Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform guidance) requires non-federal entities other than States to follow their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR sections 200.318 through 200.326. This includes using the small purchase methods only for procurements that meet the applicable criteria under 2 CFR sections 200.320(b). Condition, Cause, and Effect/Potential Effect: Internal controls at the County were not sufficient to ensure full and open competition on grant-funded contracts. Individuals involved in the procurement process incorrectly relied on NRS requirements instead of the County’s procurement policy and federal procurement guidelines. Questioned Costs: None noted. Context: A nonstatistical sample of the procurement transactions funded with the ARPA Coronavirus State and Local Recovery Funds revealed that the County did not conduct procurement transactions in a manner providing fair and open competition on two construction contracts. Recommendation: We recommend that the County provide additional training to grantoversight personnel and ensure controls are sufficiently enhanced to ensure procurement policies are followed on federal grant-funded purchases. Views of Responsible Officials and Planned Corrective Actions: We agree with this finding and will enhance control procedures as recommended. Repeat Finding from Prior Year: Yes; 2024-008.
Finding 2025-001 – COVID 19 – Coronavirus State and Local Fiscal Recovery Fund - AL No. 21.027 U.S. Department of Treasury Other Matters Related to Internal Control over Compliance of the Major Program Criteria: Non‐federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. Condition and Context: During our testing as it related to compliance with procurement we noted that an expense for engineering services for the Waste Water Treatment Assessment services charged to the major program would have required a formal bidding process as the project exceeded the simplified acquisition threshold. The Town had selected the engineering company for “On Call” engineering services as it related to the DPW through a request for qualifications process. The contract does include as part of the services to be provided Waste Water Treatment Assessment services. However, the contract is not specific to federally funded projects. The Town of Medfield had submitted the request for qualifications documentation as well as the executed contracted for “On Call” services to both the Town’s consulting service and the pass through entity for approval of the Waste Water Treatment Assessment. The pass through entity and the pass through entities Auditors did not have any concerns with the request for qualifications as it relates to the Waste Water Treatment Assessment project. Questioned Costs: $175,500 Cause: Based on the judgement of the pass through entity (Norfolk County) and their auditors, the Town was approved to procure engineering services for the Waste Water Treatment Assessment as part of a larger “On Call” services contract. The Town did select the contractor through a competitive request for qualifications process, but did not initiate a separate procurement for the sub-project. Effect or Potential Effect: There is risk that amounts charged to the federal awards major program may not be in accordance with procurement, suspension, and debarment principles. Identification as a Repeat Finding: 2024-001 Recommendation: Going forward, the Town of Medfield should consider a separate bidding process for expenses related to federal grant funds. Management Response: Due to the differences in the interpretation of federal requirements regarding competitive procurement, the Town will follow the more restrictive one on an ongoing basis. New projects paid for by federal grants will have separate procurements.
Federal Procurement Regulations Significant Deficiency U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES ALN #: 93.224 - Health Centers Program and 93.527 - Grants for New and Expanded Services under the Health Center Program Federal Award Identification #: H80CS00111 Condition: During the Health Centers Program audit, it was noted that HAH did not follow their procurement policies as required by the Uniform Guidance 2 CFR 200.318. Criteria: 2 CFR 200.318 Questioned Costs: $0 Context: During the audit, it was noted that while the majority of program expenditures are salary and benefits, HAH did not follow their policies for procurement for other goods and services, and did not obtain multiple bids or sole source justification for three out of eight vendors selected for testing that exceeded the micro-purchases threshold. Cause: Turnover at HAH, who separated from the parent entity in FY24 resulting in changes in procedures. Effect: Lack of internal control to ensure program requirements Identification as repeat finding, if applicable: Not applicable. Recommendation: We recommend that HAH establish an updated procurement policy and designate an individual to review all purchases over the micro-purchases threshold and review procurement documentation to ensure it is sufficient before expenses are approved for payment. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding. See corrective action plan.
Criteria: Nonfederal entities other than States, including those operating Federal programs as subrecipients of States, must follow the procurement standards set out at 2 CFR Sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR Part 200. Nonfederal entities other than States, including those operating Federal programs as subrecipients of States, must follow the suspension and debarment standards set out at 2 CFR Part 180, which implements Executive Orders 12549 and 12689, “Debarment and Suspension,” federal awarding agency regulations in Title 2 of the CFR adopting/implementing the OMB guidance in 2 CFR Part 180; program legislation; and the terms and conditions of the award. Condition: During transactional testing, the following was noted: • 4 out of 8 vendors reviewed did not have evidence of multiple competitive bids being obtained. Additionally, there are no consistent processes in place to check to ensure vendors are not suspended or debarred prior to conducting business. • 4 out of 8 vendors reviewed did not have evidence or processes in place to check to ensure vendors were not suspended or debarred prior to conducting business. None of the 6 vendors were suspended or debarred. Context: The audit findings represent a systematic problem, see condition above. Cause: There were ineffective controls in place during the period over procurement, along with lack of management oversight. Effect: The Clinic is not enacting fair competition in the procurement process nor are they following their policies by making sure bidding support is provided before the appropriate officials sign the Purchase Order. Additionally, the Clinic may be paying vendors that are suspended and debarred which would be an unallowable cost. Questioned Costs: AL#: 93.441 Known: Procurement- $60,729 Repeat Finding: Yes, 2022-007, 2023-004, and 2024-002. Recommendation: We recommend the Clinic conduct training for staff and program managers to review the Clinic’s procurement and suspension and debarment policies and procedures along with federal regulations. Views of Responsible Officials: The Clinic will review the procurement standards set forth at 2 CFR part 200 and will update the procurement and purchasing policies to comply with all required purchasing standards. All vendors will be required to submit and certify a statement regarding debarment and suspension prior to contract award.
Criteria: The Uniform Guidance 2 CFR Part 200.318 requires that the Agency have documented procurement procedures for procurement transactions under a Federal award or subaward. Condition: The Agency has a procurement policy in place; however, it is not fully aligned with the procurement standards set forth in 2 CFR Part 200.317–200.327 of the Uniform Guidance. Specifically, the policy does not incorporate all required procurement methods or procedures, such as competitive bidding (sealed bids), even though no purchases during the audit period met the threshold requiring formal bidding. Cause: The Agency's current policy has not been updated to fully address the specific requirements of 2 CFR Part 200.317–200.327 of the Uniform Guidance. Effect: The Agency is not in compliance with 2 CFR Part 200.317–200.327 of the Uniform Guidance. Questioned Costs: None reported. Context: Not applicable. Repeat Finding: Not applicable. Recommendation: Although there were no purchases in the audit period meeting the threshold for competitive bidding, we recommend that the Agency review and revise its procurement policy to ensure compliance. This should include procedures for all procurement methods including sealed bids. View of Responsible Officials: Refer to management’s corrective action plan.
Identification of the Federal Program: Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grants Cluster - Entitlement/Special Purpose Federal Agency: U.S. Department of the Housing and Urban Development Pass-through Entity: County of Orange Community Resources Department Pass-through Identification Number: J2JWJVWQBEA6 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): For federally funded programs, recipients are required to establish and maintain effective internal control over compliance in accordance with 2 CFR §200.303. These controls should provide reasonable assurance that federal awards are managed in compliance with applicable laws, regulations, and the provisions of contracts or grant agreements. Pursuant to 2 CFR §§200.403 through 200.405, costs charged to federal programs must be allowable, reasonable, necessary, and adequately documented. Recipients must maintain sufficient documentation to support the nature of expenditures, vendor selection, and cost reasonableness to ensure compliance with allowable cost principles. Additionally, pursuant to 2 CFR §200.318, non-Federal entities are required to use documented procurement procedures that reflect applicable federal, state, and local requirements. These procedures must ensure that procurement activities are conducted in a manner providing for full and open competition, use appropriate procurement methods, and include adequate documentation to support vendor selection and cost reasonableness. Recipients are responsible for ensuring that procurement activities performed by employees, consultants, or contractors on their behalf comply with these requirements. Failure to follow these procedures may result in costs that are not adequately supported as allowable under federal requirements. Further, pursuant to 24 CFR §570.506, when CDBG funds are used for rehabilitation activities, recipients must ensure that work is completed in accordance with applicable laws, codes, and requirements related to housing safety, quality, and habitability. This includes ensuring that required permits are obtained and inspections are performed in accordance with local building and safety requirements prior to and throughout construction activities. Condition: During our audit of the CDBG program, we identified the following deficiencies related to internal control and compliance over compliance requirements: Allowable Costs/Cost Principles: The City did not maintain sufficient documentation to support compliance with federal requirements related to CDBG-funded rehabilitation activities. Specifically, the City did not maintain adequate documentation to support vendor selection, cost reasonableness, or the basis for contractor procurement. In addition, the City did not maintain evidence demonstrating that procurement-related activities performed by a consultant on its behalf were conducted in accordance with established procedures. Special Tests and Provisions – Rehabilitation: During our testing of nine CDBG-funded rehabilitation projects, we noted that one project had a building permit on file that expired in 2008 and was not renewed prior to or during construction. Additionally, five projects had building permits that were issued after construction activities had already commenced, indicating that required permits were not obtained prior to the start of rehabilitation work. Cause: The City has not established and implemented effective internal controls and monitoring procedures over its CDBG program to ensure compliance with all federal requirements. Effect or Potential Effect: The City did not maintain sufficient documentation to support expenditures, limiting its ability to demonstrate that costs charged to the program are allowable, reasonable, and adequately supported in accordance with federal requirements. As a result, there is an increased risk that costs may be questioned or disallowed. Additionally, failure to obtain and maintain valid permits prior to construction increases the risk of noncompliance with rehabilitation requirements and may result in ineligible activities. Questioned Costs: None. Context: See condition above for the context of the finding. Recommendation: We recommend that the City strengthen its internal control system over the CDBG program by implementing and documenting formal policies and procedures to ensure compliance with federal requirements. This includes maintaining sufficient documentation to support vendor selection, cost reasonableness, and overall allowability of costs, as well as ensuring appropriate oversight of consultants performing activities on the City’s behalf. Additionally, the City should enhance its monitoring procedures over rehabilitation activities by maintaining sufficient documentation to support that work was performed in accordance with program requirements, including evidence of inspections and completion of approved work; permits or local approvals alone should not be relied upon as sole evidence of compliance. The City should provide training to staff involved in program administration and implement ongoing monitoring procedures to ensure compliance with federal requirements. Views of Responsible Officials: Management concurs with the finding and agrees to implement necessary corrective procedures.
2025-001 PROCUREMENT, SUSPENSION AND DEBARMENT Grantors: U. S. Department of Justice U. S. Department of Health and Human Services Federal Program Names: Crime Victim Assistance Maternal, Infant and Early Childhood Home Visiting Grant FALN Numbers: 16.575 and 93.870 Pass-through Entities: CT Office of Victim Services CT Office of Early Childhood Criteria: When procuring property and services, entities must follow the procurement standards set out at 2 CFR sections 200.318-200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform applicable federal statutes and the procurement requirements identified in 2 CFR part 200. Condition: The procurement policy in place during the first part of fiscal 2025 was not updated to comply with the requirement of the Uniform Guidance as stated above, and did not specify a micro-purchase or small purchase threshold above which written quotes would be required, although this was addressed in January 2025. A formal written policy for ensuring vendors are not suspended or debarred was not included in the old policy and, although the new policy does include such language, no specific procedures were performed regarding the determination as to whether vendors were suspended or debarred. Questioned Costs: None. Effect: Certain purchases could be incurred at higher amounts than might have been the case had multiple written quotes been obtained prior to the transaction. However, all purchases tested appeared to be in the normal course of business and costs appeared reasonable. Our testing did not result in any questioned costs. Additionally, the potential existed that a vendor that could either be suspended or debarred could have unknowingly been utilized due to the existing process. Cause: The agency did not timely complete the process to update its policies and procedures to conform with the Uniform Guidance by the expiration of the extended implementation deadline cited in the Uniform Guidance. A new procurement policy was implemented during the fiscal year, however while the policy states that suspension and debarment of vendors will be addressed, no procedures were actually implemented and documented to ensure that new or existing vendors’ statuses were verified. Recommendation: Management should create and implement a procedure that ensures all vendors are checked for suspension and debarment on an ongoing basis to prevent any further noncompliance in this area. Additional training of relevant staff regarding the new policies and procedures should be considered, especially regarding retention of adequate documentation of bids, quotes, or other procedures including documentation of the checking of vendors against the suspension and debarment lists. Views of Responsible Officials: A new procurement procedure to ensure vendors are not suspended or debarred, was prepared and implemented effective in fiscal 2026. Relevant staff have been and continue to be trained appropriately regarding execution of related procedures to ensure all aspects are being properly performed.
2025-001 – Procurement, Suspension and Debarment Federal Program Information: Department of Education - Child Nutrition Cluster: CFDA - 10.553/10.555/10.559//10.582 Criteria: The following CFR(s) apply to this finding: 2 CFR 200.318 General procurement Standards and 2 CFR 200.214 Suspension and Debarment Condition: During audit procedures, it was identified that the Supervisory Union did not have internal controls in place to ensure that all appropriate procurement standards and procedures were followed. Cause: Unknown Effect: The Supervisory Union may not be consistently following all appropriate procurement standards and procedures. There were instances where the suspension and debarment verification were not performed. Identification of Questioned Costs: None identified. Context: Of the 8 procurement purchases tested, 6 were not verified for suspension or debarment in SAM.gov. Repeat Finding: This is a repeat finding of 2024-002. Recommendation: It is recommended that the Supervisory Union implements controls to ensure that it follows all appropriate procurement standards and procedures. We also recommend that the Supervisory Union review its procurement policy to ensure that it is updated and complete.
FA 2025-001 Improve Controls over Procurement and Suspension and Debarment Compliance Requirement: Procurement and Suspension and Debarment Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 10.553 – School Breakfast Program; 10.555 – National School Lunch Program Federal Award Numbers: 255GA324N1199 (Year: 2025) Questioned Costs: $7,536 Description: A review of expenditures charged to the Child Nutrition Cluster revealed that the School District’s internal control procedures were not operating appropriately to ensure that the School District’s procurement and suspension and debarment procedures were followed. Background Information: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding is granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture, and GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $2,718,778.68 were expended and reported on the Jeff Davis County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2025. Criteria: As a recipient of federal awards, the School District is required to establish, document, and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state, “(a)… the recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations… (b) Recipients and subrecipients must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.” In addition, provisions included in the Uniform Guidance, Section 200.320 – Procurement Methods provide guidance for informal procurement methods and state “If simplified acquisition procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources.” Furthermore, Title 2 CFR Section 180.300 states in part that the recipient or subrecipient must “verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person.” Condition: A sample of 40 procurement transactions was randomly selected for testing using a nonstatistical sampling approach. These transactions were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The following deficiencies were noted: • For twenty expenditures, documentation maintained to support the entity’s verification that the vendors were not suspended or debarred or otherwise excluded from participating in the transaction lacked evidence of supervisory review as required by the School District’s policies and procedures. • The School District could not provide evidence that an adequate number of rate or price quotations were obtained from qualified sources for two small purchase expenditures reviewed. Questioned Costs: Upon testing a sample of $82,497 in procurement transactions, known questioned costs of $7,536 were identified for expenditures that did not follow the School District’s procurement procedures. Using the total population of $1,613,491 in procurement transactions, we project the likely questioned costs to be approximately $147,385. The following Assistance Listing Numbers were affected by known and likely questioned costs: 10.553 and 10.555. Cause: In discussing these deficiencies with the School District, they believe these issues are primarily due to the lack of proper documentation and not following its policies and procedures that govern the procurement process for federal programs. Effect: The School District was not in compliance with the Uniform Guidance and GaDOE guidance. Failure to appropriately implement procedures to address procurement and suspension and debarment compliance requirements exposes the School District to unnecessary risk of error and misuse of federal funds and could result in the expenditure of federal funds with unqualified vendors. In addition, this deficiency could lead to the return of federal funds associated with unallowable expenditures. Recommendation: The School District should evaluate and improve internal control procedures to ensure that required procurement methods are properly identified and followed and required procurement and suspension and debarment documentation is properly identified, safeguarded, and retained. In addition, management should develop a monitoring process to ensure that these procedures are operating appropriately. Views of Responsible Officials: We concur with this finding.
FINDING 2025-003 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States Assistance Listings Number: 84.027 Federal Award Numbers and Years (or Other identifying Numbers): 22611-133-PN01, 23611-133-PN01, 24611-133-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 19 LEWIS CASS SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The internal control system in place at the School Corporation was not effective in ensuring compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement - Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, the informal procurement method is permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. A total of two vendors were determined to require small purchase procedures, totaling $123,078. For the two vendors tested, the School Corporation did not obtain price or rate quotations. Additionally, documentation detailing the history of procurement, which must include the reason for the procurement method used, was absent for those two vendors. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the System for Award Management (SAM) Excluded Parties List System (EPLS), collecting a certification from that person or entity, or adding a clause or condition to the covered transaction with that person or entity. A population of two covered transactions for goods or services totaling $123,078, both of which equaled or exceeded the $25,000 threshold paid from the special education funds during the audit period, were identified and selected for testing. For both transactions, the School Corporation did not verify that the vendor was not suspended, debarred, or otherwise excluded from or eligible for participation in federal assistance programs or activities prior to issuing payment. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 20 LEWIS CASS SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal 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 200.214 states: "Non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities." 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 School Corporation did not have adequate internal controls to ensure compliance with procurement and suspension and debarment requirements. Effect The lack of an effective internal control system enabled material noncompliance to occur and remain undetected. Noncompliance with the Procurement and Suspension and Debarment compliance requirement could enable small purchases made by the School Corporation to be uncompetitive and could lead to contracting with vendors who are suspended or debarred from receiving federal grant funding. INDIANA STATE BOARD OF ACCOUNTS 21 LEWIS CASS SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the management of the School Corporation develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are verified to not be suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING REFERENCE NUMBER 2025-008 FEDERAL PROGRAMS (ALN – 84.027) SPECIAL EDUCATION – GRANTS TO STATES (IDEA, PART B) – SPECIAL EDUCATION CLUSTER (IDEA) (ALN – 84.173) SPECIAL EDUCATION – PRESCHOOL GRANTS (IDEA PRESCHOOL) – SPECIAL EDUCATION CLUSTER (IDEA) U.S. DEPARTMENT OF EDUCATION AWARD NUMBERS H027A230003 (07/01/2023 – 09/30/2024); H027A240003 (07/01/2024 – 09/30/2025); H173A230003 (07/01/2023 – 09/30/2024); H173A240003 (07/01/2024 – 09/30/2025); COMPLIANCE REQUIREMENT PROCUREMENT AND SUSPENSION AND DEBARMENT TYPE OF FINDING INTERNAL CONTROL AND COMPLIANCE – MATERIAL WEAKNESS AND MATERIAL NONCOMPLIANCE CRITERIA 2 CFR Section 200.317, establishes that when conducting procurement transactions under a Federal award, a State or Indian Tribe must follow the same policies and procedures it uses for procurements with non-Federal funds. 2 CFR §200.318(a)(i) establishes that the recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations and the standards identified in §§ 200.317 through 200.327. The recipient or subrecipient must maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price. STATEMENT OF CONDITION As part of our audit procedures over procurement process, we requested a list of all procurement procedures performed related to professional services and direct services to participants. No information was provided related to procurement procedures. In relation to quotation process, we selected a sample of forty (40) transactions for which a quotation process should have been performed. We found the following deficiencies: 1. In one quotation process, we were not provided with the document listing the bidders, evidence of the bidder selection, and the reasons for that selection. 2. In another quotation process, the requisition specifying the goods for which quotations were requested did not correspond to the fiscal year and made no reference to the quotations submitted. In addition, we requested a detailed list of all contracts formalized during the year and financed with IDEA funds. When selecting a sample of twenty-five (25) contracts, we were informed that several were financed with State funds. We requested the list of IDEA program contracts again, but it was not provided. This constitutes a scope limitation. QUESTIONED COSTS None. PERSPECTIVE INFORMATION After we requested all the supporting information related to procurement processes and contracts, the PRDE was not able to provide the basic documentation for the procurement performed and a list of contracts with IDEA funding during a reasonable period of time. This is a systemic deficiency that should properly be corrected, and the information should be available for audit process. The samples were statistically valid samples. STATEMENT OF CAUSE The IDEA program performs a procurement process related to specific services for which no evidence of the procurement performed was provided. The PRDE does not maintain a detail of contracts financed with IDEA funding. In addition, quotations for some purchases are performed through the Purchase Department of the PRDE, and no proper controls over the documentation are maintained POSSIBLE ASSERTED EFFECT Due to the lack of filing documentation related to the procurements performed and formalized contracts, we were unable to ascertain compliance with the procurement and suspension and debarment process. In relation to the quotation process, PRDE is not maintaining proper documentation to demonstrate compliance with procurement. IDENTIFICATION OF REPEAT FINDING This is a repeat finding (Finding Reference Number 2024-009). RECOMMENDATIONS We recommend that the PRDE review its internal control procedures for filings to ensure that all procurement documentation is readily available to any auditor or entity tasked with assessing the procurement process.
Program All federal programs Criteria The City must comply with procurement standards set out at 2 CFR sections 200.318 through 200.326 within the Uniform Guidance. Condition The City’s procurement standards do not include all the essential elements as outlined in 2 CFR sections 200.318 through 200.326. In addition, the City did not retain adequate documentation for verification that vendors were not suspended or debarred parties. Questioned costs None noted. Context Although the City’s policy is not in conformity with all sections the federal Uniform Guidance criteria, the City did follow the established purchasing procedures for purchases for the City’s major programs. With respect to the verification that vendors are not suspended or debarred, the City provided documentation that vendors were reviewed on SAM.gov, but the documentation did not provide evidence of that there were no active exclusion records. Effect The City is at risk for noncompliance for expenditures of federal monies as it relates to federal procurement. Cause Unknown. Recommendation We recommend that the City update the procurement policies to include each of the criteria as set out in 2 CFR sections 200.318 through 200.326. We also recommend that the City retain documentation to support the verification check for suspended or debarred vendors. Views of responsible official and planned corrective actions The City agrees with the finding.
Procurement and Suspension and Debarment Federal Agencies: United States Department of Transportation Federal Program Name: Highway Planning and Construction Assistance Listing Number: 20.205 Federal Award Identification Number and Year: Not Available Pass-Through Agency: State of Connecticut Department of Transportation Pass-Through Number: 12062-DOT57151-22108 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or Specific Requirement 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (UG) requires compliance with the provisions of procurement, suspension, and debarment. Condition: There was no documentation of controls in place to review for suspension and debarment on related procurement activities at the time the contracts were executed. Questioned Costs: None Context: Although testing did not reveal vendors providing services that were suspended and debarred, no documentation existed to verify compliance with this requirement when the contracts were executed. Cause: The Town did not properly document the requirement at the time the contracts were executed. Effect: No effect can be determined. Repeat Finding: Yes, 2024-001 Recommendations: We recommend that the Town continue its formal procurement policies with the criteria in 2 CFR sections 200.318 and 200.326 moving forward. Views of Responsible Officials: Management agrees with this finding.
III Federal Award Findings and Questioned Costs FA 2025-001 Improve Controls over Procurement and Suspension and Debarment Compliance Requirement: Procurement and Suspension and Debarment Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 10.553 – School Breakfast Program; 10.555 – National School Lunch Program 10.582 - Fresh Fruit and Vegetable Program Federal Award Numbers: 255GA324N1199 (Year: 2025), 255GA324L1603 (Year: 2025) Questioned Costs: $6,267 Description: A review of expenditures charged to the Child Nutrition Cluster revealed that the School District’s internal control procedures were not operating appropriately to ensure that the School District’s procurement and suspension and debarment procedures were followed. Background Information: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding is granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture, and GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $3,568,611.24 were expended and reported on the Jones County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2025. Criteria: As a recipient of federal awards, the School District is required to establish, document, and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state, “(a)… the recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations… (b) Recipients and subrecipients must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.” In addition, provisions included in the Uniform Guidance, Section 200.320 – Procurement Methods provide guidance for informal procurement methods and state “If simplified acquisition procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources.” Condition: A sample of 40 procurement transactions was randomly selected for testing using a nonstatistical sampling approach. These transactions were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The School District could not provide evidence that an adequate number of rate or price quotations were obtained from qualified sources for four small purchase expenditures reviewed. Questioned Costs: Upon testing a sample of $159,951.89 in procurement transactions, known questioned costs of $6,267 were identified for expenditures that did not follow the School District’s procurement procedures. Using the total population of $1,778,019 in procurement transactions, we project the likely questioned costs to be approximately $69,659. The following Assistance Listing Numbers were affected by known and likely questioned costs: 10.553, 10.555, and 10.582. Cause: In discussing these deficiencies with the School District, they stated that the internal control procedures related to procurement were not being followed appropriately. In addition, management did not adequately monitor the procurement internal control procedures. Effect: The School District was not in compliance with the Uniform Guidance and GaDOE guidance. Failure to appropriately implement procedures to address procurement and suspension and debarment compliance requirements exposes the School District to unnecessary risk of error and misuse of federal funds and could result in the expenditure of federal funds with unqualified vendors. In addition, this deficiency could lead to the return of federal funds associated with unallowable expenditures. Recommendation: The School District should evaluate and improve internal control procedures to ensure that required procurement methods are properly identified and followed and required procurement and suspension and debarment documentation is properly identified, safeguarded, and retained. In addition, management should develop a monitoring process to ensure that these procedures are operating appropriately. Views of Responsible Officials: We concur with this finding.
2025-004: FEDERAL PROCUREMENT PROCEDURES Program: Child Nutrition Cluster Federal Assistance Listing Number: 10.553, 10.555, 10.559 Federal Agency: U.S. Department of Agriculture Pass-Through Agency: Arizona Department of Education Grantor Number: ADE ED09-0001 Questioned Costs: $-0- Type of Finding: Noncompliance (Other Matter), significant deficiency in internal control Compliance Requirement: I. Procurement, Suspension, and Debarment Condition: During testing of procurement activities within the Child Nutrition Cluster, we selected three purchases for review. For all three purchases tested, the District did not perform and document the procurement procedures required under federal regulations to obtain written price quotations. Specifically, the District was unable to provide evidence demonstrating that applicable procurement requirements, including obtaining and documenting competition as required by federal procurement standards, were followed prior to making the purchases. Criteria or Specific Requirement: Title 2 CFR §200.318 through §200.327 requires non-federal entities expending federal awards to establish and follow documented procurement procedures that reflect applicable federal, state, and local laws and regulations. These procedures must ensure full and open competition and maintain sufficient records to detail the history of the procurement, including the rationale for the method of procurement, contractor selection, and the basis for contract pricing. Cause: District personnel responsible for procurement and federal program administration did not consistently apply and document procurement procedures for purchases charged to the Child Nutrition Cluster. The District did not maintain documentation to support that three written quotes were maintained to support the purchases or that other applicable methods of procurement were utilized (cooperative purchases, RFPs, etc.) Additionally, management's monitoring controls were not sufficient to ensure compliance with federal procurement requirements prior to the expenditure of federal funds. Effect: Failure to follow and document required procurement procedures increases the risk that purchases may not be made in accordance with federal requirements, potentially limiting competition and resulting in questioned costs, repayment of federal funds, or other sanctions from grantor agencies. Repeat Finding: No. Recommendation: We recommend the District strengthen internal controls over procurement compliance by implementing procedures to ensure all purchases made with federal funds are reviewed for compliance with applicable procurement requirements before purchases are finalized, maintaining documentation supporting the procurement method utilized, solicitation of bids or quotes when required, vendor selection, and price determination. Views of Responsible Officials: The District concurs with this recommendation. See the corrective action plan in a separately published document.
2025-005: FEDERAL PROCUREMENT PROCEDURES Program: Child Nutrition Cluster Federal Assistance Listing Number: 10.553, 10.555, 10.559 Federal Agency: U.S. Department of Agriculture Pass-Through Agency: Arizona Department of Education Grantor Number: ADE ED09-0001 Questioned Costs: $-0- Type of Finding: Noncompliance (Other Matter), significant deficiency in internal control Compliance Requirement: I. Procurement, Suspension, and Debarment Condition: During testing of procurement activities within the Child Nutrition Cluster, we selected three purchases for review. For all three purchases tested, the District did not perform and document the procurement procedures required under federal regulations to obtain written price quotations. Specifically, the District was unable to provide evidence demonstrating that applicable procurement requirements, including obtaining and documenting competition as required by federal procurement standards, were followed prior to making the purchases. Criteria or Specific Requirement: Title 2 CFR §200.318 through §200.327 requires non-federal entities expending federal awards to establish and follow documented procurement procedures that reflect applicable federal, state, and local laws and regulations. These procedures must ensure full and open competition and maintain sufficient records to detail the history of the procurement, including the rationale for the method of procurement, contractor selection, and the basis for contract pricing. Cause: District personnel responsible for procurement and federal program administration did not consistently apply and document procurement procedures for purchases charged to the Child Nutrition Cluster. The District did not maintain documentation to support that three written quotes were maintained to support the purchases or that other applicable methods of procurement were utilized (cooperative purchases, RFP’s, etc.) Additionally, management's monitoring controls were not sufficient to ensure compliance with federal procurement requirements prior to the expenditure of federal funds. Effect: Failure to follow and document required procurement procedures increases the risk that purchases may not be made in accordance with federal requirements, potentially limiting competition and resulting in questioned costs, repayment of federal funds, or other sanctions from grantor agencies. Repeat Finding: No. Recommendation: We recommend the District strengthen internal controls over procurement compliance by implementing procedures to ensure all purchases made with federal funds are reviewed for compliance with applicable procurement requirements before purchases are finalized, maintaining documentation supporting the procurement method utilized, solicitation of bids or quotes when required, vendor selection, and price determination. Views of Responsible Officials: The District concurs with this recommendation. See the corrective action plan in a separately published document.
FA 2025-001 Improve Controls over Procurement and Suspension and Debarment Compliance Requirement: Procurement and Suspension and Debarment Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Title: 84.027A – Grants to States; 84.173A – Preschool Grants Federal Award Number: H027A230073 (Year: 2024), H027A240073 (Year: 2025), H173A240081 (Year: 2025) Questioned Costs: $4,500 Description: A review of expenditures charged to the Special Education Cluster revealed that the School District’s internal control procedures were not operating appropriately to ensure that the School District’s procurement and suspension and debarment procedures were followed. Background Information: The Special Education Cluster (SEC), which is comprised of the Special Education Grants to States (IDEA, Part B) and Special Education Preschool Grants (IDEA Preschool) programs, was authorized under the Individuals with Disabilities Education Act (IDEA). Special Education Cluster funding is available to ensure that all children with disabilities have available to them a free appropriate public education that emphasizes special education and related services designed to meet their unique needs and prepares them for further education, employment, and independent living; ensure that the rights of children with disabilities and their parents are protected; assist states, localities, educational service agencies, and federal agencies to provide for the education of all children with disabilities; and assess and ensure the effectiveness of efforts to educate children with disabilities. SEC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. SEC funds totaling $525,466 were expended and reported on the Evans County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2025. Criteria: As a recipient of federal awards, the School District is required to establish, document, and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state, “(a)… the recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations… (b) Recipients and subrecipients must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.” In addition, provisions included in the Uniform Guidance, Section 200.320 – Procurement Methods provide guidance for informal procurement methods and state “If simplified acquisition procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources.” Provisions included in the Uniform Guidance, Section 200.320(c) – Noncompetitive Procurement states that procurement by a noncompetitive method may only be used if one of the circumstances outlined applies, including when “the procurement transaction can only be fulfilled by a single source.” Furthermore, Title 2 CFR Section 180.300 states in part that the recipient or subrecipient must “verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person.” Condition: A sample of 12 procurement transactions was randomly selected for testing using a nonstatistical sampling approach. These transactions were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The School District could not provide evidence that an adequate number of rate or price quotations were obtained from qualified sources or documentary evidence as justification for single source procurement for one small purchase expenditure reviewed. In addition, a sample of 2 covered transactions was randomly selected for testing using a nonstatistical sampling approach. These expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. Although it was determined that the vendors associated with these transactions were not suspended or debarred or otherwise excluded from participating in the transaction, documentation could not be provided to support the entity’s verification as required by the School District’s policies and procedures. Questioned Costs: Upon testing a sample of $10,504 in procurement transactions, known questioned costs of $4,500 were identified for expenditures that did not follow the School District’s procurement procedures. Using the total population of $101,739 in procurement transactions, we project the likely questioned costs to be approximately $43,585. The following Assistance Listing Numbers were affected by known and likely questioned costs: 84.027A and 84.173A. Cause: In discussing these deficiencies with the School District, they believe these issues are primarily due to the lack of proper documentation and not following its policies and procedures that govern the procurement process for federal programs. Specifically, Management stated that rate or price quotations were not obtained because the vendor was considered a single source provider; however, documentation supporting the single source procurement method was not maintained. Effect: The School District was not in compliance with the Uniform Guidance and GaDOE guidance. Failure to appropriately implement procedures to address procurement and suspension and debarment compliance requirements exposes the School District to unnecessary risk of error and misuse of federal funds and could result in the expenditure of federal funds with unqualified vendors. In addition, this deficiency could lead to the return of federal funds associated with unallowable expenditures. Recommendation: The School District should evaluate and improve internal control procedures to ensure that required procurement methods are properly identified and followed and required procurement and suspension and debarment documentation is properly identified, safeguarded, and retained. In addition, management should develop a monitoring process to ensure that these procedures are operating appropriately. Views of Responsible Officials: We concur with this finding.
Finding 2025 001 – Procurement Federal Program: Child and Adult Care Food Program Assistance Listing Numbers: 10.558 Federal Agency: U.S. Department of Education Pass Through Entity: Commonwealth of Massachusetts Department of Education Federal Award Identification Number: 13-035-CF-801 Federal Awards Year: 2024-2025 Criteria: 2 CFR 200.318(a) requires entities to maintain and use documented procurement procedures consistent with federal standards. Condition: During the audit of the Organization, we identified the written procurement policy in place did not include all the required elements. Context: The entity did not maintain a written procurement policy that included all the required elements. Cause: The Organization's written procurement policy had not been reviewed and updated to incorporate all Uniform Guidance procurement requirements, including applicable procurement thresholds and federal procurement standards. Effect or Potential Effect: Not maintaining a procurement policy that complies with Uniform Guidance increases the risk of noncompliance with federal procurement requirements and may result in unsupported or questioned costs. Questioned Costs: None identified. Recommendation: The auditee should implement a formal procurement policy in accordance with Uniform Guidance. View of Responsible Officials: Management agrees with the finding. See managements corrective action plan.
Finding 2025-012 – Child Nutrition Cluster - Inadequate Procurement Policies and Procedures Federal Agency: U.S. Department of Agriculture Federal Program: Child Nutrition Cluster Assistance Listing Numbers: 10.553, 10.555, 10.559 Compliance Requirement: Procurement, Suspension, and Debarment Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria Pursuant to 2 CFR §§ 200.318 through 200.326, non-Federal entities are required to establish and maintain documented procurement procedures that comply with Federal procurement standards applicable to Federal awards. Additionally, 2 CFR § 200.303 requires non-Federal entities to establish and maintain effective internal controls over Federal awards that provide reasonable assurance that the entity is managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. Written procurement policies should incorporate applicable Federal procurement methods, competition requirements, documentation standards, and suspension and debarment requirements to facilitate compliance with Uniform Guidance. Condition During testing of procurement and suspension and debarment requirements for the Child Nutrition Cluster, UHY noted that the County's procurement policy did not fully incorporate all requirements prescribed by Uniform Guidance, including certain Federal procurement standards and documentation requirements outlined in 2 CFR §§ 200.318 through 200.326. Although procurements tested during the audit were generally conducted in accordance with applicable requirements, the written procurement policy had not been updated to fully reflect all Federal procurement requirements applicable to federally funded procurements. Context During testing of procurement and suspension and debarment requirements for the Child Nutrition Cluster, UHY noted that the County's procurement policy did not fully incorporate all requirements prescribed by Uniform Guidance, including certain Federal procurement standards and documentation requirements outlined in 2 CFR §§ 200.318 through 200.326. Although procurements tested during the audit were generally conducted in accordance with applicable requirements, the written procurement policy had not been updated to fully reflect all Federal procurement requirements applicable to federally funded procurements. Cause Management had not updated the County's procurement policy to incorporate all applicable Federal procurement requirements prescribed by Uniform Guidance. Existing procedures relied upon management's knowledge and application of procurement requirements rather than a procurement policy that fully documented Federal requirements. Effect Because the County's procurement policy does not fully align with Uniform Guidance requirements, there is an increased risk that procurements charged to Federal awards may not be conducted or documented in accordance with applicable Federal requirements. The absence of a procurement policy that fully incorporates Federal procurement standards increases the likelihood that instances of noncompliance could occur and not be prevented or detected on a timely basis. Accordingly, this matter represents a significant deficiency in internal control over compliance. Identification as a Repeat Finding, if Applicable No. Questioned Costs None identified. Recommendation Management should revise and update the County's procurement policy to incorporate all applicable requirements prescribed by 2 CFR §§ 200.318 through 200.326, including Federal procurement methods, competition requirements, documentation standards, and suspension and debarment requirements. Management should also implement procedures to periodically review changes in Federal grant requirements and update policies and procedures accordingly. Responsible Official Superintendent of Schools and Finance Director Views of Responsible Official The County concurs with the recommendation and will review and revise its procurement policy to incorporate all applicable Federal procurement requirements under Uniform Guidance. Management will also implement procedures to periodically monitor changes to Federal grant requirements and update procurement policies and procedures as necessary to ensure continued compliance with Federal requirements.
Compliance Requirement I. Procurement Finding Type Significant Deficiency in Internal Control Over Compliance and Compliance Finding Federal Agency U.S. Department of Treasury Federal Program Title Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number 21.027 Criteria: I. 2 CFR sections 200.318 - 200.326 of the Uniform Guidance require that non-federal entities follow documented procurement procedures that ensure full and open competition. All purchases using federal funds must comply with applicable thresholds, documentation, and approval requirements. Condition: The Organization did not follow required procurement procedures for certain program transactions. Cause: Though a procurement policy exists for the Organization, there was no enforcement of this policy for the federal program. Effect: Failure to follow a formal procurement policy causes the Organization to be out of compliance with Uniform Guidance and/or grant requirements and increases the likelihood of disallowance of costs. Questioned Costs: None Identification as a Repeat Finding: N/A - this was not reported as a finding in the prior audit report. Context: The Organization did not follow required procurement procedures under the major program as no competitive bidding or documented justification for sole sourcing was provided. Recommendations: We recommend that the Organization revisit their existing procurement policy and implement a formal process/policy to identify any new transactions to ensure the policy is followed. A review of each project file should be implemented to ensure that procurement activities tied to federal award are taking place. View of Responsible Officials: The Organization disagrees with this audit finding.
Finding 2025-002: Documentation of Procurement and Competitive Bidding Procedures Condition During testing of procurement transactions, we noted that a vendor was selected for services without documented evidence that competitive bidding or price quotations were obtained, and the procurement file did not include documentation describing the basis for vendor selection. While Home Start, Inc.’s fiscal policies allow for the use of oral quotes and permit vendor selection based on responsiveness and advantage to the Organization considering factors such as price, quality, and other relevant considerations, the procurement documentation maintained by the Organization did not include evidence that quotes were obtained or documentation supporting the basis for vendor selection. Criteria Under 2 CFR §200.318(a), non-federal entities must establish and maintain effective internal controls over the procurement process to ensure compliance with federal statutes, regulations, and the terms and conditions of federal awards. Additionally, 2 CFR §200.318(i) requires non-federal entities to maintain records sufficient to detail the history of procurement, selection of contract type, contractor selection or rejection, and the basis of the contract price. Further, 2 CFR §§200.319–200.320 require that procurements be conducted in a manner providing full and open competition, and that appropriate price or rate quotations be obtained depending on the procurement method. Cause The Organization did not consistently maintain documentation supporting the procurement process, including evidence of quotes obtained or documentation explaining the basis for vendor selection when competitive quotes were not documented. Effect The absence of procurement documentation reduces the Organization’s ability to demonstrate compliance with Uniform Guidance procurement requirements and increases the risk that procurements funded with federal awards may not meet federal competition standards. Recommendation We recommend that management strengthen procurement documentation procedures to ensure that procurement files include sufficient documentation of the competitive bidding or quotation process, including: • Evidence of quotes or bids obtained, including oral quotes where permitted by policy. • Documentation supporting the evaluation and selection of vendors. • Written justification when competitive bids or quotes are not obtained, consistent with both Uniform Guidance requirements (2 CFR §200.318(i)) and the Organization’s fiscal policies. Implementing these procedures will help ensure that procurement activities funded by federal awards are adequately documented and compliant with Uniform Guidance procurement standards.
Federal Program: ALN 93.600 Head Start Program Category: Compliance/ internal control significant deficiency Compliance requirements: Procurement and Suspension/Debarment Condition: BGCPR did not follow its procurement policies in compliance with applicable State and Federal procurement requirements. Criteria: BGCPR’s Fiscal Policy Manual — VI. Cash Disbursements & Expense Allocations, Incoming Invoice Processing, item 2 established that vendors must be created in the Workflow system in accordance with established procedures. Documentation for new vendors must be obtained and reviewed for completeness and accuracy and must include, at a minimum, Form W-9, the new vendor form, and a valid Merchant Registration Certificate issued by the applicable local governmental agency. 2 CFR § 200.318(a) requires recipients and subrecipients to maintain and use documented procurement procedures for procurement transactions under a Federal award or subaward, including the acquisition of property or services. These procedures must be consistent with applicable State, local, and tribal laws and regulations and the Federal procurement standards. 2 CFR § 200.318(h) requires recipients and subrecipients to award contracts only to responsible contractors possessing the ability to perform successfully under the terms and conditions of a proposed procurement. Consideration must be given to contractor integrity, public policy compliance, proper classification of employees, past performance, and financial and technical resources. 2 CFR § 200.318(i) requires recipients and subrecipients to maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price. Under 2 CFR § 200.319(a), procurement transactions must provide full and open competition. When simplified acquisition procedures apply, § 200.320(a)(2)(i) requires price or rate quotations from an adequate number of qualified sources; noncompetitive procurement is permitted only under the circumstances in § 200.320(c) and must be supported by the procurement record. Under 2 CFR § 200.214 and Appendix II(H) to Part 200, contract awards must not be made to parties that are debarred, suspended, or otherwise excluded in SAM. Section 200.327 requires contracts under Federal awards to contain the applicable provisions in Appendix II. Cause: BGCPR did not consistently apply its procurement policies and did not have an effective pre-award and supervisory review control to confirm vendor eligibility, required competition and approvals, complete procurement documentation, and applicable contract provisions before purchase commitments and payments were made. Context: Of 21 procurement transactions tested: 7 samples did not have an available supplier merchant registration certificate; 5 samples did not evidence the required quotation process and/or purchase order and did not include a documented justification; and 3 samples had contracts of which 2 samples did not include a debarment and suspension provision. Effect or potential effect: The absence of required vendor documentation, competition support, purchase orders or documented justification, and debarment and suspension controls increases the risk that purchases may be made from unauthorized or excluded vendors, may not provide full and open competition, and may be unsupported or subject to questioned costs under the Federal award. Recommendation: We recommend that management strengthen and enforce procurement controls by: (1) requiring a current Puerto Rico Merchant Registration Certificate before award or purchase; (2) documenting the required quotations and purchase order, or an approved justification citing the allowable basis for a noncompetitive procurement; (3) performing and retaining a dated SAM.gov exclusion search before contract award and renewal; (4) using standardized contracts containing all applicable Federal provisions, including debarment and suspension language; and (5) requiring documented supervisory review of a procurement checklist before approval and payment. Views of officials responsible: BGCPR agrees with the deficiency identified, mostly attributable to employee turnover within the Finance Division. As a result of this, during fiscal year 2026-2027 BGCPR will implement procedures to ensure proper procurement process including the following: a. Review the procurement check list to ensure that all required documentation is included within and ensure revision before a purchase order is issued to the vendor. b. Training to the personnel to guarantee that policy and procedures are implemented as required. c. Enforce standardized procedures to ensure that all approvals are consistently documented and maintained in accordance with policy or grant requirements. Anticipated completion date: September 30, 2026
Federal Program: ALN 10.536 CACFP Training Grants Category: Compliance/internal control significant deficiency Compliance requirements: Allowable costs / cost principles/procurement Record retention Condition: The procurement process was not adequately documented to demonstrate compliance with BGCPR's procurement policy. Criteria: 2 CFR § 200.318(a) requires recipients and subrecipients to maintain and use documented procurement procedures for procurement transactions under a Federal award or subaward, including the acquisition of property or services. These procedures must be consistent with applicable State, local, and tribal laws and regulations and the Federal procurement standards. 2 CFR § 200.318 (e) established that when appropriate for the procurement or use of common or shared goods and services, recipients and subrecipients are encouraged to enter into State and local intergovernmental agreements or inter-entity agreements for procurement transactions. These or similar procurement arrangements using strategic sourcing may foster greater economy and efficiency. Documented procurement actions of this type (using strategic sourcing, shared services, and other similar procurement arrangements) will meet the competition requirements of this part. 2 CFR § 200.318 (i) established that the recipient or subrecipient must maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price. According to VI. Purchasing and Procurement of the BGCPR’s Fiscal Policies and Procedures, all requisitions, purchase orders, and invoices must be approved prior to the purchase commitment. For purchases between up to $1,000, quotations are not required; however, the Purchasing Department must obtain price information from the supplier. Every transaction should have a formal purchase order from BGCPR’s system. Further, 2 CFR §200.403(g) requires costs charged to Federal awards to be adequately documented. Moreover, pursuant to 2 CFR §200.334, recipients and subrecipients must retain all Federal award records, including financial records, supporting documentation, and statistical records, for a minimum of three years from the date of submission of the final financial report. If litigation, claims, or audit findings are initiated before the expiration of the retention period, the records must be retained until all such matters are resolved and final action has been taken. Context: For 2 samples tested, purchases were made without a formal purchase order generated from the system. In addition, 1 sample included merchandise received and paid in excess of the amount authorized in the purchase order. The purchase order was not amended. Cause: Program procurement personnel relied on the pass-through entity's procurement process and did not consistently maintain documentation required under BGCPR's internal procurement policy. Questioned cost: Amount is below the threshold to be considered a questioned cost. Effect or potential effect: Failure to consistently follow the entity’s procurement policy may result in unsupported or unauthorized purchases, payments exceeding approved amounts, and questioned costs if the expenditures are not properly authorized, documented, or determined to be allowable. Recommendation: Management should strengthen oversight of procurement activities and ensure that all procurement transactions are supported by documentation demonstrating compliance with BGCPR's procurement policies, including the use of formal purchase orders and adherence to authorized purchasing limits. Views of officials responsible: In order to avoid this situation happening in the future, instruction will be provided to all personnel emphasizing that every purchase should be made through a purchase order. This will ensure that we follow the BGCPR formal procedure and ensure better internal control is being followed. In addition, we will emphasize that no shipment should be received if such purchase is not in accordance with the specification disclosed in the purchase order. Anticipated Completion Date: September 30, 2026
Criteria: Nonfederal entities other than States, including those operating Federal programs as subrecipients of States, must follow the procurement standards set out at 2 CFR Sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR Part 200. Condition: GLIDE did not maintain formal evidence of review and approval of contracts subject to procurement standards. In addition, GLIDE did not have a procurement policy in place that conformed to the federal procurement requirements. Questioned Costs: There were no questioned costs identified.Recommendation: Update the written procurement policy to align with applicable federal requirements, train responsible personnel, and require a complete procurement file for each covered purchase, including the procurement method, quotes or bids as applicable, evaluation and selection rationale, conflict-of-interest considerations, and evidence of approval. Repeat finding: This is not a repeat finding. Context: We obtained a population of contracts exceeding $10,000 and selected two of the four contracts for testing, totaling $97,430. GLIDE provided supporting documentation demonstrating that multiple bids were obtained and evaluated for the contracts selected. However, management was unable to provide documentation evidencing the formal review and approval of contracts subject to procurement standards. Cause: Procurement controls were not effectively designed and implemented. Management did not ensure that procurement procedures were aligned with federal requirements or that supporting documentation to evidence review and approval was retained in the procurement file. Effect: Without documentation of approval, GLIDE cannot demonstrate controls were operating effectively to ensure compliance with federal procurement standards, including full and open competition and required procurement history documentation.
Federal Agency: US Deparment of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Assistance Listing Number: 21.027 Federal Award Identification Number and Year: COVID-19 ARPA (American Rescue Plan Act) Pass-Through Agency: N/A Pass-Through Number(s): N/A Compliance Requirement: Procurement – Suspension and Debarment Award Period: March 3, 2021 - December 31, 2024, liquidated by December 31, 2026 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Uniform Guidance (2 CFR §§200.214 and 200.318) prohibits non‑Federal entities from awarding contracts supported by Federal awards to parties that are suspended or debarred. In addition, 2 CFR §200.303 requires non‑Federal entities to establish and maintain effective internal control over Federal awards, including documented policies and procedures to ensure consistent compliance with Federal requirements. Verification of vendor eligibility is typically performed through review of the System for Award Management (SAM.gov) or equivalent documentation prior to contract execution. Condition: During our audit, we noted a deficiency related to suspension and debarment verification and documentation. Specifically, for the procurement transactions tested, Worcester County, Maryland did not document verification that the vendor was not suspended or debarred prior to contract execution. In addition, the County does not have a formally documented suspension and debarment policy. While management indicated that suspension and debarment checks may be performed in practice, the absence of written policies and procedures resulted in inconsistent application and documentation of this required compliance procedure. Questioned costs: N/A Context: Uniform Guidance requires non‑federal entities to ensure that vendors and contractors receiving federal funds are not suspended or debarred from participating in federally funded programs. Effective compliance with this requirement is supported by documented policies and procedures that require verification (e.g., review of the System for Award Management (SAM.gov)) prior to entering into contracts. Cause: The County had not formally documented policies and procedures related to suspension and debarment verification and relied on informal practices and staff knowledge. As a result, suspension and debarment checks were not consistently documented or retained prior to contract execution. Effect: Failure to consistently document suspension and debarment verification increases the risk that the County may enter into contracts with vendors that are ineligible to participate in federally funded programs. While no instances of contracting with suspended or debarred vendors were identified and no questioned costs were noted, these conditions represent noncompliance with Federal procurement documentation requirements and reduce the County’s ability to demonstrate consistent adherence to Uniform Guidance. Repeat Finding: No. Recommendation: We recommend that the County develop and formally document a suspension and debarment policy that requires verification and documentation of vendor eligibility (e.g., SAM.gov review) for all contracts supported by Federal awards prior to execution of the contract. Management should also consider implementing standardized checklists or review controls to promote consistent compliance. Views of Responsible Officials and Planned Corrective Actions: Management concurs. Worcester County plans to update the County purchasing, financial and grant policies to ensure debarment and suspension compliance by implementing procedures aligned with the U.S. Office of Management and Budget Uniform Guidance (primarily 2 CFR Part 200) and the governmentwide debarment rules in 2 CFR Part 180, as adopted by the awarding agency. The corrective action includes implementing a written procurement policy which states that the county will not contract with or issue subawards to parties that are suspended or debarred when federal funds are involved. The Grant/Budget Office will maintain open communication with Procurement regarding federally funded grant projects that will be advertised for bid. After bids are received and before the evaluation committee reviews or recommends an award, the Grant/Budget Office will search the System for Award Management (SAM.gov) exclusion database for each vendor that submitted a bid. A PDF or screenshot of the SAM search for each vendor will be retained in a grant and procurement file. All other federal grants under procurement threshold will need county departments to reach out to the Grant/Budget office before choosing vendors. Departments will need to list their potential vendors for the federal grant and email the Grant/Budget office for debarment verification before moving forward with expending federal grant funding. A PDF or screenshot of the SAM search for each vendor will be sent to the department and a copy kept by Grants/Budget office as well.
Finding: This is a new finding relating to a significant deficiency in internal control over compliance in relation to the procurement suspension and debarment requirements of the above noted major federal program. Criteria: The 2025 Uniform Guidance compliance supplement issued by the Office of Management and Budget in November of 2025 outlines the period of performance compliance guidelines and requirements of the above noted major federal program. It states, “Recipients may use award funds to enter into contracts to procure goods and services necessary to implement one or more of the eligible purposes outlined in 42 USC sections 802(c) and 803(c) and Treasury's 2021 Interim Final Rule, 2022 Final Rule, and 2023 Interim Final Rule. As such, except as noted in the next paragraph, recipients are expected to have procurement policies and procedures in place that comply with the procurement standards outlined in the Uniform Guidance. In July 2022, Treasury released SLFRF FAQ 13.15, which explains that only a subset of the requirements in Subparts D and E of the Uniform Guidance apply to recipients' use of award funds under the revenue loss eligible use category. The requirements of 2 CFR sections 200.318 through 200.327 are not included in the list of requirements applicable to such funds.” However, Subpart C of the Uniform Guidance 2 CFR section 200.214 states, “Recipients and subrecipients are subject to the nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, as well as 2 CFR part 180. The regulations in 2 CFR part 180 restrict making Federal awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal awards.” Condition: As part of the current fiscal year audit, the Bid Ordinance and Charter of the Town were reviewed to determine if there were any documented internal control policies and procedures requiring the review and documentation of whether a vendor for goods and services which were being funded through federal award programs were either suspended or debarred from receiving or participating in federal awards. We were unable to find any documented internal control policies or procedures requiring a review for the suspension and debarment status of potential vendors for goods and services which were being funded through federal award programs. In addition, in relation to the project contracts entered into under the above noted major federal program a request was made for the backup documentation relating to the actual bid process that was followed such as copies of the request for bids, the bid specifications, the bids received and the actual approval of each bid. A request was also made relating to whether the bid process was waived for any of these project contracts and if such a waiver was made a copy of the meeting minutes of the Board of Selectmen of the Town approving such a waiver was requested. Part of the intent of requesting these bid related documents was to review the provided information to determine if any suspension and debarment review was made and documented. No information could be provided in relation to these requests. Questioned Costs: There are no questioned costs relating to this significant deficiency in internal control over compliance in relation to this procurement suspension and debarment finding. Context: The procurement suspension anddebarment compliance requirements relating to the above noted major federal programingeneral state that vendors who have been suspended or disbarred can not receive or participate in federal awards. We feel that not being able to provide some formof documentation showing that vendors for which goods or services were purchasedwith funds relating to the above noted major federal program were reviewed to determine if they were suspended or debarred from receiving or participating in federal awards indicates a significant deficiency in internal control over compliance in relation to the procurement suspension and debarment compliance requirement. Effect: During our review of the vendors being used in relation to the seven reported projects of the above noted major federal program, none were noted as being suspended or disbarred. However, the lack of adequate internal controls over these compliance requirements could provide an opportunity for noncompliance. Any funds found to have been paid to vendors who have been suspended or debarred from receiving or participating in federal awards could be required to be returned to the funding source. Cause: We were unable to determine why neither the provided bid ordinance or town charter included any internal controls relating to the review and documentation of the reviews of vendors in relation to their potential status of being suspended or disbarred from receiving or participating in federal awards. In addition, we did review certain contracts that were entered into in relation to the above noted major federal program and we were unable to find any references or clauses relating specifically to suspension and debarment. We were unable to determine why no references could be located within these reviewed contracts. Recommendation: We recommend that the Town more closely monitor vendors receiving and participating in federal award programs relating to procurement suspension anddebarment compliance requirements. In addition, we recommend that specific internal control policies and procedures be created, documented and implemented to ensure compliance in relation to all applicable procurement suspension and debarment requirements. Views of Responsible Officials: We have discussed this finding with our auditor and we do understand the importance of an adequate system of internal control policies and procedures relating to federal award program procurement suspension and debarment requirements. We do intend to review our bid ordinance and town charter, as time allows, to determine if any specific changes or modifications to these two documents should be made in relation to this compliance requirement.
Compliance Over Procurement and Suspension and Debarment U.S. Department of Agriculture (USDA) Child Nutrition Cluster ALN 10.555 Criteria: 2 CFR 200.318(a) requires that non-Federal entities use their 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 through 200.327. Accordingly, the entity is required to comply with the Louisiana Public Bid Law, LA R.S. 38:2211 et seq., which governs the procurement of goods and services using public funds. Under Louisiana Public Bid Law, purchases meeting applicable bid thresholds must be made by obtaining quotes or through a formal public bid process, as applicable, to ensure that public funds are expended through a transparent, competitive procurement process. Condition: During our testing of Procurement and Suspension and Debarment for the Child Nutrition Cluster, we selected a sample of 5 vendors from a population of 14 vendors utilized during the fiscal year. For one vendor selected, the School Board made purchases totaling $33,000 without obtaining the required competitive bids or quotes in accordance with Louisiana Public Bid Law. Cause: The School Board did not obtain competitive bids or quotes prior to making purchases from the vendor in question, as required under Louisiana Public Bid Law. This condition indicates a deficiency in the School Board’s procurement controls, including the lack of an adequate review process to ensure that purchases meeting applicable bid thresholds are supported by the required quotes or subjected to a formal competitive bid process before a vendor is selected and a commitment is made. Effect: By failing to obtain competitive bids or quotes as required, the School Board cannot demonstrate that the $33,000 in purchases from this vendor represent the best value to the program or that public funds were expended through a fair and open competitive process as required by Louisiana Public Bid Law and 2 CFR 200.318(a). The $33,000 represents known and questioned costs subject to a potential disallowance by the federal awarding agency. Regarding likely questioned costs: our testing covered 5 of 14 vendors (35.7% of the vendor population). The exception was identified within the tested population; however, because procurement noncompliance in this context was vendor-specific rather than transaction-rate-based, the likely questioned costs are limited to the $33,000 associated with the identified vendor. No extrapolation to the untested vendor population has been made, as the noncompliance relates to a discrete procurement decision rather than a systemic per-transaction error. Recommendation: We recommend that management implement a formal procurement review process to ensure that all purchases meeting or exceeding applicable bid thresholds under Louisiana Public Bid Law are supported by the required quotes or subjected to a competitive bid process prior to vendor selection and commitment of funds. Management should develop or strengthen written procurement policies and procedures that clearly identify bid thresholds, required procurement methods, and documentation retention requirements, consistent with 2 CFR 200.318-200.327. Management should also consult with legal counsel and the federal awarding agency regarding the appropriate disposition of the $33,000 in questioned costs identified. Repeat Finding: No. View of Responsible Officials: Prior to purchases being made, the Child Nutrition Program Supervisor will check for suspension and debarment of vendors. The accounts payable accountant will also review for suspension and debarment prior to the payment being made. Evidence of review will be maintained in an appropriately labeled file each year. See response to finding 2025-018 above.
Controls Over Procurement and Suspension and Debarment U.S. Department of Agriculture (USDA) Child Nutrition Cluster ALN 10.555 Criteria: 2 CFR 200.318(a) requires that non-Federal entities use their 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 through 200.327. The entity is also required to maintain procurement records sufficient to document the history of each procurement transaction, including the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price. Condition: During our testing of procurement and suspension and debarment for the Child Nutrition Cluster, we selected a sample of 5 vendors/contracts from a population of 14 vendors utilized during the fiscal year. For one vendor selected, the School Board was unable to provide a complete contract file containing evidence that the contract terms were properly reviewed and/or approved prior to execution. The file also did not contain sufficient documentation to demonstrate that the procurement file was complete and reviewed for compliance with applicable procurement and suspension and debarment requirements. Cause: The School Board had policies and procedures in place to ensure contract files included required documentation, including evidence of review and approval of contract terms. However, the policies and procedures were not consistently followed. As a result, the contract file did not contain sufficient documentation to demonstrate that the required review and approval procedures were performed. Effect: Without a complete contract file, the School Board cannot demonstrate that the contract terms were properly reviewed and approved, that the procurement was complete in accordance with applicable requirements, or that suspension and debarment procedures were adequately documented. This increases the risk that federally funded contracts may be awarded to vendors that are suspended, debarred, or otherwise excluded from participation in federal programs. Recommendation: We recommend that management strengthen the application of its existing procurement and contract review procedures to ensure they are consistently followed for all federally funded purchases. Contract files should be reviewed for completeness prior to contract execution and payment to ensure they include evidence of contract term review and approval, procurement support, and suspension and debarment verification. We also recommend that management periodically monitor contract files for compliance with established policies and procedures. Repeat Finding: No. View of Responsible Officials: Prior to purchases being made, the Child Nutrition Program Supervisor will check for suspension and debarment of vendors. The accounts payable accountant will also review for suspension and debarment prior to payment being made. Evidence of review will be maintained in an appropriately labeled file each year.
Type of Finding: Material Weakness in Internal Control over Compliance Federal Agency: Department of Housing and Urban Development; Department of Veterans Affairs Federal Program Name: Emergency Solutions Grant Program; Veterans Affairs Supportive Services for Veteran Families Program Assistance Listing Number: 14.231; 64.033 Federal Award Identification Number and Year: 14.231: SC-111170-2, CW2254906, CW2259491 64.033: 2020-WA-146-24, 2020-WA-146-25, 20-WA-146-FY24, 20-WA-146-FY25 Pass-Through Agency: 14.231: Pierce County Human Services, City of Tacoma 64.033: N/A – Direct Pass-Through Number(s): 14.231: SC-111170-2, CW2254906, CW2259491 64.033: N/A – Direct Award Period: 14.231: July 1, 2024 – June 30, 2025; November 1, 2022 – December 31, 2024 64.033: October 1, 2019 – September 30, 2026 Criteria or specific requirement: 2 CFR 180.300 indicates that participants must check SAM exclusions, collect a certification form, or add a clause or condition to the covered transaction before entering into a covered transaction. When a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-Federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. 2 CFR 200.318(i) requires recipients of federal funds to "maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price." Condition: For selected procurements, insufficient documentation was available to support the procurement decision, ensure the correct procurement method was used, and to verify open competition. All selected covered transactions had a suspension and debarment check performed during the fiscal year under audit; however, checks should be performed prior to entering into a covered transaction. Questioned costs: Note: all vendors ultimately determined not to be suspended or debarred, therefore questioned costs only apply to procurement samples. Context: 14.231:1/5 selected procurements lacked sufficient documentation to support procurement process; 4/5 selected covered transactions lacked support to evidence suspension and debarment was checked prior to entering into the covered transactions. 64.033: 4/5 selected procurements lacked sufficient documentation to support procurement process; 4/5 selected covered transactions lacked support to evidence suspension and debarment was checked prior to entering into the covered transactions. Cause: There is a misunderstanding that costs that are not directly procured for a federal program may be subject to suspension and debarment checks and a misunderstanding that the full contract cost should be considered when determining if a contract is a covered transaction. There is inadequate document management for historic paper files. There are different processes implemented across the various Divisions, which results in inconsistent application of compliance requirements and controls. Effect: Increased possibility of entering into a covered transaction with vendors/contractors who are federally suspended or debarred or to procure goods and services that are less-than-ideal for the program needs. Repeat Finding: 2024-001 Recommendation: CLA recommends performing suspension and debarment checks on all vendors that may be paid for (even if only in part) with federal funds, if the full value of the contract is likely to exceed $25,000. Additional checks should be performed on a regular basis (recommended annually) so that changes to vendor status are caught timely. This may require modification to organizational policies and training amongst staff who perform procurement activities. CLA also recommends that a consistent procurement process and documentation location be used across all Divisions to ensure documentation to support procurement decisions is accessible and maintained. Updated procurement decisions should be documented at the initiation of any new procurements, as well as before entering into any substantial amendments to existing contracts/agreements. Views of responsible officials: There is no disagreement with the audit finding.
Procurement Federal Agency: U.S. Department of the Treasury Federal Program Name: Coronavirus Capital Projects Fund (CCPF) Assistance Listing Number: 21.029 Federal Award Identification Number and Year: NOW-20005 - 2025 Pass-Through Agency: Rhode Island Department of the Treasury Pass-Through Number: NOW-20005 Award Period: August 2, 2023 – October 30, 2026 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Repeat Finding: No Criteria or specific requirement: Per Uniform Guidance §200.318 General procurement standards, a non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Condition: The Town of Smithfield does not have a written conflict of interest policy in place for the selection, award, and administration of contracts as required by Uniform Guidance. Questioned Costs: None Context: Although the Town does not have a written conflict of interest policy in place for the selection, award, and administration of contracts, we did not identify transactions where contracts were awarded where there appeared to be a conflict of interest in the procurement process in 3 of 3 procurement transactions tested. Cause: Management was not aware of the procurement standards set out at 2 CFR section §200.318 within Uniform Guidance. Effect: The Town is at risk for noncompliance with Federal grants as it relates to procurement. Recommendation: We recommend the Town implement a written conflict of interest policy in line with Uniform Guidance §200.318. Views of Responsible Officials: Management agrees with this finding.
Condition The Institute does not have a written procurement policy. Additionally, the Institute does not perform suspension and debarment verification (e.g., checking the System for Award Management (SAM.gov) or equivalent excluded parties list) prior to entering into contracts or agreements with vendors, contractors, or subrecipients. Criteria Organizations that receive federal funding are generally required, under 2 CFR § 200.318–200.327 (Uniform Guidance), to: • Maintain written procurement procedures that conform to applicable federal, state, and local laws; • Ensure procurement transactions are conducted in a manner providing full and open competition; • Verify that contractors and subrecipients are not suspended, debarred, or otherwise excluded from participating in federal programs, per 2 CFR § 200.214 and 2 CFR Part 180. Cause The Institute has not formalized its procurement practices in a written policy and staff is not currently required to check suspension and debarment status as part of the vendor selection or contracting process. Effect Without a written procurement policy, the Institute lacks a consistent, auditable standard for procurement decisions, increasing the risk of non-compliance, favoritism, or inconsistent practices across departments. The absence of suspension and debarment checks creates risk that the Institute could enter into agreements with parties who are legally excluded from receiving federal funds, potentially resulting in disallowed costs, reputational harm, or loss of funding. Recommendation The Institute should develop and formally adopt a written procurement policy that addresses methods of procurement, competition requirements, documentation standards, and conflict-of-interest provisions consistent with 2 CFR § 200.318–200.327. The Institute should also implement a documented procedure requiring suspension and debarment verification (via SAM.gov or equivalent) for all vendors, contractors, and subrecipients prior to contract execution, and retain evidence of this check in procurement files. Views of Responsible Officials and Planned Corrective Actions Management agrees with the finding and recommendation. The Institute is formalizing its procurement practices in a written procurement policy consistent with applicable Uniform Guidance requirements. The policy addresses procurement methods, competition, documentation, conflicts of interest, and suspension and debarment requirements for procurements in accordance with federal regulations. The Institute contracted with Visual Compliance to assist with verifying vendors against all available U.S. debarred and suspended lists before entering into covered contracts or agreements with vendors, contractors, or subrecipients. The Institute has developed and approved a Suspension and Debarment policy and staff are required to check suspension and debarment status as part of the vendor selection or contracting process. The Institute is developing a written procurement policy. Evidence of the verification will be retained with the applicable procurement or agreement documentation.
Material Weakness Finding No. 2025-003: Procurement Policies U.S. Department of Health and Human Services Substance Abuse and Mental Health Services Federal Assistance Listing Number 93.243. U.S. Department of Health and Human Services Health Care for Native Hawaiians Federal Assistance Listing Number 93.932. Criteria The Uniform Guidance 2 CFR §200.320 sets forth the methods of procurement to be followed in the acquisition of property or services required under a Federal award or subaward, which includes formal purchase methods such as proposal or bids when the value of the property or services under a Federal financial assistance award exceeds a certain threshold, as defined. Furthermore, 2 CFR §200.320(c) provides specific circumstances in which noncompetitive procurement can be used. Condition During our audit, we noted that the Organization made subawards to entities which were subject to a formal purchase method, for which competitive processes for selection were not performed, nor was documentation of the specific criteria of 2 CFR §200.320(c) met to support noncompetitive procurements maintained. Cause Management had not updated its policies and procedures to incorporate certain pertinent sections of the procurement standards of the Uniform Guidance.Effect The lack of procurement standards in accordance with the Uniform Guidance may result in allowable cost issues. Identification of a Repeat Finding This finding was reported as a federal award finding in the immediately previous audit as Finding No. 2024-003. Recommendation We again recommend that the Organization incorporate the procurement standards of the Uniform Guidance to its policies and procedures manual to ensure compliance with Federal standards, including 2 CFR §200.318(h) which stipulates that sufficient detail of the history of the procurement must be maintained, including the selection of the contractor. Views of Responsible Officials and Corrective Action The Organization acknowledges incorporation of the procurement standards of the Uniform Guidance to its policies and procedures to ensure compliance with Federal standards, including 2 CFR §200.318(h). The Organization concurs with the prior year (2024-003) and current year renumbered recommendation (2025-003), and highlights its ongoing progressive and corrective implementation of policy and process actions. For context, the Organization’s progressive and corrective actions as of the fiscal year ended (FYE) June 30, 2024 report included the following:A. Financial Policies – May 2025. Completed financial policies related to: implementation of significant accounting policies, internal control environment, cash and banking, cash disbursements and check issuance, payroll processes, procure to pay and revenue recognition policies, processes and procedures. In addition, when applicable, documenting procurement circumstances, processes, decisions and CEO approval was implemented via memo(s) to the procurement file (MTPF). B. Procurement Related Processes – May 2025. Initiated use of MTPF, and process implementation of Request(s) for Professional Services Qualifications, Request(s) for Professional Services, Request(s) for Proposal. C. HRSA Policies – July 2025. Developed HRSA related policies re: implementation of HRSA policies; executive performance evaluation, non-executive performance evaluation, executive compensation, non-executive compensation, timesheets, suspension & debarment procedure, financial management system, legislative mandates, legislative mandates process & procedure and cash management for federal draws and return of funds.D. Board Policy Provision & Awareness – August 2025. Informed the Board about the progress of the Organization’s policy framework, including the above policies. For the year ended June 30, 2025, to the period of the audit report date, the Organization continued the prospective implementation of the above policies and processes, including the following reflective contract review work by the Organization: A. Reviewed all contracts executed between July 1, 2024 to June 30, 2025. B. Discussed with respective program director(s), the application of initiation, consideration, decision, documentation and monitoring phased activities. C. Worked with respective program director(s) to document in memorandum(s) to file (MTF), the basis for decision and documentation on a contract-by-contract basis. D. Initiated work with respective program contract monitors to implement and document consistent Organization wide contract monitoring processes and activities (e.g., contract, term, billing, deliverables, eligible expenditures, data input, frequency). E. Updated procurement processes for emergency disaster recovery and support of community needs, including MTF documentation. Although as of June 30, 2025 the implementation of the resolution was not completed, the implementation continues and is expected to be fully implemented by the next audit report date.
2025-003 Improve Controls Over Special Education Procurement Federal Agency: U.S. Department of Education Program: Special Education Grants to States AL Number: 84.027/84.173 Award Year: 2025 Type of Finding Compliance – Procurement Internal Control over Compliance – Procurement – Significant Deficiency Criteria or Specific Requirement Under 2 CFR 200.318 and 200.320, non-federal entities are required to maintain adequate documentation supporting procurement decisions, including the method of procurement used; and justify and document the use of noncompetitive (sole source) procurement, including the reasons why competition was not feasible. Specifically, 2 CFR 200.320(c) permits noncompetitive procurement only under limited circumstances and requires proper justification and documentation. Condition and Context During testing of procurement transactions charged to the Special Education Grants to States program, we identified one instance in which the School Department utilized a sole source procurement method; however, no documentation was maintained to support or justify the determination that the vendor qualified as a sole source provider, in accordance with 2 CFR 200.320(c). Cause The School Department does not have sufficient internal controls in place to ensure that sole source determinations are appropriately evaluated and documented against Uniform Guidance criteria. Effect or Potential Effect The lack of documentation supporting sole source procurement increases the risk that procurement may not comply with federal requirements, competitive procurement processes may be inappropriately bypassed; and federal funds may not be used in a manner that ensures full and open competition. Questioned Costs No evidence of improper payment or unallowable costs was identified; therefore, no questioned costs are reported. Recommendation We recommend that the School Department develop and implement formal procedures requiring written justification for all sole source procurements. Ensure documentation clearly addresses the criteria under 2 CFR 200.320(c). Implement a review process to verify that procurement files include all required documentation prior to payment, and provide training to relevant personnel on federal procurement requirements under Uniform Guidance. Views of Responsible Official and Planned Corrective Action Management’s corrective action plan is included at the end of this report.
FA 2025-002 Improve Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Procurement and Suspension and Debarment Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education Assistance Listing Numbers and Titles: 10.553 – School Breakfast Program; 10.555 – National School Lunch Program Federal Award Number: 255GA324N1199 (Year: 2025) Questioned Costs: $40,701 Description: A review of expenditures charged to the Child Nutrition Cluster revealed that the School District’s internal control procedures were not operating appropriately to ensure that expenditures were appropriately reviewed, approved, and documented. Background: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential childcare institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding is granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture, and GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $9,655,237 were expended and reported on the Liberty County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2025. Criteria: As a recipient of federal awards, the School District is required to establish, document, and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following criteria to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the recipient or subrecipient… (g) Be adequately documented, (h) Cost must be incurred during the approved budget period…” Additionally, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state, “(a)… the recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations… (b) Recipients and subrecipients must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.” In addition, provisions included in the Uniform Guidance, Section 200.320 – Procurement Methods provide guidance for informal procurement methods and state “If simplified acquisition procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources.” Condition: A sample of 23 expenditures was randomly selected for testing using a nonstatistical sampling approach. These transactions were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The following deficiencies were noted: • For four expenditures, evidence of review and approval was not reflected within the voucher package. • The School District could not provide evidence that an adequate number of rate or price quotations were obtained from qualified sources or documentary evidence as justification for single source procurement for three small purchase expenditures. • The School District could not provide evidence that an adequate number of sealed bids or proposals were obtained from qualified sources or documentary evidence as justification for single source procurement for three simplified acquisition expenditures. • Two expenditures were not recorded in the correct fiscal year. Questioned Costs: Upon testing a sample of $1,659,140 in expenditure transactions, known questioned costs of $40,701 were identified. Using the total population of $5,920,045 in expenditure transactions, we project the likely questioned costs to be approximately $145,228. The following Assistance Listing Numbers were affected by known and likely questioned costs: 10.553 and 10.555. Cause: In discussing these deficiencies with the School District, they believe these issues are primarily due to employee turnover, the lack of proper documentation and not following its policies and procedures that govern the procurement process for federal programs. Effect: The School District was not in compliance with the Uniform Guidance or GaDOE guidance related to the Child Nutrition Cluster. Failure to ensure that expenditures are reviewed, approved, and documented appropriately and follow proper procurement procedures exposes the School District to unnecessary risk of error and misuse of federal funds. Additionally, failure to ensure that appropriate documentation exists to support the allowability of payments associated with the CNC fund may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with improperly documented expenditures. Recommendation: The School District should review current internal control procedures related to Child Nutrition Cluster expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures reflect evidence of review and approval prior to payment and follow appropriate procurement procedures. In addition, all expenditure voucher packages and procurement documentation should be maintained on-file according to the School District’s record retention policy and should contain all required components. Furthermore, management should develop and implement a monitoring process to ensure that controls are operating appropriately. Views of Responsible Officials: We concur with this finding.
FA 2025-001 Improve Controls over Expenditures Compliance Requirements: Procurement and Suspension and Debarment Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: None Assistance Listing Number and Title: 93.243 – Substance Abuse and Mental Health Services Projects of Regional and National Significance Federal Award Number: H79SM088573 (Year: 2025) Questioned Costs: $80,321 Description: A review of expenditures charged to the Substance Abuse and Mental Health Services Projects of Regional and National Significance program revealed that the School District’s internal control procedures were not operating appropriately to ensure that the School District’s procurement and suspension and debarment procedures were followed. Background: The Substance Abuse and Mental Health Services Projects of Regional and National Significance (SAMH) program provides funds for the purpose of increasing student access to evidence-based and culturally relevant trauma support services and mental health care by developing innovative initiatives, activities, and programs to link local school systems with local trauma-informed support and mental health systems, including those under the Indian Health Service. SAMH funding is granted to Liberty County Board of Education by the U.S. Department of Health and Human Services. SAMH funds totaling $995,591 were expended and reported on the Liberty County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2025. Criteria: As a recipient of federal awards, the School District is required to establish, document, and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state, “(a)… the recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations… (b) Recipients and subrecipients must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.” In addition, provisions included in the Uniform Guidance, Section 200.320 – Procurement Methods provide guidance for informal procurement methods and state “If simplified acquisition procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. Furthermore, Title 2 CFR Section 180.300 states in part that the recipient or subrecipient must “verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person.” Condition: A sample of 17 expenditures was randomly selected for testing using a nonstatistical sampling approach. These transactions were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The following deficiencies were identified: • One expenditure did not reflect evidence of supervisory review. • The School District could not provide evidence that an adequate number of rate or price quotations were obtained from qualified sources or documentary evidence as justification for single source procurement for one simplified acquisition expenditure reviewed. • For two expenditures, documentation could not be provided to support the entity’s verification that the vendor was not suspended or debarred or otherwise excluded from participating in the transaction. Questioned Costs: Upon testing a sample of $127,714 in expenditure transactions, known questioned costs of $80,321 were identified. Using the total population of $630,037 in expenditure transactions, we project the likely questioned costs to be approximately $396,237. The following Assistance Listing Numbers were affected by known and likely questioned costs: 93.243. Cause: In discussing these deficiencies with the School District, they believe these issues are primarily due to the lack of proper documentation and not following its policies and procedures that govern the procurement process for federal programs. Effect: The School District was not in compliance with the Uniform Guidance. Failure to ensure that expenditures are appropriately approved and implement procedures to address procurement and suspension and debarment compliance requirements exposes the School District to unnecessary risk of error and misuse of federal funds and could result in the expenditure of federal funds for unallowable purposes and/or with unqualified vendors. In addition, this deficiency could lead to the return of grant funds associated with unallowable expenditures. Recommendation: The School District should evaluate and improve internal control procedures to ensure that expenditures are reviewed and approved prior to payment, that required procurement methods are properly identified and followed and required procurement and suspension and debarment documentation is properly identified, safeguarded, and retained. In addition, management should develop a monitoring process to ensure that these procedures are operating appropriately. Views of Responsible Officials: We concur with this finding.
Procurement Federal Agency: Department of Housing and Urban Development Federal Program: Economic Development Initiative, Community Project Funding, and Miscellaneous Grants Assistance Listing Number: 14.251 Award Period: February 5, 2024 – August 31, 2031 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matter Criteria or specific requirement: 2 CFR §§200.318–200.326 require entities to maintain records supporting the procurement method, vendor selection, and basis for price. Condition: Of four procurement transactions tested, one lacked sufficient documentation to demonstrate compliance with Uniform Guidance procurement requirements. Questioned costs: None. Context: We tested four procurement transactions within the major program; one transaction did not include sufficient supporting documentation to demonstrate compliance. Cause: Controls over procurement documentation and review were not consistently applied. Effect: Noncompliance occurred for the transaction tested, increasing the risk of undetected noncompliance and questioned costs. Repeat finding: No. Recommendation: We recommend the Organization strengthen controls to ensure procurement documentation is consistently obtained, retained, and reviewed for compliance. View of responsible officials: There is no disagreement with the audit finding.
Finding 2025-001 – COVID 19 – Coronavirus State and Local Fiscal Recovery Fund - AL No. 21.027 U.S. Department of Treasury Norfolk County Noncompliance and Material Weakness Related to Internal Control over Compliance of the Major Program Criteria: Non‐federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. Condition: During our testing as it related to compliance with procurement we noted that an expense for engineering services for the Well #10 Permitting Project services charged to the major program would have required a formal bidding process as the project exceeded the simplified acquisition threshold of $250,000. Context: The Town had a ARPA project 1123 for well#10 permitting project that they relied on a request for qualifications from 2011 for engineering services related to Town wide drinking water. The Well#10 project was submitted on 12/20/22 for approval by Norfolk County. It is the auditor’s professional judgment that separate procurement procedures should have been performed as the RFQ was approximately 11 years old and this was a new project. Although services are exempt under State procurement requirement, Federal Procurement rules would have required procurement procedures. Under Federal Procurement requirements expenses of $250,000 or more require a formal bid process. As the project costs and estimates at the time of the project exceeded $250,000, the Town should have performed formal bid procedures for this service. Questioned Costs: Based on vendor expenses charged to the grant in FY 2025 the total questioned costs were $54,060.65. Cause: The noncompliance occurred because the organization mistakenly relied on Massachusetts Chapter 30B exemptions, which govern state and local procurements, and did not recognize the need to comply with the more stringent federal procurement requirements for federal fund usage. Staff members were not sufficiently aware of the specific requirements under 2 CFR Part 200 and the precedence of federal procurement regulations over state law in this context. Effect or Potential Effect: There is a risk that the amounts charged to the federal awards major program may not be in accordance with procurement, suspension, and debarment principles. Identification as a Repeat Finding: 2024-002 Recommendation: Going forward, the Town of Bellingham should consider a separate bidding process for expenses related to federal grant awards. Management Response: We acknowledge the audit finding regarding our reliance on Massachusetts Chapter 30B exemptions for procurement involving federal funds. We understand that federal procurement regulations under 2 CFR Part 200 take precedence over state law and that we failed fully to comply with federal requirements for competitive bidding, sole-source justification, and documentation. We are committed to addressing this issue by reviewing our procurement policies to clearly differentiate between state and federal requirements, ensuring that federal standards govern all procurement involving federal funds. We will provide additional training to staff, implement stronger documentation procedures, and review past procurement to ensure full compliance moving forward.
FINDING 2025-005 Subject: Special Education Cluster (IDEA) - Condition of Records Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 23611-051-PN01,24611-051-PN01, 22611-051-ARP, 23619-051-PN01, 25619-051-PN01, 22619-051-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Matching, Level of Effort, Earmarking; Period of Performance; Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation received reimbursements totaling $12,668,761 from the Special Education Cluster (IDEA) federal awards during the audit period. The reimbursements were associated with six separate federal awards, each of which was required to be accounted for in a separate fund within the School Corporation's financial management system. Expenditures were to be made in accordance with the approved grant applications and budgets, with reimbursement requests subsequently submitted to the Indiana Department of Education (IDOE). The School Corporation was responsible for maintaining detailed disbursement ledgers for each grant fund to support the amounts claimed for reimbursement. As is typical with reimbursement-based grants, the ending cash and investment balances of each grant fund were expected to reflect overdrawn balances until the subsequent reimbursements were received from the IDOE. The $12,668,761 received in the Special Education Cluster (IDEA) funds during the audit period was based on 23 reimbursement requests for expenditures incurred. Based on our review of grant fund records and inquiry with management, we identified the following deficiencies: The reimbursement requests for the reimbursements received during the audit period included dates of July 1, 2021 to March 31, 2025. It was not easily determined what was requested for reimbursement for the earlier dates due to the School Corporation including in the "Dates Included in this Request" section descriptions such as "Entire Grant Period" and "Start to March 21, 2025". The supporting documentation with the reimbursement requests did not always have detail or specifically state which disbursements were included in the amount for the request. Several had documentation that showed detail for a period of time then a calculation was done to subtract what was previously requested for reimbursement. The total received in reimbursements was $12,668,761. The total detailed disbursement ledgers for the population that could be determined reflected total expenditures of $15,894,839. This resulted in $3,226,078 in disbursements in excess of what the School Corporation requested for reimbursement. Of the six federal awards reported on the Schedule Expenditures of Awards, four reached the award's performance end date, and of those four, three reported a Grant Balance After Reimbursement on the last Reimbursement Form. o Grant 23619-051-PN01 reported a Grant Balance After Reimbursement of $1,367 on February 26, 2024. The dates included in this final request were "01/01/24 - 01/31/24." INDIANA STATE BOARD OF ACCOUNTS 29 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) o Grant 22611-051-ARP reported a Grant Balance After Reimbursement of $55,581 on December 15, 2023. The dates included in this final request were "06/01/23 - 09/30/23." o Grant 22619-051-ARP reported a Grant Balance After Reimbursement of $82,677 on December 13, 2023. The dates included in this final request were "Entire Grant Period." Of the 23 reimbursement requests submitted, only 10 were supported by detailed disbursement ledgers that agreed with the dates and amounts claimed. The remaining 13 reimbursement requests could not be directly reconciled to the supporting documentation provided. Upon further inquiry with management, additional information was provided; however, these records lacked sufficient detail, such as transactions, reasons for overspending, and which transactions were not requested for reimbursement due to overspending. Due to the deficiencies noted above, the School Corporation was unable to provide sufficient appropriate evidence for us to determine populations, and, therefore, audit and base an opinion on the compliance requirements subject to audit that were determined to have a direct and material effect on the program. As a result, the $12,668,761 in reimbursements received during the audit period were considered questioned costs. The lack of internal controls and noncompliance were material and systemic throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302 states in part: "(a) . . . the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. See also § 200.450. (b) The financial management system of each non-Federal entity must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): INDIANA STATE BOARD OF ACCOUNTS 30 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . . (3) Records that identify adequately the source and application of funds for federallyfunded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income, and interest and be supported by source documentation. (4) Effective control over, and accountability, for all funds, property, and assets. The non- Federal entity must adequately safeguard all assets and ensure that they are used solely for authorized purposes. See § 200.303. (5) Comparison of expenditures with budget amounts for each Federal award. (6) Written procedures to implement the requirements of § 200.305. (7) Written procedures for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the Federal award." 2 CFR 200.1 states in part: "Questioned cost means a cost that is questioned by the auditor because of an audit finding: (1) Which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for funds used to match Federal funds; (2) Where the costs, at the time of the audit, are not supported by adequate documentation; or (3) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. (4) Questioned costs are not an improper payment until reviewed and confirmed to be improper as defined in OMB Circular A-123 appendix C. (See also the definition of Improper payment in this section)." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. INDIANA STATE BOARD OF ACCOUNTS 31 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." 2 CFR 200.1 states in part: ". . . Financial obligations, when referencing a recipient's or subrecipient's use of funds under a Federal award, means orders placed for property and services, contracts and subawards made, and similar transactions that require payment. Period of performance means the total estimated time interval between the start of an initial Federal award and the planned end date, which may include one or more funded portions, or budget periods. Identification of the period of performance in the Federal award per § 200.211(b)(5) does not commit the awarding agency to fund the award beyond the currently approved budget period. Unliquidated financial obligations means, for financial reports prepared on a cash basis, financial obligations incurred by the non-Federal entity that have not been paid (liquidated). . . ." 2 CFR 200.309 states: "If a Federal awarding agency or pass-through entity approves an extension, or if a recipient extends under § 200.308(e)(2), the Period of Performance will be amended to end at the completion of the extension. If termination occurs, the Period of Performance will be amended to end upon the effective date of termination. If a renewal award is issued, a distinct Period of Performance will begin." 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. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." INDIANA STATE BOARD OF ACCOUNTS 32 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause The School Corporation experienced turnover in key personnel over the federal program which contributed to the lack of appropriate supporting records. A proper system of internal controls was not designed to ensure continuity of policies, procedures, and records when personnel transitions occurred. Effect Noncompliance with the grant agreement and the compliance requirements could result in the repayment of federal funds. Questioned Costs We identified $12,668,761 in questioned costs as noted in the Condition and Context. Recommendation We recommended that the School Corporation's management develop policies and procedures to ensure continuity of school records during a personnel change, and that all reimbursement requests are properly supported by detailed records. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-013 Subject: Gaining Early Awareness and Readiness for Undergraduate Programs - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Gaining Early Awareness and Readiness for Undergraduate Programs Assistance Listings Number: 84.334 Federal Award Number and Year (or Other Identifying Number): P334A210080 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context 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 micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. When the value of the procurement for property or services exceeds the simplified acquisition threshold, formal procurement methods are required. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. The School Corporation did not have internal controls in place to ensure it complied with the procurement compliance requirement for small purchase and simplified acquisition procurement methods. During the audit period, the School Corporation paid 40 vendors from the Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP) that fell into the small purchase threshold. Of those 40 vendors 3 vendors were tested. All 3 vendors did not have any rate quotes from qualified sources. The total dollar amount paid to these three vendors was $156,175. INDIANA STATE BOARD OF ACCOUNTS 47 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation had two vendors during the audit period, which exceeded the simplified acquisition threshold that were paid from the Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP). Both vendors were tested and it was determined that the School Corporation did not follow the formal procurement method of sealed bids or competitive proposals, nor was a circumstance documented that would have allowed for noncompetitive procurement for the purchases. The total dollar amount paid to these vendors was $724,290. In addition, the School Corporation did not follow its own purchasing policy #6325, in which the School Corporation had set a threshold of $3,500 for small purchases. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.320 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. INDIANA STATE BOARD OF ACCOUNTS 48 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (ii) Simplified acquisition thresholds. 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. (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. . . . (2) Proposals. A procurement method in which either a fixed price or costreimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." Cause A proper system of internal controls was not implemented by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to affect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper design or implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, procurement procedures for goods and services were not adhered to for vendors that fell within the small purchase and the exceeded simplified acquisition thresholds. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish and implement an effective internal control system over small purchases and purchases exceeding the simplified acquisition threshold to ensure compliance with federal grant requirements. Appropriate documentation should be maintained to ensure the procurement methods are being followed. INDIANA STATE BOARD OF ACCOUNTS 49 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-018 Subject: Teacher and School Leader Incentive Grants (formerly the Teacher Incentive Fund) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Teacher and School Leader Incentive Grants (formerly the Teacher Incentive Fund) Assistance Listings Number: 84.374 Federal Award Number and Year (or Other Identifying Number): S374A200039 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context 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. When the value of the procurement for property or services exceeds the simplified acquisition threshold, formal procurement methods are required. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. The School Corporation did not have internal controls in place to ensure it complied with the procurement requirement for small purchase and simplified acquisition procurement methods. During the audit period, the School Corporation paid 22 vendors with Teacher and School Leader Incentive Grants (formerly the Teacher Incentive Fund) that fell into the small purchase threshold. There were 4 vendors were tested. For all 4 vendors tested, the School Corporation could not provide the procurement history or the rationale for the method of procurement, selection of vendors, and basis for price. The total dollar amount paid to these four vendors was $206,756. The School Corporation had 1 vendor during the audit period which exceeded the simplified acquisition threshold that was paid from Teacher and School Leader Incentive Grants (formerly the Teacher Incentive Fund). This vendor was tested and it was determined that formal procurement methods were not followed. The total amount paid to this vendor was $305,034. In addition, the School Corporation did not follow their own purchasing policy #6325, in which the School Corporation had set a threshold of $3,500 for small purchases. INDIANA STATE BOARD OF ACCOUNTS 58 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. We identified 11 transactions during the audit period that equaled or exceeded $25,000 and were therefore determined to be covered transactions. Of the 11 transactions, 4 were selected for testing. The School Corporation was unable to provide current documentation that the vendor's suspension and debarment status was verified for 2 of these transactions. The total dollar amount spent with these 2 vendors was $82,105. There were multiple Directors over the Teacher and School Leader Incentive Grants (formerly the Teacher Incentive Fund) during the audit period. At the time the audit was performed, no previous Directors were employed with the School Corporation and there were no current employees that were knowledgeable of the grant and its requirements. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.320 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: . . . INDIANA STATE BOARD OF ACCOUNTS 59 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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. (ii) Simplified acquisition thresholds. 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. (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. . . . (2) Proposals. A procurement method in which either a fixed price or costreimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." INDIANA STATE BOARD OF ACCOUNTS 60 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not implemented by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to affect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of preventing, or detecting and correcting, noncompliance. As a result, the School Corporation did not comply with the simplified acquisition or small purchase procurement requirements or the suspension and debarment requirements of the federal award. By not properly completing the procurement process, the School Corporation could have overpaid for the goods or services that were procured. Additionally, the School Corporation could have made payment to a vendor that was suspended or debarred. Payments to such vendors are unallowable. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management develop policies and procedures to ensure continuity of school records during a personnel change. We also recommend that the School Corporation establish and implement an effective internal control system over procurement and suspension and debarment to ensure compliance with federal grant requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2025-006 – Procurement and Suspension and Debarment: Inadequate Documentation of Competitive Bidding Procedures – Noncompliance and Significant Deficiency in Internal Control Over Compliance; Agencies – Department of Health and Human Services, National Science Foundation, National Institutes of Health, National Aeronautics and Space Administration, Department of Agriculture; Assistance Listing Numbers (ALN) - 93.859, 47.083, 47.050, 93.310, 43.008, 10.699, 47.078; Program Name - Research and Development Cluster; Award Year / Award Number – FY 2025, 2024, 2023, 2022, 2021, 2020 / Awards ANTHC- 23-U-396186; 5U24GM146576-02; 2049596; 2243258; ICER 2040729, Subaward 15660316; FIAN 2220560; ICER 1928230; Subaward 1558528; ICER 2052107; 2127346; 2309480; 80NSSC20M0070; 80NSSXC20M0070; 80NSSC24M0179, 24-MIRO-0054;1333MF4P0220; 18-JV-11261944-100; 2325081; 2419971, subaward 24-S37; Criteria or Specific Requirement – 2 CFR 200.318 and 2 CFR 200.320 require recipients of federal awards to maintain sufficient records to document the history of procurement transactions, including the procurement method used, bids or proposals received, contractor selection or rejection, and the basis for contract price, as applicable.; Condition – For one procurement tested, APU did not retain documentation showing that bids were solicited, received, and evaluated before vendor selection. As a result, we could not determine whether the appropriate procurement method was used or whether adequate competition was obtained for that transaction.; Cause – Management did not have formal procurement policies and procedures requiring documentation of competitive bidding and vendor selection to be retained in the procurement file for all applicable transactions.; Effect or Potential Effect – Without sufficient procurement documentation, management may not be able to demonstrate that the appropriate procurement method was used or that adequate competition was obtained for covered transactions.; Questioned Costs - None reported.; Context – We selected three procurements totaling $267,870 out of a total of 5 procurements totaling $369,307 made during the year. We identified one exception totaling $18,000.; Repeat Finding – This is not a repeat finding.; Recommendation - We recommend that management strengthen procurement procedures to require documentation of the procurement method used, bids or proposals received, evaluation of vendor responses, and vendor selection rationale to be retained in the procurement file.; Views of Responsible Officials – Management concurs with the finding and is strengthening procedures to ensure bidding and vendor selection documentation is retained.
2025-009 – Procurement Suspension and Debarment – Material Weakness in Internal Controls over Compliance and Material Noncompliance Department of Education Federal Assistance Listing Number: 84.031 Federal Program Name: Higher Education Institutional Aid Federal Award Number: P031S210057, P031C210038 Award Year: 2024-25, 2023-24, 2022-23, 2021-22 Criteria – Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR 200.318 through 200.327. Non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR 180.220 Condition/context – Out of a sample of 2 procurement transactions selected for testing, for 1 transaction management was unable to provide supporting documentation for a signed contract, review and approval of purchase, or that the correct procurement policies were followed based on the contract value. Additionally, the University was unable to provide support that either vendor was reviewed for suspension and debarment prior to contract approval. Our sample was not, and was not intended to be, statistically valid. Questioned costs – The University asserted that the amount charged to the grant for the contractor was $63,174 however we were unable to obtain a signed contract or verify the total disbursements for the year. Cause/effect – The University does not have the proper controls in place to ensure procurement transactions adhere to the standards set out in 2 CFR 200.318 through 200.327, or to ensure covered transactions are being reviewed in accordance with 2 CFR 180.220. The lack of controls increases the risk of the University entering into transactions that do not meet the applicable standards, or with entities who may be suspended or debarred from receiving payments from federal funds. Repeat finding – No Recommendation – We recommend the University review their current control policies and procedures, and ensure controls are designed and implemented that satisfy the requirements outlined in 2 CFR 200.318 through 200.327 and 2 CFR 180.220. Views of responsible officials and planned corrective actions – Heritage University agrees with the recommendation and is reviewing its current procurement policies, procedures, and internal controls as they relate to purchases made with federal funds.
Material weakness in internal controls over compliance and instances of noncompliance related to procurement. Federal Agency: U.S. Department of Treasury Program Titles: Coronavirus State and Local Fiscal Recovery Fund Assistance Listing Number: 21.027 Award Number: EL-23-AR-47-048; HCS-24-AR-2107-048 Project Period: July 1, 2023 - June 30, 2026 Criteria Under 2 CFR § 200.318, a recipient must maintain and use documented procedures for procurement transactions under a federal award or subaward that are consistent with the standards identified under Uniform Guidance. In addition, recipient must maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price. Condition/Context for Evaluation During the audit for the year ending June 30, 2025, it was noted that the Agency's procurement policy was not in compliance with Uniform Guidance. In addition, there were two selections out of four selections when the Agency was not following its own procurement policy. This is not considered a statistical sample. Cause Housing Hope's procurement policy did not include all the requirements outlined in 2 CFR 200.317 through 200.327. Effect or Potential Effect The Agency did not fully comply with the requirements regarding procurement. Questioned Costs Not applicable as finding relates to a policy not being in compliant. Repeat Finding Not applicable Recommendation We recommend that the Agency update their procurement policy to ensure procurement requirements are in line with Uniform Guidance and that proper documentation is retained for all procurements. Views of Responsible Officials of Auditee Management concurs with the finding and has provided the accompanying management corrective action.
2025-005 Finding – Federal Award Type: Material Weakness in Internal Control over Compliance and Noncompliance – Procurement Criteria / Requirement: In accordance with 2 CFR 200.318(a), non-Federal entities must use and maintain documented procurement procedures consistent with applicable Federal standards. 2 CFR 200.318(i) requires recipients to maintain records sufficient to detail the history of each procurement, including the rationale for the method of procurement, contractor selection, and the basis for the contract price. In addition, 2 CFR 200.318(h) requires recipients to award contracts only to responsible contractors possessing the ability to successfully perform under the terms and conditions of the proposed procurement. As part of this responsibility, recipients should verify that contractors are not suspended or debarred from participating in Federal programs prior to awarding a contract. Condition / Context: The Organization did not have a documented procurement policy that addressed the procurement requirements of the Uniform Guidance. During audit testing, one procurement for ecological restoration services was selected for review. We noted that the Organization solicited proposals from multiple qualified vendors and utilized an evaluation methodology to determine the contract award. However, documentation supporting the procurement process was not retained by the Organization. Supporting documentation was obtained through email records maintained by a former employee rather than from the Organization's procurement files. Additionally, the Organization did not maintain documentation demonstrating that the selected contractor had been verified as not suspended or debarred prior to contract award. Cause: The Organization had not established documented procurement procedures or implemented controls to ensure procurement transactions were adequately documented and retained. In addition, procedures were not in place to document verification that contractors were eligible to receive Federal awards. Effect: The lack of documented procurement procedures and supporting procurement records increases the risk that procurement activities may not comply with Uniform Guidance requirements and limits the Organization's ability to demonstrate that contracts were awarded through a fair, competitive, and compliant procurement process. Additionally, failure to document suspension and debarment verification increases the risk of contracting with an ineligible vendor. Questioned Costs: None. Recommendation: We recommend the Organization develop and implement a written procurement policy that complies with the Uniform Guidance procurement standards. The policy should require documentation of each procurement transaction, including the procurement method used, solicitation process, evaluation and selection criteria, contract award decision, basis for contract pricing, and retention of all supporting documentation. In addition, management should implement procedures to verify and document that contractors are not suspended or debarred prior to contract award and retain this documentation within the procurement file. Management’s Response: Management concurs with the finding and will implement effective internal controls over Procurement.
Finding 2025-003 Federal assistance listing number and name: 10.415 Rural Rent Housing Loans Awards numbers and years: 2025 Federal agency: United States Department of Agriculture Compliance Requirement: Procurement Questioned Costs: None Criteria: 2 CFR 200.318(a) requires nonfederal entities to have and use documented procurement procedures, consistent with federal, state, and local requirements, for the acquisition of property or services under a federal award. These procedures must ensure full and open competition and address conflicts of interest Condition and Context: The entity has not established or documented a formal procurement policy or procedures to guide the acquisition of goods and services. No written guidelines were provided during the review period. Cause: The absence of an established procurement policy appears to be due to a lack of prioritization or awareness of regulatory requirements regarding procurement governance. Effect: The lack of a procurement policy increases the risk of non-compliance with applicable procurement laws and guidelines, and reduced accountability and transparency in financial operations. Recommendation: The management should develop, approve, and implement a comprehensive procurement policy in accordance with applicable laws and best practices.
Finding 2025-001 – Procurement (Material Weakness) Repeat Finding: No Federal Agency – National Science Foundation; National Institute of Health Research and Development Cluster Social, Behavioral, and Economic Sciences – Passed through New York University: 47.075, Mathematical and Physical Sciences – Passed through Loyola University of Chicago: 47.049, Biological Sciences: 47.074, Allergy and Infectious Disease Research: 93.855 Federal Award Years: Year Ended May 31, 2025 Condition The College's procurement policy does not reflect all applicable state and local laws and federal regulations. For two out of three (67%) small purchase procurements, there was not sufficient evidence to support that documentation of the noncompetitive procurement method selected was provided at the time of purchase. Criteria Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.327. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. In accordance with 2 CFR sections 200.319 and 200.320(f), price quotations should be obtained from an adequate number of qualified sources for procurements that meet the small purchase procurement threshold or require documentation in support of the rationale to limit competition in those cases where competition was limited. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure the College has a procurement policy that meets the all applicable state and local laws and regulations. Questioned Costs There were no questioned costs related to this finding. Cause The College does not have a procurement policy that follows the procurement standards set out at 2 CFR sections 200.318 through 200.327. Context Two out of three vendors tested. Expenditures totaled $100,553. Effect Lack of a documented procurement policy that meets applicable state and local laws and federal regulations can result in improper procurement of goods and services which can lead to loss of future funding. Recommendation We recommend the College implement a procurement policy that conforms to federal regulations. We also recommend that the College implement policies and procedures around documentation of noncompetitive bidding. Views of Responsible Officials We agree with this finding. See corrective action plan.
Finding 2025‐006 Procurement and Suspension and Debarment Information on the federal program: Federal awarding agency: United States Department of Education (ED) Federal program: School Safely National Activities, Assistance Listing No. 84.184X Award year: 2024‐2025 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR 200.303 requires that a non-federal entity must (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2 CFR 200.318 (i) General Procurement Standards states, “the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.” Condition: The University did not maintain records for procurements sufficient to detail the history of the procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Cause: The University did not have effective internal controls and procedures in place to ensure the University maintained records for procurements sufficient to detail the history of the procurement, including the rationale for the method of procurement and other required elements. Effect or potential effect: The University did not comply with the general procurement standards per the Uniform Guidance to maintain sufficient detail of the history of the procurement, including the rationale of the method of procurement. The University also did not retain evidence of internal controls related to approval of procurements. The performance of internal controls, including approval documentation of the procurement, is necessary to ensure compliance with federal procurement requirements. Questioned costs: $167,398 – Questioned costs were calculated based on the amount of two procurements for which the history of the procurement, including the rationale of the procurement method, was not documented ($73,980 plus $93,418). Context: We issued a material weakness related to internal control over compliance with procurement requirements in the prior year. Based upon the implementation date for the corrective action of May 31, 2025, provided by management, the finding related to this internal control had not been remediated for the period under audit. As such, we did not test the operating effectiveness of this internal control and are issuing a material weakness consistent with the prior year finding. We selected and tested the two procurements in the population over $10,000 with expenditures totaling $167,398 for the year ended May 31, 2025 for the School Safely National Activities program. For these procurements of an occupational therapist contractor ($73,980) and another vendor for supplies and materials ($93,418), the University did not obtain quotes or document sole source justification or the history of the procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. We consider the expenditures related to these procurements to be questioned costs due to lack of supporting documentation for the procurement, as noted above. The University’s total School Safely National Activities program expenditures were $1,310,305 for the year ended May 31, 2025. Of this amount, $262,030 related to procurements of goods and services during the year, of which 2 procurements were over $10,000. Identification as a repeat finding, if applicable: Yes – 2024-004; 2023-004 Recommendation: The University should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services 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. The University should also retain evidence of internal controls, including approval documentation of the procurement, performed prior to entering into procurements. Views of responsible officials: Management agrees with the finding and has developed a corrective action plan in which the University will document the methodology used to select sole source or preferred vendor procurements through completion of the Sole Source/Preferred Vendor Justification Form. The corrective action will be implemented by March 1, 2026.
Noncompliant Procurement Policy Federal Program Information: Funding agency: U.S. Environmental Agency Title: Drinking Water State Revolving Funds AL number: 66.468 Criteria or Specific Requirement: According to 2 CFR §200.318(a), non-Federal entities must use their own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in 2 CFR §200.317 through 2 CFR §200.326. Condition: The Village has a written procurement policy; however, the policy has not been updated to align with the procurement standards under 2 CFR §200.317 through 2 CFR §200.326. Context: We reviewed the procurement policy and compared it to federal requirements. Questioned Costs: None Effect: The use of a noncompliant policy increases the risk that the Village may face sanctions, including, repayment of funds or termination of awards. Cause: Management did not adopt a procurement policy that conforms with the Uniform Guidance requirements. Repeat: No Auditor's Recommendation: We recommend the Village review and update its procurement policy to ensure full compliance with 2 CFR §200.317 through 2 CFR §200.32 View of Responsible Officials: Management acknowledges the finding and has prepared a corrective action plan.
2025-008: Procurement Policy Information on the federal program: 66.468 – Capitalization Grants for Drinking Water State Revolving Fund Environmental Protection Agency (EPA) Passed through Illinois EPA L174235 and C176673 Criteria or specific requirement (including statutory, regulatory, or other citation): 2 CFR 200.318 requires that recipients of Federal awards maintain and use documented procedures for procurement transactions. Condition: We noted that the Village does not have a documented procurement policy in place as required by 2 CFR 200.318. No instances of noncompliance were identified in the procurement transactions tested. Cause: Management has not yet developed or formally adopted procurement policies and procedures consistent with the Uniform Guidance requirements. Effect or potential effect: The lack of a documented procurement policy may result in procurement activities that are not compliant with federal requirements. Questioned costs: None Context: We reviewed procurement practices related to purchases made under federal programs during the audit period. Procurement transactions selected for testing complied with applicable federal requirements. Identification as a repeat finding, if applicable: Not applicable Recommendation: We recommend that the Village develop and adopt a written procurement policy that aligns with the requirements of 2 CFR 200.318–.326 to strengthen internal control over procurement activities. Views of responsible officials and planned corrective actions: A purchasing and procurement policy was created and discussed at the May 2026 finance committee meeting and approved by the board in May 2026.
Congressional Grants - Procurement: Information on Federal Program: U.S. Department of Housing and Urban Development Congressional Grant (Federal Assistance Listing Number 14.251). 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. Statement of Condition: During our discussions with management, we noted that the Organization does not have documented procurement procedures in place. Statement of Cause: The Organization did not review compliance requirements related to procurement outlined in 2 CFR Section 200.318. Statement of Effect: The Organization is not in compliance with 2 CFR Section 200.218. The Organization does not have documented procedures and is therefore not performing required procedures that would be standard for all purchases over a given threshold. Questioned Costs: None. Perspective Information: As part of the required procurement testing, inquiries are made of the Organization’s management as to any procurement policies that the Organization has. Recommendation: We recommend that the Organization review the requirements of 2 CFR Section 200.318 to develop procurement policies to be followed. Views of responsible officials and planned corrective actions: The Capital District YMCA will develop and implement a written procurement policy in accordance with CFR Section 200.318. We will have this in place by July 31, 2025.