentation was not consistent and compliance requirements were not understood. Effect or Potential Effect: Procurement transactions may not be in compliance and disallowed. Questioned Costs: $22,000 – two simplified acquisitions Context: 60 ($76,181) out of 721 ($302,069) procurement transactions were tested. Two of the 721 procurements were simplified acquisitions while the remaining were micro purchases. Repeat Finding: This is a repeat of Finding 2022-005. Recommendation: The Organization should develop and document procurement procedures that meet state, local, and Uniform Guidance requirements. Internal controls should be designed, implemented, and documented within the procurement procedures to ensure compliance with 2 CFR sections 200.317 through 200.327. At a minimum, the procurement history including rationale for the method, procurement method support, contract selections and rejections, suspension and debarment, and bases for contract prices should be documented. Views of Responsible Officials: Management agrees with the finding and will implement procurement procedures.
Assistance Listing Numbers: 10.001, 10.200, 10.215, 10.307, 10.310, 10.311, and 10.912 Name of Federal Program or Cluster: Research and Development Cluster Name of Federal Agency: Department of Agriculture Federal Award Identification Numbers: 58-5090-2-037 2022-38624-38368 2021-38640-34714 2020-38640-31522 2022-38640-37486 2023-51300-40959 2021-68012-35917 2019-68012-29852 2020-68012-31934 2021-49400-35592 NR225F48XXXXG006 Name of Pass-through Entities and Award Periods: Michigan State University-September 1, 2022 through August 31, 2025; Regents of the University of Minnesota- April 1, 2021 through March 31, 2023, March 1, 2022 through February 28, 2025, and April 1, 2023 through March 31, 2025; Board of Regents of the University of Wisconsin System- September 1, 2019 through August 31, 2024, September 1, 2020 through August 31, 2025, and January 1, 2022 through December 31, 2026 Criteria or Specific Requirement: 2 CFR section 200.318(a) requires a non-federal entity to have and use documented procurement procedures, consistent with state, local, and tribal laws and regulations and the standards of 2 CFR sections 200.317 through 200.327. 2 CFR section 200.318(c)(1) requires a non- federal entity to 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. 2 CFR section 200.318(i) requires a non-federal entity to maintain records sufficient to detail the history of procurement including, but not limited to, the: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition: There are no documented procurement procedures that meet the requirements of 2 CFR sections 200.317 through 200.327 that were implemented for the fiscal year. There are no consistently implemented internal controls documented to ensure compliance with 2 CFR sections 200.317 through 200.327. 19 out of 60 procurements did not have documented an internal control over compliance. 1 of 2 simplified acquisition procurements had no documentation of the rationale for the method, documentation to support a required procurement method used, contractor selections or rejections, suspension and debarment, and bases for contract prices. The only support documented are the invoices. No covered transactions were documented as tested for suspension and debarment. Cause: There were no written procedures over procurement and when changes in management and accounting services occurred internal control documentation was not consistent and compliance requirements were not understood. Effect or Potential Effect: Procurement transactions may not be in compliance and disallowed. Questioned Costs: $22,000 – two simplified acquisitions Context: 60 ($76,181) out of 721 ($302,069) procurement transactions were tested. Two of the 721 procurements were simplified acquisitions while the remaining were micro purchases. Repeat Finding: This is a repeat of Finding 2022-005. Recommendation: The Organization should develop and document procurement procedures that meet state, local, and Uniform Guidance requirements. Internal controls should be designed, implemented, and documented within the procurement procedures to ensure compliance with 2 CFR sections 200.317 through 200.327. At a minimum, the procurement history including rationale for the method, procurement method support, contract selections and rejections, suspension and debarment, and bases for contract prices should be documented. Views of Responsible Officials: Management agrees with the finding and will implement procurement procedures.
Assistance Listing Numbers: 10.001, 10.200, 10.215, 10.307, 10.310, 10.311, and 10.912 Name of Federal Program or Cluster: Research and Development Cluster Name of Federal Agency: Department of Agriculture Federal Award Identification Numbers: 58-5090-2-037 2022-38624-38368 2021-38640-34714 2020-38640-31522 2022-38640-37486 2023-51300-40959 2021-68012-35917 2019-68012-29852 2020-68012-31934 2021-49400-35592 NR225F48XXXXG006 Name of Pass-through Entities and Award Periods: Michigan State University-September 1, 2022 through August 31, 2025; Regents of the University of Minnesota- April 1, 2021 through March 31, 2023, March 1, 2022 through February 28, 2025, and April 1, 2023 through March 31, 2025; Board of Regents of the University of Wisconsin System- September 1, 2019 through August 31, 2024, September 1, 2020 through August 31, 2025, and January 1, 2022 through December 31, 2026 Criteria or Specific Requirement: 2 CFR section 200.318(a) requires a non-federal entity to have and use documented procurement procedures, consistent with state, local, and tribal laws and regulations and the standards of 2 CFR sections 200.317 through 200.327. 2 CFR section 200.318(c)(1) requires a non- federal entity to 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. 2 CFR section 200.318(i) requires a non-federal entity to maintain records sufficient to detail the history of procurement including, but not limited to, the: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition: There are no documented procurement procedures that meet the requirements of 2 CFR sections 200.317 through 200.327 that were implemented for the fiscal year. There are no consistently implemented internal controls documented to ensure compliance with 2 CFR sections 200.317 through 200.327. 19 out of 60 procurements did not have documented an internal control over compliance. 1 of 2 simplified acquisition procurements had no documentation of the rationale for the method, documentation to support a required procurement method used, contractor selections or rejections, suspension and debarment, and bases for contract prices. The only support documented are the invoices. No covered transactions were documented as tested for suspension and debarment. Cause: There were no written procedures over procurement and when changes in management and accounting services occurred internal control documentation was not consistent and compliance requirements were not understood. Effect or Potential Effect: Procurement transactions may not be in compliance and disallowed. Questioned Costs: $22,000 – two simplified acquisitions Context: 60 ($76,181) out of 721 ($302,069) procurement transactions were tested. Two of the 721 procurements were simplified acquisitions while the remaining were micro purchases. Repeat Finding: This is a repeat of Finding 2022-005. Recommendation: The Organization should develop and document procurement procedures that meet state, local, and Uniform Guidance requirements. Internal controls should be designed, implemented, and documented within the procurement procedures to ensure compliance with 2 CFR sections 200.317 through 200.327. At a minimum, the procurement history including rationale for the method, procurement method support, contract selections and rejections, suspension and debarment, and bases for contract prices should be documented. Views of Responsible Officials: Management agrees with the finding and will implement procurement procedures.
Assistance Listing Numbers: 10.001, 10.200, 10.215, 10.307, 10.310, 10.311, and 10.912 Name of Federal Program or Cluster: Research and Development Cluster Name of Federal Agency: Department of Agriculture Federal Award Identification Numbers: 58-5090-2-037 2022-38624-38368 2021-38640-34714 2020-38640-31522 2022-38640-37486 2023-51300-40959 2021-68012-35917 2019-68012-29852 2020-68012-31934 2021-49400-35592 NR225F48XXXXG006 Name of Pass-through Entities and Award Periods: Michigan State University-September 1, 2022 through August 31, 2025; Regents of the University of Minnesota- April 1, 2021 through March 31, 2023, March 1, 2022 through February 28, 2025, and April 1, 2023 through March 31, 2025; Board of Regents of the University of Wisconsin System- September 1, 2019 through August 31, 2024, September 1, 2020 through August 31, 2025, and January 1, 2022 through December 31, 2026 Criteria or Specific Requirement: 2 CFR section 200.318(a) requires a non-federal entity to have and use documented procurement procedures, consistent with state, local, and tribal laws and regulations and the standards of 2 CFR sections 200.317 through 200.327. 2 CFR section 200.318(c)(1) requires a non- federal entity to 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. 2 CFR section 200.318(i) requires a non-federal entity to maintain records sufficient to detail the history of procurement including, but not limited to, the: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition: There are no documented procurement procedures that meet the requirements of 2 CFR sections 200.317 through 200.327 that were implemented for the fiscal year. There are no consistently implemented internal controls documented to ensure compliance with 2 CFR sections 200.317 through 200.327. 19 out of 60 procurements did not have documented an internal control over compliance. 1 of 2 simplified acquisition procurements had no documentation of the rationale for the method, documentation to support a required procurement method used, contractor selections or rejections, suspension and debarment, and bases for contract prices. The only support documented are the invoices. No covered transactions were documented as tested for suspension and debarment. Cause: There were no written procedures over procurement and when changes in management and accounting services occurred internal control documentation was not consistent and compliance requirements were not understood. Effect or Potential Effect: Procurement transactions may not be in compliance and disallowed. Questioned Costs: $22,000 – two simplified acquisitions Context: 60 ($76,181) out of 721 ($302,069) procurement transactions were tested. Two of the 721 procurements were simplified acquisitions while the remaining were micro purchases. Repeat Finding: This is a repeat of Finding 2022-005. Recommendation: The Organization should develop and document procurement procedures that meet state, local, and Uniform Guidance requirements. Internal controls should be designed, implemented, and documented within the procurement procedures to ensure compliance with 2 CFR sections 200.317 through 200.327. At a minimum, the procurement history including rationale for the method, procurement method support, contract selections and rejections, suspension and debarment, and bases for contract prices should be documented. Views of Responsible Officials: Management agrees with the finding and will implement procurement procedures.
Assistance Listing Numbers: 10.001, 10.200, 10.215, 10.307, 10.310, 10.311, and 10.912 Name of Federal Program or Cluster: Research and Development Cluster Name of Federal Agency: Department of Agriculture Federal Award Identification Numbers: 58-5090-2-037 2022-38624-38368 2021-38640-34714 2020-38640-31522 2022-38640-37486 2023-51300-40959 2021-68012-35917 2019-68012-29852 2020-68012-31934 2021-49400-35592 NR225F48XXXXG006 Name of Pass-through Entities and Award Periods: Michigan State University-September 1, 2022 through August 31, 2025; Regents of the University of Minnesota- April 1, 2021 through March 31, 2023, March 1, 2022 through February 28, 2025, and April 1, 2023 through March 31, 2025; Board of Regents of the University of Wisconsin System- September 1, 2019 through August 31, 2024, September 1, 2020 through August 31, 2025, and January 1, 2022 through December 31, 2026 Criteria or Specific Requirement: 2 CFR section 200.318(a) requires a non-federal entity to have and use documented procurement procedures, consistent with state, local, and tribal laws and regulations and the standards of 2 CFR sections 200.317 through 200.327. 2 CFR section 200.318(c)(1) requires a non- federal entity to 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. 2 CFR section 200.318(i) requires a non-federal entity to maintain records sufficient to detail the history of procurement including, but not limited to, the: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition: There are no documented procurement procedures that meet the requirements of 2 CFR sections 200.317 through 200.327 that were implemented for the fiscal year. There are no consistently implemented internal controls documented to ensure compliance with 2 CFR sections 200.317 through 200.327. 19 out of 60 procurements did not have documented an internal control over compliance. 1 of 2 simplified acquisition procurements had no documentation of the rationale for the method, documentation to support a required procurement method used, contractor selections or rejections, suspension and debarment, and bases for contract prices. The only support documented are the invoices. No covered transactions were documented as tested for suspension and debarment. Cause: There were no written procedures over procurement and when changes in management and accounting services occurred internal control documentation was not consistent and compliance requirements were not understood. Effect or Potential Effect: Procurement transactions may not be in compliance and disallowed. Questioned Costs: $22,000 – two simplified acquisitions Context: 60 ($76,181) out of 721 ($302,069) procurement transactions were tested. Two of the 721 procurements were simplified acquisitions while the remaining were micro purchases. Repeat Finding: This is a repeat of Finding 2022-005. Recommendation: The Organization should develop and document procurement procedures that meet state, local, and Uniform Guidance requirements. Internal controls should be designed, implemented, and documented within the procurement procedures to ensure compliance with 2 CFR sections 200.317 through 200.327. At a minimum, the procurement history including rationale for the method, procurement method support, contract selections and rejections, suspension and debarment, and bases for contract prices should be documented. Views of Responsible Officials: Management agrees with the finding and will implement procurement procedures.
Assistance Listing Numbers: 10.001, 10.200, 10.215, 10.307, 10.310, 10.311, and 10.912 Name of Federal Program or Cluster: Research and Development Cluster Name of Federal Agency: Department of Agriculture Federal Award Identification Numbers: 58-5090-2-037 2022-38624-38368 2021-38640-34714 2020-38640-31522 2022-38640-37486 2023-51300-40959 2021-68012-35917 2019-68012-29852 2020-68012-31934 2021-49400-35592 NR225F48XXXXG006 Name of Pass-through Entities and Award Periods: Michigan State University-September 1, 2022 through August 31, 2025; Regents of the University of Minnesota- April 1, 2021 through March 31, 2023, March 1, 2022 through February 28, 2025, and April 1, 2023 through March 31, 2025; Board of Regents of the University of Wisconsin System- September 1, 2019 through August 31, 2024, September 1, 2020 through August 31, 2025, and January 1, 2022 through December 31, 2026 Criteria or Specific Requirement: 2 CFR section 200.318(a) requires a non-federal entity to have and use documented procurement procedures, consistent with state, local, and tribal laws and regulations and the standards of 2 CFR sections 200.317 through 200.327. 2 CFR section 200.318(c)(1) requires a non- federal entity to 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. 2 CFR section 200.318(i) requires a non-federal entity to maintain records sufficient to detail the history of procurement including, but not limited to, the: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition: There are no documented procurement procedures that meet the requirements of 2 CFR sections 200.317 through 200.327 that were implemented for the fiscal year. There are no consistently implemented internal controls documented to ensure compliance with 2 CFR sections 200.317 through 200.327. 19 out of 60 procurements did not have documented an internal control over compliance. 1 of 2 simplified acquisition procurements had no documentation of the rationale for the method, documentation to support a required procurement method used, contractor selections or rejections, suspension and debarment, and bases for contract prices. The only support documented are the invoices. No covered transactions were documented as tested for suspension and debarment. Cause: There were no written procedures over procurement and when changes in management and accounting services occurred internal control documentation was not consistent and compliance requirements were not understood. Effect or Potential Effect: Procurement transactions may not be in compliance and disallowed. Questioned Costs: $22,000 – two simplified acquisitions Context: 60 ($76,181) out of 721 ($302,069) procurement transactions were tested. Two of the 721 procurements were simplified acquisitions while the remaining were micro purchases. Repeat Finding: This is a repeat of Finding 2022-005. Recommendation: The Organization should develop and document procurement procedures that meet state, local, and Uniform Guidance requirements. Internal controls should be designed, implemented, and documented within the procurement procedures to ensure compliance with 2 CFR sections 200.317 through 200.327. At a minimum, the procurement history including rationale for the method, procurement method support, contract selections and rejections, suspension and debarment, and bases for contract prices should be documented. Views of Responsible Officials: Management agrees with the finding and will implement procurement procedures.
Assistance Listing Numbers: 10.001, 10.200, 10.215, 10.307, 10.310, 10.311, and 10.912 Name of Federal Program or Cluster: Research and Development Cluster Name of Federal Agency: Department of Agriculture Federal Award Identification Numbers: 58-5090-2-037 2022-38624-38368 2021-38640-34714 2020-38640-31522 2022-38640-37486 2023-51300-40959 2021-68012-35917 2019-68012-29852 2020-68012-31934 2021-49400-35592 NR225F48XXXXG006 Name of Pass-through Entities and Award Periods: Michigan State University-September 1, 2022 through August 31, 2025; Regents of the University of Minnesota- April 1, 2021 through March 31, 2023, March 1, 2022 through February 28, 2025, and April 1, 2023 through March 31, 2025; Board of Regents of the University of Wisconsin System- September 1, 2019 through August 31, 2024, September 1, 2020 through August 31, 2025, and January 1, 2022 through December 31, 2026 Criteria or Specific Requirement: 2 CFR section 200.318(a) requires a non-federal entity to have and use documented procurement procedures, consistent with state, local, and tribal laws and regulations and the standards of 2 CFR sections 200.317 through 200.327. 2 CFR section 200.318(c)(1) requires a non- federal entity to 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. 2 CFR section 200.318(i) requires a non-federal entity to maintain records sufficient to detail the history of procurement including, but not limited to, the: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition: There are no documented procurement procedures that meet the requirements of 2 CFR sections 200.317 through 200.327 that were implemented for the fiscal year. There are no consistently implemented internal controls documented to ensure compliance with 2 CFR sections 200.317 through 200.327. 19 out of 60 procurements did not have documented an internal control over compliance. 1 of 2 simplified acquisition procurements had no documentation of the rationale for the method, documentation to support a required procurement method used, contractor selections or rejections, suspension and debarment, and bases for contract prices. The only support documented are the invoices. No covered transactions were documented as tested for suspension and debarment. Cause: There were no written procedures over procurement and when changes in management and accounting services occurred internal control documentation was not consistent and compliance requirements were not understood. Effect or Potential Effect: Procurement transactions may not be in compliance and disallowed. Questioned Costs: $22,000 – two simplified acquisitions Context: 60 ($76,181) out of 721 ($302,069) procurement transactions were tested. Two of the 721 procurements were simplified acquisitions while the remaining were micro purchases. Repeat Finding: This is a repeat of Finding 2022-005. Recommendation: The Organization should develop and document procurement procedures that meet state, local, and Uniform Guidance requirements. Internal controls should be designed, implemented, and documented within the procurement procedures to ensure compliance with 2 CFR sections 200.317 through 200.327. At a minimum, the procurement history including rationale for the method, procurement method support, contract selections and rejections, suspension and debarment, and bases for contract prices should be documented. Views of Responsible Officials: Management agrees with the finding and will implement procurement procedures.