Information on Federal Programs: 93.083 – Centers for Disease Control and Prevention: Prevention of Disease, Disability, and Death through Immunization & Control of Respiratory & Related Diseases. Criteria or Specific Requirements: According to 2 CFR §200.303, the non-Federal entity must: establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in Standards for Internal Control in the Federal Government, issued by the Comptroller General of the United States, or the Internal Control Integrated Framework, issued by COSO. Additionally, according to 2 CFR §200.320, the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §200.318 and §200.319. Condition: During the testing of the procurement compliance requirement related to the major programs, it was determined that ATS did not have a documented procurement policy in place for procurement of property or services required under a Federal award. Cause: Management did not have internal control procedures in place to ensure that procurement requirements were adequately followed, documented and retained when Federal awards were obtained. Effect: Failure to have and use documented procurement policies and procedures could have resulted in noncompliance with the Criteria or Specific Requirements section above. Perspective: While ATS did not have documented procurement policies and procedures compliant with 2 CFR §200.320, ATS did establish a documented selection criteria policy for contractors under its Federal program. With this policy ATS created a selection subcommittee to review, evaluate and select contractors. The subcommittee evaluated the applications received and chose the contractors based on several selection criteria. Each contractor’s application was sent for review and approval by prime awardee. Within a random sample of 4 procurement contracts, 4 were selected based on the selection criteria policy established. Questioned Costs: Questioned costs were not identified. Repeat Finding: Not applicable. Recommendation: ATS should update its procurement policy to include requirements for procurement of property or services required under a Federal award or subaward to ensure compliance with the Uniform Guidance.
Criteria or Specific Requirement OMB’s Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (UG) requires that grant recipients follow procurement procedures for the acquisition of property or services under a federal award. Grantees are required to comply with certain procurement standards as defined in 2 CFR 200.318. These standards include the requirement that the grantee must use its own documented procurement procedures provided that they conform to applicable federal law. In addition, the grantee must maintain records sufficient to detail the history of procurement. Condition and Context During planning procedures for our audit, we concluded that the prior year finding over procurement was not yet remediated. Based on our procedures, there was no supporting documentation retained for those transactions subject to procurement and approvals were given verbally between the requestor and the Executive Director. Cause The Organization did not have adequate controls or policies in place to maintain formal evidence of procurement and to ensure the Organization’s procurement policy was adhered to. Effect or Potential Effect Due to the weakness in internal controls and compliance finding noted above, there is a risk that contracts may be awarded to vendors in a manner that is not consistent with Federal procurement requirements and the Organization’s procurement policy. No questioned costs are reported as vendors subject to procurement policies are below $25,000. Recommendation The Organization should address the weaknesses in internal controls noted above in order to ensure that federal procurements are conducted in accordance with federal requirements and supporting documentation is maintained to support such conclusion. The Organization should ensure that prior to entering into transactions, a review is performed over vendor selection and all required documentation is retained. Views of Responsible Official Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.
Criteria or Specific Requirement OMB’s Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (UG) requires that grant recipients follow procurement procedures for the acquisition of property or services under a federal award. Grantees are required to comply with certain procurement standards as defined in 2 CFR 200.318. These standards include the requirement that the grantee must use its own documented procurement procedures provided that they conform to applicable federal law. In addition, the grantee must maintain records sufficient to detail the history of procurement. Condition and Context During planning procedures for our audit, we concluded that the prior year finding over procurement was not yet remediated. Based on our procedures, there was no supporting documentation retained for those transactions subject to procurement and approvals were given verbally between the requestor and the Executive Director. Cause The Organization did not have adequate controls or policies in place to maintain formal evidence of procurement and to ensure the Organization’s procurement policy was adhered to. Effect or Potential Effect Due to the weakness in internal controls and compliance finding noted above, there is a risk that contracts may be awarded to vendors in a manner that is not consistent with Federal procurement requirements and the Organization’s procurement policy. No questioned costs are reported as vendors subject to procurement policies are below $25,000. Recommendation The Organization should address the weaknesses in internal controls noted above in order to ensure that federal procurements are conducted in accordance with federal requirements and supporting documentation is maintained to support such conclusion. The Organization should ensure that prior to entering into transactions, a review is performed over vendor selection and all required documentation is retained. Views of Responsible Official Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.
Uniform Guidance requires written policies for the requirements outlined in 2 CFR 200.302(b)(7), 2 CFR 200.318(c)(1), 2 CFR 200.318(c)(2), 2 CFR 200.320(b)(2), and 2 CFR 200.319(d). The Village does not have written policies in place for the requirements outlined in the Code of Federal Regulations sections referenced above.
Criteria: The Uniform Guidance requires written policies and procedures documenting how the organization determines and complies with the applicable compliance requirements. Condition: BREC does not currently maintain written policies and procedures for determining and documenting the applicable compliance requirements in accordance with 2 CFR 200.318-326. Questioned Costs: None. Cause: Written policies and procedures for the applicable compliance requirements have not been developed. Effect: Written policies and procedures over the applicable compliance requirements are not available to guide staff responsible for federal expenditures. Recommendation: We recommend that BREC develop written policies and procedures for determining and documenting the applicable compliance requirements under the Uniform Guidance. Repeat Finding: No. View of Responsible Official: While BREC currently does not have any federal expenses identified as unallowable costs applicable to this finding, a written SOP was recently developed for determining allowable costs and procurement requirements in accordance with the applicable CFR to guide key finance staff with responsibility for federally eligible expenditures.
United States Department of the Treasury Reference Number: 2023-012 Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds (SLFRF) Federal Award Number: None Assigned Type of Finding: Noncompliance and Significant Deficiency in Internal Controls over Compliance Compliance Requirement: Procurement Condition: During our audit of procurement transactions related to the SLFRF, we noted one instance where the Town acquired precast restrooms at a cost of $339,500, for a park project without a competitive bidding process, as required by federal regulations and the Town’s Purchasing Policy. Criteria: Under 2 CFR §200.318-§200.326, non-federal entities must follow documented procurement procedures that reflect applicable state, local, and tribal laws and regulations, provided those procedures conform to federal standards. The Town has adopted procurement policies requiring competitive bidding for purchases of equipment, materials, or professional services, with an estimated total cost exceeding $25,000 for an individual item/service or an overall contract exceeding $50,000. The policy also requires the documentation of vendor selection and justification. Cause: The Town did not consistently enforce its procurement policies due to turnover in key positions during the year. Effect: The Town was not in compliance with the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) at 2 CFR §200.318-§200.326 and with its own procurement policies. The lack of competitive bidding for purchases, where it is required increases the risk that the Town may not receive the best prices or terms for the goods and services it purchases. Recommendation: We recommend that the Finance Department enhance its processes and oversight surrounding federal and Town procurement requirements. Views of Responsible Town Officials and Planned Corrective Actions: See corrective action plan. Responsible Positions: Town Manager and Director of Finance
2 CFR 200 outlines the following policies required for a County spending Coronavirus State and Local Fiscal Recovery Funds: • 2 CFR 200.302(b)(7) for determining the allowability of costs in accordance with Subpart E-Cost Principles; • 2 CFR 200.430 for allowability of compensation costs; 2 CFR 200.464(a)(2) for reimbursement of relocation costs; • 2 CFR 200.318(c)(1) for employee conflicts of interest; • 2 CFR 200.318(c)(2) for organizational conflicts of interest; • 2 CFR 200.320(b)(2) for selection and awarding of contracts for competitive proposals; • 2 CFR 200.319(d) for minimum evaluation criteria for bids and proposals. During testing we noted that the County did not have sufficient written policies addressing the above requirements. Failure to adopt and implement policies could lead to noncompliance with federal requirements. We recommend the County approve and implement the above policies to ensure compliance with federal requirements.
2 CFR 200 outlines the following policies required for a County spending Coronavirus State and Local Fiscal Recovery Funds: • 2 CFR 200.302(b)(7) for determining the allowability of costs in accordance with Subpart E-Cost Principles; • 2 CFR 200.430 for allowability of compensation costs; 2 CFR 200.464(a)(2) for reimbursement of relocation costs; • 2 CFR 200.318(c)(1) for employee conflicts of interest; • 2 CFR 200.318(c)(2) for organizational conflicts of interest; • 2 CFR 200.320(b)(2) for selection and awarding of contracts for competitive proposals; • 2 CFR 200.319(d) for minimum evaluation criteria for bids and proposals. During testing we noted that the County did not have sufficient written policies addressing the above requirements. Failure to adopt and implement policies could lead to noncompliance with federal requirements. We recommend the County approve and implement the above policies to ensure compliance with federal requirements.
2 CFR 200 outlines the following policies required for a County spending Coronavirus State and Local Fiscal Recovery Funds: • 2 CFR 200.302(b)(7) for determining the allowability of costs in accordance with Subpart E-Cost Principles; • 2 CFR 200.430 for allowability of compensation costs; 2 CFR 200.464(a)(2) for reimbursement of relocation costs; • 2 CFR 200.318(c)(1) for employee conflicts of interest; • 2 CFR 200.318(c)(2) for organizational conflicts of interest; • 2 CFR 200.320(b)(2) for selection and awarding of contracts for competitive proposals; • 2 CFR 200.319(d) for minimum evaluation criteria for bids and proposals. During testing we noted that the County did not have sufficient written policies addressing the above requirements. Failure to adopt and implement policies could lead to noncompliance with federal requirements. We recommend the County approve and implement the above policies to ensure compliance with federal requirements.
2 CFR 200 outlines the following policies required for a County spending Coronavirus State and Local Fiscal Recovery Funds: • 2 CFR 200.302(b)(7) for determining the allowability of costs in accordance with Subpart E-Cost Principles; • 2 CFR 200.430 for allowability of compensation costs; 2 CFR 200.464(a)(2) for reimbursement of relocation costs; • 2 CFR 200.318(c)(1) for employee conflicts of interest; • 2 CFR 200.318(c)(2) for organizational conflicts of interest; • 2 CFR 200.320(b)(2) for selection and awarding of contracts for competitive proposals; • 2 CFR 200.319(d) for minimum evaluation criteria for bids and proposals. During testing we noted that the County did not have sufficient written policies addressing the above requirements. Failure to adopt and implement policies could lead to noncompliance with federal requirements. We recommend the County approve and implement the above policies to ensure compliance with federal requirements.
Assistance Listing, Federal Agency, and Program Name 21.027 U.S. Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year MH 1251 2023 Pass through Entity The Ohio Department of Mental Health and Addiction Services Finding Type Significant deficiency Repeat Finding No Criteria Per 2 CFR 200.320, an entity must have written procurement procedures that address the procurement methods outlined throughout 2 CFR 200.318, 200.319, and 200.320. Condition Controls in place were not adequate to ensure the policy included appropriate procurement thresholds and methods. Questioned Costs N/A If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported N/A Identification of How Questioned Costs Were Computed N/A Context ProMedica did not include all requirements outlined throughout 2 CFR 200.318, 200.319, and 200.320 for procurement methods in their written policy. Cause and Effect ProMedica has written procurement procedures in place, however these policies did not include all requirements outlined throughout 2 CFR 200.318, 200.319, and 200.320. This lack of controls could lead to noncompliance with the Uniform Guidance requirement to have written policies. Recommendation Management should implement controls to ensure all procurement policies align with the guidance in 2 CFR 200.318, 200.319, and 200.320. Views of Responsible Officials and Planned Corrective Actions Management understands the importance of adhering to procurement thresholds and methods. Procurement policies and grant policies will be updated to include federal thresholds and methods to reflect federal Uniform Guidance.
FINDING 2023-004 Subject: Drinking Water State Revolving Fund (DWSRF) Cluster - Procurement and Suspension and Debarment Federal Agency: Environmental Protection Agency Federal Program: Drinking Water State Revolving Fund Assistance Listings Number: 66.468 Federal Award Number and Year (or Other Identifying Number): DW23150901 Pass-Through Entity: Indiana Finance Authority Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not designed or implemented at the City to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement - Policy The City had not established a purchasing policy that reflected applicable state laws and regulations, including procedures to avoid the acquisition of unnecessary or duplicative items and procedures to ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Additionally, the City did not maintain a policy that prohibits the use of statutorily or administratively imposed state, local, or tribal geographical preferences in evaluation of bids or proposals. INDIANA STATE BOARD OF ACCOUNTS 22 CITY OF LOGANSPORT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Procurement - Small Purchases The City expended federal funds to pay 12 separate vendors to provide goods and services for the duration of the City's Lead Service Line Replacement project. A population of 5 vendors had aggregated expenditures for the audit period that were less than the simplified acquisition threshold of $150,000 but exceeded the $10,000 micro-purchase threshold. All 5 vendors were tested; for 2 of the 5 vendors, the City was unable to provide any documentation that the procurement method used was appropriate or that the procurement provided full and open competition or rationale to support the determination to limit competition. The history of the procurement, including rationale for the method of procurement, selection of the vendor, and the basis for the price, was not adequately documented. Suspension and Debarment Prior to entering into subawards and covered transactions with award funds, recipients are required to verify that vendors are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Due to the agreement with the Indiana Finance Authority (IFA), the City was not required to perform testing over suspension and debarment for a majority of the vendors used; however, several drawdowns from the State Revolving Funds (SRF) program were used to reimburse the City for payments made to specific vendors. The vendors paid directly by the City were not included in the IFA's procedures for checking suspension and debarment, therefore, the City was obligated to meet the requirement. The City did not maintain a set of procedures for checking suspension and debarment status of vendors for expenditures related to the SRF awards. A total of two vendors paid directly by the City exceeded the suspension and debarment threshold of $25,000 and were subject to testing. No documentation to show that suspension and debarment was verified prior to entering into the contract could be provided for either vendor. The lack of internal controls and noncompliance was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 23 CITY OF LOGANSPORT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases– (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." 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 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The nonfederal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." INDIANA STATE BOARD OF ACCOUNTS 24 CITY OF LOGANSPORT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.318(d) states: "The non-Federal entity's procedures must avoid acquisition of unnecessary or duplicative items. Consideration should be given to consolidating or breaking out procurements to obtain a more economical purchase. Where appropriate, an analysis will be made of lease versus purchase alternatives, and any other appropriate analysis to determine the most economical approach." 2 CFR 200.319(c) states: "The non-Federal entity must conduct procurements in a manner that prohibits the use of statutorily or administratively imposed state, local, or tribal geographical preferences in the evaluation of bids or proposals, except in those cases where applicable Federal statutes expressly mandate or encourage geographic preference. Nothing in this section preempts state licensing laws. When contracting for architectural and engineering (A/E) services, geographic location may be a selection criterion provided its application leaves an appropriate number of qualified firms, given the nature and size of the project, to compete for the contract." 2 CFR 200.319(d) states: "The non-Federal entity must have written procedures for procurement transactions. These procedures must ensure that all solicitations: (1) Incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Such description must not, in competitive procurements, contain features which unduly restrict competition. The description may include a statement of the qualitative nature of the material, product or service to be procured and, when necessary, must set forth those minimum essential characteristics and standards to which it must conform if it is to satisfy its intended use. Detailed product specifications should be avoided if at all possible. When it is impractical or uneconomical to make a clear and accurate description of the technical requirements, a 'brand name or equivalent' description may be used as a means to define the performance or other salient requirements of procurement. The specific features of the named brand which must be met by offers must be clearly stated; and (2) Identify all requirements which the offerors must fulfill and all other factors to be used in evaluating bids or proposals." Cause The City did not maintain a procurement policy that would demonstrate the appropriate procedures to be followed when procuring with federal funding and were not aware of the need to follow federal guidelines for procurement or suspension and debarment for expenditures associated with the SRF awards. Effect Without a proper system of internal controls in place that operated effectively, noncompliance remained undetected. As a result, proper procurement procedures were not adhered to for all vendors. Without following the required methods for procurement, the City could be overpaying for services or providing federal funds to an entity that is suspended or debarred. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funds to the City. INDIANA STATE BOARD OF ACCOUNTS 25 CITY OF LOGANSPORT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that the City's management establish a proper system of internal controls to ensure expenditures made from federal awards use the appropriate procurement method and retain the documentation to support the procurement methods used in order to ensure compliance with the terms and conditions of the federal award and ensure that vendors paid from federal funds are neither suspended nor debarred. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2023-002 The Town did not have adequate internal controls for ensuring compliance with federal suspension, debarment and procurement requirements, and it did not comply with federal suspension and debarment requirements. Assistance Listing Number and Title: 97.047 Building Resilient Infrastructure and Communities Federal Grantor Name: Department of Homeland Security Federal Award/Contract Number: EMS-2018-PC-001 Pass-through Entity Name: Washington State Military Department Pass-through Award/Contract Number: PDMC-PL-10-WA-2017-003 Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background During fiscal year 2023, the Town spent $642,325 of the Building Resilient Infrastructure and Communities (BRIC) program. The objective of the program is to make federal funds available to local communities for hazard mitigation activities. The Town used the program funds to upgrade and relocate an existing watermain. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Suspension and debarment Federal requirements prohibit recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the Town enters into contracts or purchases goods and services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must 20 Office of the Washington State Auditor sao.wa.gov verify the contractors are not suspended, debarred or otherwise excluded from participating in federal programs. The Town may verify this by obtaining a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at SAM.gov. The Town must verify this before entering into the contract, and must maintain documentation demonstrating compliance with this federal requirement. Procurement Federal regulations require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR 200.318-327. The procedures must reflect the most restrictive of federal, state or local procurement thresholds and methods when using federal funds. Additionally, federal regulations require recipients to maintain written standards of conduct that cover conflicts of interest and govern the actions of employees involved in selecting, awarding or administrating contracts procured with federal funds. Description of Condition Suspension and Debarment Our audit found the Town did not have internal controls to verify two of the three contractors that it paid more than $25,000 in federal funds were not suspended or debarred from participating in federal programs. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Procurement Our audit found the Town’s internal controls were ineffective for ensuring compliance with federal procurement requirements. Although the Town has a procurement policy, it does not conform with federal requirements. Specifically, the Town’s procurement policy does not include methods for procuring architectural and engineering services, public works projects and more, and the thresholds in the policy do not conform with the most restrictive requirements. Further, the Town did not have standards of conduct policies or procedures over conflicts of interest for officers or agents who award contracts, as federal regulations require. We consider this deficiency in internal controls to be a significant deficiency. 21 Office of the Washington State Auditor sao.wa.gov Cause of Condition Suspension and Debarment The Town experienced turnover among key staff, and current staff could not locate documentation to demonstrate compliance with federal suspension and debarment requirements. Procurement The Town does not regularly manage federal funds and as a result, staff were unaware of the requirement to have written standards of conduct and procurement policies or procedures that conform to federal procurement standards. Effect of Condition Suspension and Debarment The Town did not obtain a written certification from the contractors, insert a clause into the contracts, or check for exclusion records at SAM.gov to verify contractors it paid $98,103 using federal funds were not suspended or debarred before contracting with them. Without adequate internal controls, the Town increases its risk of awarding federal funds to contractors that are excluded from participating in federal programs. Any payments the Town made to an ineligible party would be unallowable, and the awarding agency could potentially recover them. We subsequently verified the contractors were not suspended or debarred. Therefore, we are not questioning costs. Procurement Without written policies and procedures that conform to federal procurement standards, the Town is at an increased risk of not complying with the most restrictive of federal, state or local procurement requirements when using federal funds to procure contractors. Although the Town’s procurement policy did not conform to federal procurement standards and it did not have a standards of conduct policy in place, we found the Town complied with federal requirements for soliciting and awarding the architectural and engineering services and public works contracts we tested. 22 Office of the Washington State Auditor sao.wa.gov Recommendation Suspension and Debarment We recommend the Town strengthen its internal controls to verify all contractors it pays $25,000, all or in part with federal funds, are not suspended or debarred from participating in federal programs and maintain documentation demonstrating compliance with this requirement. Procurement We recommend the Town update its procurement policies and procedures and develop written standards of conduct procedures that conform to federal procurement standards in Uniform Guidance (2 CFR 200.318-327). Town’s Response The Town of Coupeville acknowledges SAO’s recommendation regarding the need to strengthen internal controls regarding federal procurement, as well as to update the procurement policy to ensure full compliance with the Uniform Guidance including conflict of interest and ethics sections. In response, the Town is updating procurement contracts with suspension and debarment verbiage and aligning policy with the requirements outlined in the Uniform Guidance (2 CFR 200) ensuring that all procurement processes are conducted in accordance with federal regulations and standards of conduct. The Town further ensures all authorized purchasers within the Town of Coupeville will receive ongoing training in procurement policies particularly when engaging in grant activities. The Town of Coupeville would like to thank the State Auditor’s Office for its thorough review and the valuable recommendations provided in the recent audit report. We appreciate the time and effort the audit team took to identify areas where our internal controls and processes can be improved. We take these findings seriously and will continue to take proactive steps to enhance our processes and ensure accountability regarding our use of federal funds. Auditor’s Remarks We appreciate the Town's commitment to resolve this finding and thank the Town for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular audit. 23 Office of the Washington State Auditor sao.wa.gov Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures.
Identification as a Repeat Finding: N/A Finding: Blue Mountain Land Trust did not have a written procurement policy that complies with the procurement standards established in 2 CFR sections 200.318 through 200.326 in place during the year. Criteria: Non-Federal entities other than 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 200. Condition and context: Blue Mountain Land Trust maintains a practice of soliciting bids for services from at least three contractors, but it has not established a written policy that contemplates all required elements under 2 CFR sections 200.318 through 200.326. Sample size and population: Sampling was not applicable to this finding. Effect: The result of the finding is that Blue Mountain Land Trust is not in compliance with federal procurement standards during the compliance year. Recommendation: Formalize written procurement procedures in compliance with required standards. Question Costs: None Management Response and Corrective Action Plan: See Corrective Action Plan Contact Person: Amanda Martino, Executive Director
Finding 2023-002: Material Weakness - Lack of Documentation on Sole Source Contracts and Verification of Vendors Federal grantor: Department of Commerce Condition: The Chamber contract with a vendor on a sole-source basis and did not document justification for the use of a sole source vendor. In addition, the Chamber did not verify that the vendor was not on the list of vendors suspended or debarred from federal contracting before contracting with the vendor. Criteria: Entities are required to follow the procurement standards in 2 CFR sections 200.318 through 200.327, including ensuring that the procurement method used for the contracts are appropriate based on the dollar amount and conditions specified in 2 CFR section 200.320 and noncompetitive procurements. Entities also must comply with 2 CFR Part 1326 that prohibits entities that have been debarred, suspended or voluntarily excluded from participating in Federal procurement. Cause: The Chamber’s Procurement Policy allows for a sole source vendor but requires staff to document sole source procurements prior to initial purchase. It appears staff did not follow its policy. The Policy also contains a requirement to verify or receive vendor certification that they are not debarred, suspended, ineligible or voluntarily excluded from Federal procurements, but this procedure was not followed. Effect: The Department of Commerce may impose additional conditions on the receipt of a subsequent tranche of future award funds, if any, or take other available remedies as set forth in 2 C.F.C. section 200.339. Recommendation: We recommend the Chamber review policies with staff to ensure procurement requirements are followed, and that staff are familiar with federal procurement requirements. Views of Responsible Officials and Planned Corrective Actions: The Chamber agrees with this finding and is in the process of implementing changes to their procurement process.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Health Center Cluster Assistance Listing Number: 93.224/93.527 Federal Award Identification Number: H80CS12856 Award Periods: March 1, 2023 – February 29, 2024 Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria: 2 CFR sections 200.212 and 200.318(h); 2 CFR section 180.300; 48 CFR section 52.209-6 outlines that the non-Federal entity must verify that the agency in which it is entering into a contract is not suspended or debarred or otherwise excluded from participating in the transaction. Condition: As a result of the lack of a suspension and debarment policy, the organization did not document that Sam.gov was checked prior to entering into a contract with a vendor. Questioned costs: None. Context: Five (5) of five (5) vendors selected for testing did not have evidence prior to contracting of a check for suspension and debarment. However, subsequent review showed evidence the vendors were not suspended and debarred. Cause: Employee turnover. Effect: Possible noncompliance with 2 CFR section 200.320(c)(1) - (3). Repeat finding: No. Recommendation: We recommend that the organization retain documentation that Sam.gov was used to verify that a vendor was not suspended, debarred, or otherwise excluded from participating in the transaction prior to contract. The organization can keep screenshots that Sam.gov was checked or a PDF print out of the web page which includes the date verified. Views of responsible officials: There is no disagreement with the audit finding.
The Town did not have adequate internal controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 10.760 – Waste and water Disposal Systems for Rural Communities Federal Grantor Name: U.S. Department of Agriculture Federal Award/Contract Number: N/A Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: No Description of Condition In fiscal year 2023, the Town spent $2,584,843 in loan and grant funds from the Water and Waste Disposal Systems for Rural Communities program. This program is intended to assist rural communities obtain safe drinking water and adequate waste disposal facilities. The Town used these funds primarily for a water line project. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations for procurements standards in 2 CFR § 200.318 require award recipients to have written standards of conduct that cover conflicts of interest and expectations for their employees who are involved in selecting, awarding and administrating contracts and purchases. Our audit found the Town’s internal controls were ineffective for ensuring compliance with federal procurement requirements. Specifically, the Town did not establish written standards of conduct covering these required elements: • Officers, employees and agents may not participate in selecting, awarding or administrating a contract supported by a federal award if they have a real or apparent conflict of interest. • Officers, employees and agents may neither solicit nor accept gratuities, favors or anything of monetary value from contractors or parties to subcontracts. • Disciplinary actions for violating these standards We consider this deficiency in internal controls to be a significant deficiency. Cause of Condition The Town became aware of the requirement to have written standards of conduct covering selection and administration of contracts involving federal funds during the audits of fiscal years 2020 and 2021 which we conducted during calendar year 2023. Therefore, the Town was unable to adopt such policies to be compliant in year 2023. Effect of Condition Without written standards of conduct, the Town is at a greater risk of noncompliance with these requirements when using federal funds to procure contractors. Although the Town did not have policies in place, we verified that no one involved with selecting and administrating the contract had a real or apparent conflict of interest with the contract. Recommendation We recommend the Town develop written standards of conduct policies that conform to Uniform Guidance. Town’s Response Town of Twisp has since been working to draft updated federal award/purchasing/reporting policy, not only to address processes for procurement, but to establish federal purchasing policy in compliance with the recommendation of the recent audit findings including discipline for non-adherence to the policy. This Policy was adopted in October of 2024 and will alleviate any further issues with Federal procurement requirements. Auditor’s Remarks We appreciate the Town’s commitment to resolving the issues noted and we will follow up during the next audit Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
Information on the Federal Program(s): 10.760 Water and Waste Disposal Systems for Rural Communities, Department of Agriculture Compliance Requirements: Procurement. Type of Finding: Material Noncompliance. Criteria: 2 CFR § 200.318(c)(1) requires that the non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Condition: We noted that the City did not have written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts in fiscal year 2023. Cause: The City was not aware of the requirement to have written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Effect: Failure to have written standards of conduct could result in noncompliance with Uniform Guidance requirements. Questioned Costs: There are no questioned costs. Recommendation: We recommend that the City develop written standards of conduct that include the requirements of 2 CFR § 200.318(c)(1). Views of Responsible Officials and Planned Corrective Action: The City will develop written standards of conduct in that satisfy the requirements of 2 CFR § 200.318(c)(1).
Information on the Federal Program(s): 10.760 Water and Waste Disposal Systems for Rural Communities, Department of Agriculture Compliance Requirements: Procurement. Type of Finding: Material Noncompliance. Criteria: 2 CFR § 200.319(d) requires that the non-Federal entity must maintain written procedures for procurement transactions. Condition: We noted that the City did not have written procedures for procurement transactions that include the provisions required by the Procurement Standards 2 CFR § 200.318 through 2 CFR § 200.327 in fiscal year 2023. Cause: The City was not aware of the requirement to have written procedures for procurement transactions. Effect: Failure to have adequate written procedures for procurement transactions could result in the acquisition of goods or services in violation with administrative requirements, federal regulations, other procurement requirements, and Uniform Guidance requirements. Questioned Costs: There are no questioned costs. Recommendation: We recommend that the City identify grants that are subject to Uniform Guidance on a timely basis to ensure all compliance requirements are met and develop adequate written policies and procedures for procurement transactions. Views of Responsible Officials and Planned Corrective Action: The City has identified federal grants subject to the Uniform Guidance and will develop written policies and procedures which include the relevant provisions required by 2 CFR § 200.318 through 2 CFR § 200.326 Contract provisions.
Information on the Federal Program(s): 10.760 Water and Waste Disposal Systems for Rural Communities, Department of Agriculture Compliance Requirements: Procurement. Type of Finding: Material Weakness in Internal Control Over Compliance. Criteria: Internal controls should be in place to provide reasonable assurance that procurement of goods and services are made in compliance with federal regulations and other procurement requirements, as applicable. Condition: The City lacks sufficient controls over procurement to ensure compliance with federal regulations and other procurement requirements, as applicable. Cause: The City did not design and implement controls over compliance with procurement. Effect or Potential Effect: Failure to have adequate internal controls over compliance with procurement could result in the acquisition of goods or services in violation with administrative requirements, federal regulations, and other procurement requirements. Questioned Costs: There are no questioned costs. Recommendation: We recommend that the City create and adopt an official written policy for procurement and contracts establishing contract files that document significant procurement history; methods of procurement authorized including selection of contract type, contractor selection or rejection, and the basis of contract price; verification that procurements provide full and open competition; requirements for cost or price analysis, including for contract modifications; obtaining and reacting to suspension and debarment certifications; and other applicable requirements for procurements under federal awards are followed. We also recommend that personnel with adequate knowledge and experience of responsibilities for procurements for federal awards review procurement and contracting decisions for compliance with federal procurement policies. Views of Responsible Officials and Planned Corrective Action: Management concurs with the audit finding. The City will develop written policies and procedures for procurement, including the relevant provisions required by 2 CFR § 200.318 through 2 CFR § 200.326 Contract provisions. Management will evaluate the need to contract with local government consultants to perform control procedures where City personnel are not available or qualified to perform.
Criteria: Under 2 CFR §200.318-326, non-federal entities must adhere to procurement standards for purchases made with federal funds. Key requirements include: - Full and Open Competition: Procurement transactions must be conducted to ensure open competition and prevent practices that may unduly restrict competition (2 CFR §200.319(a)). - Documentation of Procurement History: Entities must maintain records that detail the procurement history, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price (2 CFR §200.318(i)). -Use of Non-Competitive Procurement: Non-competitive procurement is only allowed under limited circumstances, such as when the item is available from a single source, there is a public emergency, or after solicitation of multiple sources, competition is deemed inadequate (2 CFR §200.320(c)). Condition: During 2023, the organization incurred expenditures of approximately $16.5 million for the acquisition renovation of motels into permanent housing using federal funds under the SLFRF program. However: - No documentation was available to demonstrate compliance with federal procurement standards, including the contractor solicitation process, selection method, or the basis for the contract price. - It is unclear whether the contractor was selected through a competitive process, or if justification for non-competitive procurement was appropriately documented as required by 2 CFR §200.320(c). - Contractor costs totaled approximately $16.5 million expended during the year. Additionally, the organization also did not maintain documentation for vendors used in its Emergency Solutions Grant Program sites. These vendors consisted primarily of food providers and security services. During the course of our audit, we learned that one catering vendor utilized by the organization was owned by an employee who was also involved in authorizing payments to the vendor. Cause: The organization did not establish or follow sufficient internal controls to ensure compliance with federal procurement requirements, including maintaining the required documentation for procurement activities.Possible effect: The lack of procurement documentation creates a significant risk that noncompliant practices occurred, such as non-competitive procurement or payments exceeding fair market value. Questioned cost: $1,318,527 related to the catering vendor Recommendation: Implement comprehensive procurement policies and procedures that comply with federal regulations under 2 CFR §200.318-326. Ensure all procurement transactions are documented, including evidence of competitive bidding or justification for non-competitive procurement under 2 CFR §200.320(c). Conduct staff training on procurement standards for federal awards, focusing on documentation, competition, and conflict of interest requirements. Perform periodic internal reviews to confirm compliance with procurement policies. Consult with California's HCD regarding their expectations of contractor selection policies for the HomeKey program. Views of responsible officials: Management acknowledges this finding, which occurred during a period of rapid program expansion when procurement infrastructure had not yet been fully developed. Since the audit period, we have completely overhauled our procurement process to ensure full compliance with the Federal procurement standards. We have implemented a formal procurement policy, created a dedicated Procurement sub-department within Finance, hired a Procurement Supervisor and support team, and launched a new procurement software platform to ensure proper solicitation, documentation, approval routing, and record retention for all Federally funded programs. These upgrades establish consistent competitive bidding, justification procedures, conflict-of-interest safeguards, and transparent procurement. In addition, we have strengthened oversight, provided staff training on Federal procurement standards, and embedded monitoring practices to ensure ongoing compliance. Management is confident these substantial structural improvements have significantly reduced the risk of noncompliance and positioned the organization for full alignment with federal procurement standards going forward.
Coronavirus State and Local Fiscal Recovery Funds Information on Federal Program: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing No. 21.027. Criteria: CFR Section 200.318 stipulates that a non-Federal entity must use its own documented procurement procedures which reflect applicable state, local, and tribal laws, and regulations, provided that the procurements conform to applicable Federal law and the standards identified in Part 200 Subpart D. additionally, 2 CFR Section 200.213 stipulates that no awards, subawards, or contracts be awarded to parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Statement of Condition: During our discussions with management and testing of the major program, we noted that the Town is not verifying the eligibility of vendors to participate in Federal assistance programs. Statement of Cause: The Town did not review compliance requirements related to procurement outlined in 2 CFR Section 200.318 and Section 200.213. Statement of Effect: The Town is not in compliance with 2 CFR Section 200.213. The Town is not performing required procedures, as a result, vendors that are not eligible for participation in Federal assistance programs or activities could be selected. Questioned Cost: None. Repeat Finding: No. Perspective Information: As part of testing of compliance over procurement, a selection of vendors charged to the major program was selected for testing of compliance. Of the Town’s vendors charged to the program, none were suspended or debarred from participation in Federal assistance programs or activities. Recommendation: we recommend that the Town review the requirements of 2 CFR Section 200.213 and ensure that a review of the eligibility of potential vendors to participate in Federal assistance programs or activities is performed prior to disbursing funds to the vendor. Views of responsible officials and Planned Corrective Actions: Moving forward, the Town of Guilderland will ensure that vendors are not included on the suspended or debarred list to ensure compliance with the requirements noted above.
Finding 2023-003 Federal Program: Coronavirus State and Local Fiscal Recover Funds, AL# 21.027 Type of Finding: Significant deficiency in internal controls over compliance and immaterial non-compliance Compliance Requirement: Procurement Criteria: In accordance with the Uniform Guidance, specifically 2 CFR §200.318, non-federal entities must have documented procurement procedures that conform to the Uniform Guidance 2 CFR §200.318 through §200.326. Condition and Context: The auditee did not have written procurement procedures that conformed to the Uniform Guidance 2 CFR §200.318 through §200.326. However, the auditee did follow the methods of procurement required (per 2 CFR §200.320) for federal procurements made during the audit period. Cause: There were not adequate internal controls over compliance in place to ensure there were written procurement policies that conformed with the Uniform Guidance. Effect: The deficiency in the internal controls over compliance could result in material non-compliance with the procurement compliance requirement of the federal award and the Uniform Guidance. Questioned Costs: None. Repeat Finding: No. Recommendation: We recommend the Organization document procurement policies in a formal written procurement policy that contains all required elements of and conforms to the requirements of the Uniform Guidance. View of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.
Finding 2023-003 Procurement - Significant Deficiency Program name: Office for Coastal Management Assistance Listing: 11.473 Federal award Identification number: 20 NFWF 339630 Federal award year: 9/1/2020 - 9/30/2024 Federal awarding agency: U.S. Department of Commerce Criteria - Per 2 CFR 200.318 (i), recipients and subrecipients must maintain records sufficient to detail the history of each procurement. These records must include: rationale for the method of procurement; selection of contract type; contractor selection or rejection, and; basis for the contract price. Additionally, 2 CFR 200.318(a) requires entities to maintain and use documented procurement procedures that are consistent with applicable laws and regulations. Condition - The Organization has a written procurement policy in place; however, it was unable to provide documentation demonstrating that procurement transactions during the audit period were conducted in accordance with that policy. Specifically, the auditee did not retain records detailing the procurement method used, contractor selection rationale, or price justification for sampled transactions. Cause - The Organization did not maintain or consistently apply documentation protocols for internal control reviews. Formal documentation practices were not in place during the audit period. Effect - Without sufficient documentation, the auditee cannot demonstrate compliance with Federal procurement standards. This increases the risk of noncompliance with Uniform Guidance requirements and may result in unallowable costs or questioned costs. Questioned costs - None identified. Perspective - The deficiency was pervasive across multiple procurement transactions. Identification of Repeat Findings - This is a repeat finding from the prior year (Finding 2022-003). As a result of the 2022 audit report, issued in October 2025, the Organization began the process of developing updated policies for compliance. In 2025, the Organization formally adopted a new procurement policy as well as procedures to ensure proper documentation will be maintained. Recommendation - We recommend that the Organization strengthen its internal controls over procurement by: Ensuring all procurement transactions are documented in accordance with 2 CFR 200.319(i). Training staff on documentation requirements. Periodically reviewing procurement files for completeness and compliance. Management response - Management agrees with this assessment and has committed to a corrective action plan. Management has also engaged with a new accounting firm to oversee the financial reporting functions at the Organization.
2 CFR § 300 codified in 45 CFR part 75 gives regulatory effect to the Department of Health and Human Services. 2 CFR § 200.302(b)(6) states the financial management system of each non-Federal entity must provide for written procedures to implement the requirements of 2 CFR § 200.305 Payment. Additionally, for Federal awards, the Uniform Guidance requires a written policy for the procurement requirements outlined in 2 CFR § 200.318(c)(1), 2 CFR § 200.318(c)(2), and 2 CFR § 200.320(B) 2 CFR 200.302(b)(7) requires written procedures for determining the allowability of costs in accordance with Subpart E-Cost Principles of this part and the terms and conditions of the Federal award. 2 CFR 200.430 states that costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable. 2 CFR 200.431 requires established written leave policies if the entity intends to pay fringe benefits. 2 CFR 200.464(a)(2) requires reimbursement of relocation costs to employees be in accordance with an established written policy must be consistently followed by the employer. 2 CFR 200.475 requires reimbursement and/or charges to be consistent with those normally allowed in like circumstances in the non-Federal entity's non-federally-funded activities and in accordance with non-Federal entity's written travel reimbursement policies. The General Health District did not have written policies as required by Uniform Guidance. The failure to implement written policies as required by Uniform Guidance could result in noncompliance with the District’s federal programs. The General Health District should adopt written policies in accordance with the Uniform Guidance.
Missing documentation for procurement, suspension and debarment 93.318 Protecting and Improving Health Globally: Building and Strengthening Public Health Impact, Systems, Capacity and Security 93.421 Strengthening Public Health Systems and Services Criteria: Per Uniform Guidance 2 CFR 200.318, any contracts procured with federal funds for over $10,000 should be obtained via a bidding process or documentation is required to show that the contractor is the sole source for the services. In addition, the Organization should keep documentation to show that they have verified that contractors are not suspended or debarred. Condition: Bid or sole source documentation was missing for four out of thirteen items tested (30.8%). We consider this condition to be a significant deficiency for Procurement Suspension & Debarment compliance requirement and is a repeat finding shown in Section IV of this report as prior year finding 2022 004. Statistical sampling was not used in making sample selections. Questioned costs: None Effect: As a result, the Organization was missing documentation relating to the requirements for procurement, suspension and debarment. Cause: This is due to ineffective controls over the procurement process resulting from staff turnover. Recommendation: Auditors recommend that the Organization maintain all federal award documentation in a location where all authorized personnel have access in order to ensure that it can always be located. We also recommend that management create a process for procurement, including how bids are obtained and maintained for proof of compliance with Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: Management agrees with this Single Audit Finding and response is included in the Corrective Action Plan
FINDING 2023-004 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Numbers and Years (or Other Identifying Numbers): Contract #65873, SLT-3157 Pass-Through Entity: Indiana Department of Natural Resources Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement The County did adopt an applicable federal purchasing policy. The Lake County Indiana Purchasing Manual for Supplies, Services and Public Works states on page 19 that "Federal funds more than $50,000 but less than $150,000 will invite 3 quotes at an open public meeting . . .", which is the federal requirement for small purchases. However, the County did not follow this policy. In 2023, the County had one vendor that was paid a total of $97,525 from COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) under Contract #65873 from the Indiana Department of Natural Resources. However, the County did not obtain price or rate quotes for the one applicable vendor under the small purchase threshold as required. Suspension and Debarment Prior to entering into subawards and covered transactions with the SLFRF award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000 and all subawards. The verification is to be done by checking the 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. INDIANA STATE BOARD OF ACCOUNTS 24 LAKE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The County did not have policies or procedures in place related to the suspension and debarment requirements for the SLFRF funds. Two covered transactions totaling $1,990,616 paid from SLFRF funds were identified. Documentation to show that suspension and debarment was verified prior to entering into contracts with these two vendors could not be provided by the County. The amounts for which suspension and debarment were not verified for Contract #65873 from the Indiana Department of Natural Resources and the SLT-3157 directly from the Department of the Treasury were $176,711 and $1,813,905, respectively. The lack of internal controls and noncompliance were isolated to the transactions identified above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(i) 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." 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 subaward. (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 25 LAKE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The County's purchasing policy does not provide procedures on how the County will ensure the appropriate number of quotes will be obtained for small purchases or how the County will ensure compliance with the suspension and debarment requirements. Effect Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the repayment or loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation Management of the County should develop procedures to ensure the appropriate procurement methods are used for items or services procured that are within the small purchase threshold and to ensure vendors are not suspended or debarred when expending federal funds. Appropriate documentation should be maintained to ensure compliance with procurement and suspension and debarment. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2023-001 The City did not have adequate internal controls for ensuring compliance with federal requirements for procurement and subrecipient monitoring and it did not comply with federal procurement requirements. Assistance Listing Number and Title: 21.027 – COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: N/A Pass-through Entity Name: Washington Department of Commerce Pass-through Award/Contract Number: 22-96720-210 Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The purpose of the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) program is to respond to the COVID-19 pandemic’s negative effects on public health and the economy, provide premium pay to essential workers during the pandemic, provide government services to the extent COVID-19 caused a reduction in revenues collected, and make necessary investments in water, sewer or broadband infrastructure. During 2023, the City spent $3,622,519 in program funds to cover additional costs it had incurred during the pandemic, including expenditures supporting public health, household utility relief, and direct assistance payments to local businesses and nonprofit organizations financially affected by COVID-19. The program funds also included $886,240 passed through to two subrecipients to fulfill components of the program’s objectives. The portion of program funds the City passed through to the subrecipients provided emergency assistance to households and college students financially affected by COVID-19. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Procurement Federal regulations require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR § 200.318-327. These procedures must reflect the most restrictive of applicable federal, state or local laws. When using federal funds to procure goods and services, governments must apply the more restrictive requirements of federal, state or local laws by either obtaining quotes or following a competitive procurement process, depending on the estimated cost of the procurement activity. Competitive bidding may be waived in certain circumstances, including via a sole source exemption when the purchase is only available from a single vendor. Governments must document the process and ensure they comply with applicable laws for waiving competitive bidding. Additionally, state and federal requirements allow it to bypass normal procurement laws through a process commonly referred to as “piggybacking.” This process allows entities to purchase goods and services using contracts awarded by another government or group of governments via an interlocal agreement or cooperative. When piggybacking, the entity must enter into an agreement before it purchases services or goods from another entity’s contract. If the City uses such an agreement, federal regulations require it to confirm the awarding entity followed all procurement laws and regulations applicable to the entity when selecting the contractor. Subrecipient Monitoring Whenever the City passes on federal funding to subrecipients, federal regulations require it to monitor subrecipients to ensure they comply with the terms and conditions of the federal award. For these subawards, monitoring would include verifying the subrecipients only provided assistance to participants who met the program eligibility requirements. Subrecipient requirements also require the City to verify whether prior year awardees received an audit if they expended more than $750,000 in federal awards, and to follow up on any findings issued. Description of Condition Procurement The City’s internal controls were ineffective for ensuring it complied with federal procurement requirements. Although the City has written procurement policies, they do not address requirements for piggybacking and purchasing through a cooperative. Additionally, City’s policy establishes the micro purchase threshold as $20,000, which is less restrictive than the federal threshold of $10,000. Further, the City piggybacked onto another agency’s contract to purchase vehicles and did not retain supporting documentation showing it verified the awarding agency followed applicable procurement requirements before purchasing. It also determined the purchase of a software system to be sole source but did not have documentation showing its rationale and justification for this non-competitive procurement. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Subrecipient Monitoring Our audit found the City did not have internal controls in place to adequately monitor its subrecipients, as federal regulations require. The City awarded program funds to two subrecipients during the audit period and was required to monitor four subrecipients with awards from previous fiscal years in the current audit period. The City did not obtain any documentation from one subrecipient and did not obtain documentation for the final quarter of its agreement with another subrecipient to ensure program participants were eligible for assistance. Further, the City did not determine whether four subrecipients expended more than $750,000 in federal awards and received an audit when required. We consider this deficiency in internal controls to be a significant deficiency. Cause of Condition Procurement Procurement activity is decentralized and performed at the department level. The City experienced turnover in positions responsible for updating procurement policies and procuring transactions. City employees involved in these purchases were not provided adequate training to update policies and ensure they understood procurement requirements. As such, City employees were not aware of all federal requirements involved when piggybacking onto another agency’s contract or using exemptions to competitive procurement for sole source purchases. Subrecipient Monitoring The City received a recommendation in the prior audit related to this issue and began changing its procedures. However, due to timing and staff turnover, it was unable to perform and document all portions of subrecipient monitoring requirements for the period under audit. Effect of Condition Procurement Without updated written policies and procedures, the City is at an increased risk of not complying with the most restrictive of federal, state or local procurement methods when using federal funds to procure goods and services. The City did not provide supporting documentation showing the procurement methods used followed all applicable requirements for the purchase of vehicles and a software system totaling $719,217. Without effective internal controls, the City cannot demonstrate it complied with federal procurement requirements, allowed for full and open competition and received the best price. Subrecipient Monitoring The City did not monitor $290,647 expenditures for two subrecipients to ensure they complied with the terms and conditions of the subaward and appropriately used federal program funds. Therefore, the City was unable to confirm only eligible participants received assistance. Further, the City did not adequately monitor four of its subrecipients to verify they received single audits when required. Although the City sent letters to three of these subrecipients to inquire about single audits, it did not follow up with them and it also did not have evidence that it monitored for audits for the other subrecipient. Without verifying the subrecipients received single audits when required, the City would be unaware if any findings were issued relating to program requirements that would require follow-up action. Recommendation We recommend the City strengthen its internal controls to ensure compliance with federal requirements. Specifically, we recommend the City: • Provide training to employees responsible for updating policies and procurement transactions paid all or in part with federal funds • Update its written procurement policy to conform to Uniform Guidance requirements (2 CFR § 200.318-327) for all procurement activities • Ensure all goods and services charged to federal programs are procured in accordance with federal regulations and its own policy • Verify all subrecipients receive single audits when required and retain sufficient documentation of this verification • Perform and document sufficient monitoring procedures in accordance with subrecipients’ risk to verify they are complying with the terms of the award including providing funding to eligible participants, when applicable City’s Response The City acknowledges the audit findings and recognizes the importance of strengthening internal monitoring practices to ensure full alignment with federal requirements. While there may be additional context to consider regarding the specific circumstances, we appreciate the opportunity to clarify those details and outline the corrective actions that have been taken and are planned. Subrecipient No.1 – Edmonds College One of the subrecipients noted in the finding is a public higher education institution operating under the State Board for Community and Technical Colleges (SBCTC). The subrecipient administered the Student Emergency Assistance Grant (SEAG) in accordance with state guidelines that emphasize low-barrier, equity-focused access to emergency aid. These guidelines intentionally discourage requiring extensive documentation from students and instead rely on: • Written applications and student interviews • Internal verification using the college's ctclink student system • Program-level data tracking through financial aid systems • Quarterly reporting to the City, which was submitted Due to FERPA protections, the college was limited in the level of personal data it could share externally without student consent. While this model limited the City's ability to independently audit eligibility at the individual level, it is consistent with the state's recognized approach to supporting systemically disadvantaged students and aligns with SEAG Program principles. The City accepted this structure as appropriate during the agreement period. Subrecipient No.2 – Washington Kids in Transition For the second subrecipient, the City followed its standard internal audit process, which includes a quarterly review of 10% of submitted invoices to validate eligibility and ensure federal program compliance. After completing the firstquarter audit, the City identified concerns related to the supporting documentation for certain grant disbursements. In response: • The City escalated oversight and required the subrecipient to submit documentation for 100% of invoices from May through July, encompassing both Q2 and Q3. • Concurrently, the City became aware that the subrecipient had not initiated or completed a Single Audit for FY2023. Upon learning that the audit would not be submitted by the federal deadline (September 30), the City immediately ceased all grant funding and closed the program. • Though additional invoices were received in August and September, the City determined that the heightened audit activity from May through July had addressed the prior concerns. Q3 was considered to have been appropriately audited, and no further audit was conducted for the final period. The City has not resumed any partnership with this entity since September 2024. • The subrecipient ultimately declined to obtain the required Single Audit for FY2023 and FY2024. Review of Prior Year Subrecipient Audit Requirements As part of the City's monitoring efforts for subrecipients from previous fiscal years, the Deputy Director of Finance at the time requested Single Audit reports directly from the two college subrecipients and was ultimately able to obtain the reports through the Federal Audit Clearinghouse (FAC). While the City does not have documentation to confirm this process, it was discussed during internal meetings that the reports had been reviewed, and this task was considered complete at the time. Of the four subrecipients referenced in the audit, the third was a nonprofit organization for which the Deputy Director reviewed publicly available financial records. Based on that review, it was determined the organization did not meet the $750,000 federal expenditure threshold and was therefore not subject to a Single Audit. The fourth subrecipient, the entity that did not complete the required audit, was addressed in the corrective actions outlined above. Planned and Ongoing Corrective Actions To strengthen subrecipient oversight moving forward, the City is implementing the following corrective actions: • Updated Subrecipient Agreements: All future contracts will include specific and detailed language regarding audit thresholds, access to documentation, and monitoring expectations, including reference to Uniform Guidance requirements. • Audit Verification Procedures: The City will implement a documented protocol for tracking and verifying Single Audits for any subrecipient receiving $750,000 or more in federal funds. • Monitoring Documentation: The City will maintain written records of all monitoring activities, including eligibility reviews, audit follow-up, and subrecipient communication. • Staff Training and Process Improvements: Staff responsible for subrecipient oversight will receive updated training on monitoring standards, documentation expectations, and federal compliance protocols. These actions will be implemented prior to any future program launches involving subawards of federal funds and will also apply to the monitoring of any current active grants. Although no additional funding of this type was issued in 2024, the City will be subject to audit for this period and will ensure compliance with all applicable requirements, including collecting the FY2024 Single Audit reports as required. Corrective Action Plan – Procurement The City's Purchasing Policy addresses requirements for "piggybacking" and purchasing through a Cooperative in section 13.0 lnterlocal Agreements. However, the City should update the Purchasing Policy section 11.0 Procurement Using Federal Funds to include the same language that specifies the process of Interlocal and Cooperative agreements, or “piggybacking”. • As stated in the auditor's draft notification, state and federal requirements allow it to bypass normal procurement laws through a process commonly referred to as "piggybacking". This process allows entities to purchase goods and services using contracts awarded by another government or group of governments via an interlocal agreement or cooperative. When piggybacking, the entity must enter into an agreement before it purchases services or goods from another entity's contract. If the City uses such an agreement, federal regulations require it to confirm the awarding entity followed all procurement laws and regulations applicable to the entity when selecting the contractor. To ensure compliance, although the City did confirm that the vendor followed their own bid law requirements, the City will do a better job documenting that verification in any future equipment purchases using federal funding. Auditor’s Remarks We thank the City for its commitment to resolving this issue. We will follow up on the status of this finding during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures and requirements for maintaining records sufficient to detail the history of procurement. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring with Federal funds by nonfederal entities. Title 2 CFR Part 200, Uniform Guidance, section 332, Requirements for passthrough entities, establishes the requirements for subrecipient monitoring and management requirements for pass through entities.
Significant deficiency in internal control over compliance with procurement procedures meeting the requirements of 2 CFR Part 200. Federal Agency: Department of Health and Human Services Program Title: Social Services Research and Demonstration Program Assistance Listing Number: 93.647 Project Number: 90XP0459-01-00 Award Period: August 31, 2022 – August 30, 2023 Criteria Requirements contained in Title 2 U.S. Code of Federal Regulations Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Subpart D – Post Federal Award Requirements, Sections 200.318 through 200.326, require that a nonfederal entity establish and follow a written procurement policy that conforms to federal standards. Among other requirements, the written procurement policy must identify formal and informal procurement actions to be taken based on the size of the procurement, covering both goods and services. In this instance, the Organization did not follow their established procurement policy when conducting procurement actions, resulting in noncompliance with both their internal procedures and the federal requirements outlined in 2 CFR 200.318–200.326.. Condition The Organization did not follow their established written procurement policy when conducting procurement transactions. Cause The Organization’s internal controls were insufficient to ensure that the Organization’s written procurement policy provisions were followed. Effect or Potential Effect In our testing, the Organization did not follow the written procurement policy in all 5 samples selected for testing. Questioned Costs $23,064 Recommendation We recommend the Organization implement measures to ensure that its procurement policy is followed for all transactions that fall within the policy. Management should ensure procurement transactions are documented in such detail to evidence the method of procurement.
Reference Number: 2023-05 Finding: Finding Type: Significant Deficiency in Internal Control Over Compliance Title and ALN of Federal Program: 21.027 - Coronavirus State and Local Fiscal Recovery Funds Criteria or Specific Requirement: I. Procurement – 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. Additionally, Franklin County Department of Job and Family Services (the pass-through grantor) requires that subrecipient entities also follow procurement requirements identified. Condition: The Organization did not follow required procurement procedures for subrecipient transactions. Cause: Though a procurement policy exists for the Organization, there was no enforcement of this policy for the federal program. Effect or Potential 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. Recommendation: We recommend that the Organization revisit their existing procurement policy and implement a formal process to flag new purchase transactions and ensure the policy is followed. Periodic reviews of procurement activity tied to federal awards should also take place. Views of Responsible Officials: Management agrees with the finding and recommendation.
2023-002 Implement Controls and Documentation Over Procurement Federal Program Information Federal Agency: U.S. Department of the Interior Award Name: Natural Resource Stewardship Assistance Listing Number(s): 15.944 Award Year: 2023 Compliance Requirement: Procurement Type of Finding Compliance Internal Control over Compliance – Material Weakness Criteria or Specific Requirement OMB’s Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (UG) requires that grant recipients follow procurement procedures for the acquisition of property or services under a federal award. Grantees are required to comply with certain procurement standards as defined in 2 CFR 200.318. These standards include the requirement that the grantee must use its own documented procurement procedures provided that they conform to applicable federal law. In addition, the grantee must maintain records sufficient to detail the history of procurement. Condition and Context During planning procedures for our audit, we concluded that the prior year finding over procurement was not yet remediated. Based on our procedures, there was no supporting documentation retained for those transactions subject to procurement and approvals were not formally documented. In addition, no evidence was provided to prove a suspension and debarment check was performed. Cause The Organization did not have adequate policies or controls in place to maintain formal evidence of vendor approval. Effect or Potential Effect Due to the weakness in internal controls and compliance finding noted above, there is a risk that contracts may be awarded to vendors in a manner that is not consistent with Federal procurement requirements. Questioned Costs Due to the condition noted above, Federal procurement requirements were not followed and resulted in the following questioned costs. AL Number(s) Name of Federal Program Questioned Costs 15.944 Natural Resource Stewardship $37,539 Recommendation The Organization should address the weaknesses in internal controls noted above in order to ensure that federal procurements are conducted in accordance with federal requirements and supporting documentation is maintained to support such conclusion. The Organization should ensure that prior to entering into transactions, a review is performed over vendor selection, and all required documentation is retained. Views of Responsible Official Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.
Federal Agency: U.S. Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds (Eviction Rental Assistance Program 2.0) Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP0002 2022 Pass-Through Agency: Washington State Department of Commerce Pass-Through Number(s): 21-4619C-104 Award Period: 10/1/2021 - 6/30/2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Compliance Criteria or specific requirement: Uniform Guidance requires non‑Federal entities to use documented procurement procedures consistent with applicable federal standards (2 CFR §§200.317–200.327). In addition, Uniform Guidance requires non‑Federal entities to maintain written standards of conduct governing conflicts of interest and organizational conflicts of interest for employees, officers, and agents engaged in the selection, award, and administration of federal awards (2 CFR §200.318(c)(1)). Condition: The auditee did not have a written procurement policy or a written conflict of interest policy in place during the audit period. As a result, the auditee did not have formal, documented procedures to govern procurement activities or to address potential conflicts of interest related to the administration of federal awards. Context: Procurement and conflict of interest are required compliance areas to be evaluated under the OMB Compliance Supplement for the Single Audit. As part of obtaining an understanding of internal control over compliance, the auditors evaluated whether the auditee had established the required written procurement procedures and standards of conduct addressing conflicts of interest. During this evaluation, it was noted that the auditee did not have a written procurement policy or a written conflict of interest policy in place during the audit period. Cause: The auditee has not formally documented or adopted procurement and conflict of interest policies as required by Uniform Guidance. While management performs certain procurement and oversight activities informally, these practices have not been codified into written policies to ensure consistent application and compliance with federal requirements. Effect: The absence of formal procurement and conflict of interest policies increases the risk that procurement activities may not be conducted in accordance with Uniform Guidance requirements and that actual or perceived conflicts of interest may not be appropriately identified, disclosed, or mitigated. Without documented policies, the auditee is at increased risk of noncompliance with federal award requirements related to procurement standards and ethical conduct. Repeat Finding: Yes. Recommendation: We recommend that management develop, adopt, and implement written procurement and conflict of interest policies that comply with Uniform Guidance requirements. These policies should address procurement standards, including methods of procurement and oversight, and establish standards of conduct governing conflicts of interest for employees, officers, and agents involved in the administration of federal awards. Management should also ensure that these policies are communicated to relevant personnel and applied consistently. Views of responsible officials: Management agrees with the finding and has prepared a Corrective Action Plan.
2023-003 Procurement, Suspension, and Debarment - (Material Weakness) Federal Program Information: Funding Agency Title Federal Assistance Listing Number(s) Award Year and Number U.S. Department of Treasury Coronavirus State and Local Fiscal Recovery Funds 21.027 418-22 Criteria or Specific Requirement: In accordance with 2 CFR Section 200.214 of the Uniform Guidance states that SWIWC must comply with 2 CFR part 180, which implements Executive Orders 12549 and 12689. 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 200.318(i) Procurement records. The recipient or subrecipient must maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price. Condition: During our testwork over procurement, for ten samples tested, SWIWC was unable to provide adequate supporting documentation demonstrating that required procurement procedures were performed in accordance with established policies and applicable Uniform Guidance requirements. Cause: SWIWC did not consistently follow or maintain adequate documentation of its established procurement policies and procedures. Effect: SWIWC did not demonstrate compliance with applicable procurement requirements under the Uniform Guidance. As a result, there is an increased risk that purchases may not be properly authorized, adequately supported, competitively procured, or otherwise compliant with federal requirements. Auditor's Recommendations: We recommend that SWIWC strengthen its procurement monitoring controls to ensure personnel consistently follow established procurement policies and procedures. SWIWC should also require complete documentation for each procurement transaction, including approvals, quotations or bids, vendor selection support, and other applicable procurement records.
2023-006 – WRITTEN PROCUREMENT POLICIES AND PROCEDURES DO NOT CONFORM TO THE UNIFORM GUIDANCE PROCUREMENT STANDARDS Federal Program: Assistance Listing Number 17.258 and 17.278 – WIOA Adult & Dislocated Worker Grant Cluster. Federal awarding agency: U.S. Department of Labor, Employment and Training Administration. Pass-through entity: Eastern Kentucky Concentrated Employment Program, Inc. and Kentucky Education and Labor Cabinet. Type of Finding: Significant deficiency in internal control over compliance; Allowable Costs. Repeat finding – reported in the prior year as finding 2022-005. Criteria: Uniform Guidance at 2 CFR 200.318 requires non-Federal entities to maintain and use documented procurement procedures that are consistent with applicable state and local laws and regulations and conform to Federal procurement standards. Written policies should address matters including conflicts of interest, methods of procurement, contractor oversight, and full and open competition. Condition: During our review of procurement policies and procedures, we noted that the Institute had not adopted written procurement policies and procedures that conform to the procurement requirements of Uniform Guidance. Specifically, the Institute's policies did not adequately address the Federal procurement standards contained in 2 CFR Part 200. Cause: The Institute has not completed the revision of its written procurement policies and procedures to conform to the Uniform Guidance, and personnel responsible for grant administration have not been trained on the Uniform Guidance procurement standards. Effect: Without conforming written procurement policies, the Institute may not consistently apply Federal procurement requirements when expending Federal funds. This increases the risk of noncompliance and the use of procurement methods that do not meet Federal requirements. Questioned Costs: None Recommendation: We recommend that management adopt and implement written procurement policies and procedures that comply with 2 CFR 200.317 through 200.327. The policies should address procurement methods, conflicts of interest, contractor selection, suspension and debarment, required cost or price analyses, contractor oversight, full and open competition, and documentation of procurement decisions. Management's Views and Response: The Institute will adopt written procurement policies and procedures that conform to the Uniform Guidance procurement standards, present them to the Board of Directors for approval, and train the personnel responsible for procurement on their use.
Federal Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds (ARPA) Assistance Listing Number: 21.027 Federal Award Identification Number and Year: 1505-0271; 2021 Pass-Through Agency : N/A Pass-Through Number(s) : N/A Award Period: March 3, 2021 – December 31, 2024 Type of Finding: • Material Weakness in Internal Control over Compliance • Other Matters Criteria or specific requirement: Uniform Grant Guidance (2 CFR 200.318) requires the non-federal entity to maintain records sufficient to detail the history of procurement. Additionally, federal guidelines require the entity to have procedures documented to verify the vendor of a covered transaction (over $25,000) is not debarred, suspended, or otherwise excluded from participating in the transaction, prior to entering into a covered transaction. Condition: Certain purchases were not adequately documented supporting the lack of traditional procurement processes being required. Additionally, the County did not complete suspension and debarment procedures for covered transactions. Questioned costs : None. Context : In the testing of 4 of 7 procurement transactions, the County did not maintain appropriate documentation to support the history of procurement, which should include the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Additionally, in the testing of 5 of 5 covered transactions, the County did not complete the required suspension and debarment procedures prior to purchase. Cause: Timing of implementation of new controls occurred after some transactions had already been procured. Effect: Lack of internal control procedures can lead to noncompliance with grant requirements. Repeat finding : This is a repeat of prior year finding 2022-006. Recommendation: We recommend ensuring procurement procedures are complete and in accordance with Uniform Grant Guidance for any federal purchases, and available for all departments. These procedures should include verifying vendors or contractors are not suspended or debarred from doing business, prior to contracting with them, and maintaining documentation of this. The County should consider adding a Federal Procurement Checklist that covers the applicable Uniform Guidance requirements that should be completed when making purchases and retained with other procurement documents. Views of responsible officials: There is no disagreement with the audit finding.
2023 – 003 Procurement and Suspension and Debarment Federal Agency: U.S. Department Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Fund Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP3738 11/30/2021 Award Period: March 3, 2021 through December 31, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matter Criteria or specific requirement: Uniform Grant Guidance (2 CFR 200.303) requires non-federal entities receiving Federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Uniform Grant Guidance (2 CFR 200.318, 2 CFR 200.319, 2 CFR 200.324, 2 CFR 180.220, and 2 CFR 200.320,) requires a non-federal entity to maintain records sufficient to detail the history of procurement, the providing of full and open competition, the performing of cost or price analysis, and prohibits the non-federal entity to contract or make subawards to parties that are suspended or debarred (covered transactions over $25,000). These records will include the rationale for the method of procurement, selection of contract type, contractor selection or rejection, the basis for the contract price, how full and open competition was provided, the cost or price analysis performed, and verification the vendor is not suspended or debarred through the SAMs exclusion list, collecting of certification from the entity, or by adding a clause or condition to the covered transaction with the entity. Procurement methods used must be appropriate based on the dollar amount and conditions specified. Condition: Procurement methods for certain federal award purchases were not adequately documented or appropriately selected in accordance with the County’s procurement policy. In addition, the County did not maintain records the vendor was not suspended or debarred prior to entering into the transactions. Questioned costs: Unknown Context: 6 of 6 tested for procurement documentation and 6 of 6 tested for suspension and debarment documentation. Cause: With new federal funding opportunities due to the pandemic, and new guidance related to those grants, proper documentation was not retained. County policies have not been updated yet. Effect: May result in a disallowed cost if grant requirements are not followed. Repeat Finding: This is a repeat finding. Prior year finding number was 2022-003. Recommendation: We recommend the County carefully review federal procurement requirements for proper documentation needed. The County should consider use of a Federal procurement checklist. Views of responsible officials: There is no disagreement with the audit finding.
Federal Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds (ARPA) Assistance Listing Number: 21.027 Federal Award Identification Number and Year: 1505-0271; 2021 Pass-Through Agency : N/A Pass-Through Number(s) : N/A Award Period: March 3, 2021 – December 31, 2024 Type of Finding: • Material Weakness in Internal Control over Compliance • Other Matters Criteria or specific requirement: Uniform Grant Guidance (2 CFR 200.318) requires the non-federal entity to maintain records sufficient to detail the history of procurement. Additionally, federal guidelines require the entity to have procedures documented to verify the vendor of a covered transaction (over $25,000) is not debarred, suspended, or otherwise excluded from participating in the transaction, prior to entering into a covered transaction. Condition: Certain purchases were not adequately documented supporting the lack of traditional procurement processes being required. Additionally, the County did not complete suspension and debarment procedures for covered transactions. Questioned costs : None. Context : In the testing of 4 of 7 procurement transactions, the County did not maintain appropriate documentation to support the history of procurement, which should include the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Additionally, in the testing of 5 of 5 covered transactions, the County did not complete the required suspension and debarment procedures prior to purchase. Cause: Timing of implementation of new controls occurred after some transactions had already been procured. Effect: Lack of internal control procedures can lead to noncompliance with grant requirements. Repeat finding : This is a repeat of prior year finding 2022-006. Recommendation: We recommend ensuring procurement procedures are complete and in accordance with Uniform Grant Guidance for any federal purchases, and available for all departments. These procedures should include verifying vendors or contractors are not suspended or debarred from doing business, prior to contracting with them, and maintaining documentation of this. The County should consider adding a Federal Procurement Checklist that covers the applicable Uniform Guidance requirements that should be completed when making purchases and retained with other procurement documents. Views of responsible officials: There is no disagreement with the audit finding.
2023 – 003 Procurement and Suspension and Debarment Federal Agency: U.S. Department Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Fund Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP3738 11/30/2021 Award Period: March 3, 2021 through December 31, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matter Criteria or specific requirement: Uniform Grant Guidance (2 CFR 200.303) requires non-federal entities receiving Federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Uniform Grant Guidance (2 CFR 200.318, 2 CFR 200.319, 2 CFR 200.324, 2 CFR 180.220, and 2 CFR 200.320,) requires a non-federal entity to maintain records sufficient to detail the history of procurement, the providing of full and open competition, the performing of cost or price analysis, and prohibits the non-federal entity to contract or make subawards to parties that are suspended or debarred (covered transactions over $25,000). These records will include the rationale for the method of procurement, selection of contract type, contractor selection or rejection, the basis for the contract price, how full and open competition was provided, the cost or price analysis performed, and verification the vendor is not suspended or debarred through the SAMs exclusion list, collecting of certification from the entity, or by adding a clause or condition to the covered transaction with the entity. Procurement methods used must be appropriate based on the dollar amount and conditions specified. Condition: Procurement methods for certain federal award purchases were not adequately documented or appropriately selected in accordance with the County’s procurement policy. In addition, the County did not maintain records the vendor was not suspended or debarred prior to entering into the transactions. Questioned costs: Unknown Context: 6 of 6 tested for procurement documentation and 6 of 6 tested for suspension and debarment documentation. Cause: With new federal funding opportunities due to the pandemic, and new guidance related to those grants, proper documentation was not retained. County policies have not been updated yet. Effect: May result in a disallowed cost if grant requirements are not followed. Repeat Finding: This is a repeat finding. Prior year finding number was 2022-003. Recommendation: We recommend the County carefully review federal procurement requirements for proper documentation needed. The County should consider use of a Federal procurement checklist. Views of responsible officials: There is no disagreement with the audit finding.
2023 SINGLE AUDIT FINDING SA-1: Compliance Element: Allowable Costs Federal Department – Department of the Treasury COVID-19 - Provider Relief Fund and American Rescue Plan (ARPA) Coronavirus State and Local Fiscal Recovery Fund Federal Assistance Listing # 21.027 County Department – County Board CRITERIA: A. As outlined in the Uniform Guidance at 2 CFR Part 200, Subpart E regarding Cost Principles, allowable costs are based on the premise that a recipient is responsible for the effective administration of Federal awards, application of sound management practices, and administration of Federal funds in a manner consistent with the program objectives and terms and conditions of the award. In addition, CFR 200.318 subparagraph (c), Uniform Administration Requirements, Cost Principles and Audit Requirements for Federal Awards regarding conflicts of interest states: (c) Conflicts of interest. (1) The recipient or subrecipient must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award, and administration of contracts. No employee, officer, agent, or board member with a real or apparent conflict of interest may participate in the selection, award, or administration of a contract supported by the Federal award. A conflict of interest includes when the employee, officer, agent, or board member, any member of their immediate family, their partner, or an organization that employs or is about to employ any of the parties indicated herein, has a financial or other interest in or a tangible personal benefit from an entity considered for a contract. An employee, officer, agent, and board member of the recipient or subrecipient may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors. However, the recipient or subrecipient may set standards for situations where the financial interest is not substantial or a gift is an unsolicited item of nominal value. The recipient's or subrecipient's standards of conduct must also provide for disciplinary actions to be applied for violations by its employees, officers, agents, or board members. (2) If the recipient or subrecipient has a parent, affiliate, or subsidiary organization that is not a State, local government, or Indian Tribe, the recipient or subrecipient must also maintain written standards of conduct covering organizational conflicts of interest. Organizational conflicts of interest mean that because of relationships with a parent company, affiliate, or subsidiary organization, the recipient or subrecipient is unable or appears to be unable to be impartial in conducting a procurement action involving a related organization. B. Section II of the 2022 Final Rule details the allowable uses of ARPA Awards. As a recipient of an SLFRF award, the County had substantial discretion to use the award funds in the ways that best suit the needs its constituents as long as such use fits into one of the following seven statutory categories: 1. To respond to the COVID-19 public health emergency or its negative economic impacts; 2. To respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers of the recipient that are performing such essential work, or by providing grants to eligible employers that have eligible workers who perform essential work; 3. For the provision of government services, to the extent of the reduction in revenue of such recipient due to the COVID–19 public health emergency, relative to revenues collected in the most recent full fiscal year of the recipient prior to the emergency; 4. To make necessary investments in water, sewer, or broadband infrastructure; 5. To provide emergency relief from natural disasters or the negative economic impacts of natural disasters; 6. For projects eligible under the 26 surface transportation programs specified in the 2023 CAA (Surface Transportation projects); or 7. For projects eligible under Title I of the Housing and Community Development Act of 1974 (Title I projects). In addition, sections 602(c)(4) and 603(c)(5) of the Social Security Act, as amended by the Infrastructure Investment and Jobs Act, provide that SLFRF funds may be used for an authorized Bureau of Reclamation project for purposes of satisfying any non-Federal matching requirement required for the project. The Final Rule also detailed Standards for Identifying a Public Health or Negative Economic Impact Standards: Designating a Public Health Impact. Per the Final Rule: First, there must be a negative public health impact or harm experienced by an individual or a class. For ease of administration, the interim final rule allowed, and the final rule maintains the ability for, recipients to identify a public health impact on a population or group of individuals, referred to as a “class,” and to provide assistance to that class. In determining whether an individual is eligible for a program designed to address a harm experienced by a class, the recipient need only document that the individual is within the class that experienced a public health impact, see section Standards: Designating Other Impacted Classes. In the case of some impacts, for example impacts of COVID-19 itself that are addressed by providing prevention and mitigation services, such a class could reasonably include the general public. Second, the program, service, or other intervention must address or respond to the identified impact or harm. The final rule maintains the interim final rule requirement that eligible uses under this category must be in response to the disease itself or other public health harms that it caused. Responses must be reasonably designed to benefit the individual or class that experienced the public health impact or harm. Uses of funds should be assessed based on their responsiveness to their intended beneficiaries and the ability of the response to address the impact or harm experienced by those beneficiaries. Responses must also be related and reasonably proportional to the extent and type of public health impact or harm experienced. Uses that bear no relation or are grossly disproportionate to the type or extent of harm experienced would not be eligible uses. Reasonably proportional refers to the scale of the response compared to the scale of the harm. It also refers to the targeting of the response to beneficiaries compared to the amount of harm they experienced. In evaluating whether a use is reasonably proportional, recipients should consider relevant factors about the harm identified and the response. For example, recipients may consider the size of the population impacted and the severity, type, and duration of the impact. Recipients may also consider the efficacy, cost, cost-effectiveness, and time to delivery of the response. If a recipient intends to fund capital expenditures in response to the public health impacts of the pandemic, recipients should refer to the section Capital Expenditures for details about the eligibility of capital expenditures. C. Per the Final Rule, capital expenditures, in certain cases, can be appropriate responses to the public health and economic impacts of the pandemic, in addition to programs and services. Like other eligible uses of SLFRF funds in this category, capital expenditures should be a related and reasonably proportional response to a public health or negative economic impact of the pandemic. The final rule clarifies and expands how SLFRF funds may be used for certain capital expenditures, including criteria and documentation requirements specified in this section, as applicable. However, large capital expenditures intended for general economic development or to aid the travel, tourism, and hospitality industries—such as convention centers and stadiums—are, on balance, generally not reasonably proportional to addressing the negative economic impacts of the pandemic, as the efficacy of a large capital expenditure intended for general economic development in remedying pandemic harms may be very limited compared to its cost. CONDITIONS: E. Conflict of Interest - A privately owned local business was awarded a $1,000,000 ARPA grant from the County as a subrecipient. However, one of the owners of the privately owned local business is the currently elected County Sheriff. During the fiscal year ended November 30, 2023, the local business received $549,437.47 of the $1,000,000 award. The remainder of the $1,000,000 award was disbursed in the subsequent fiscal year. F. Unallowable Costs - $1,000,000 ARPA Award - The privately owned local business submitted invoices in the following expense categories as support for use of the $1,000,000 ARPA Award: 7) $538,167.08 - Capital improvements to the commercial building that is privately owned. 8) $58,616.42 - Engineering fees for local road improvements. 9) $23,429.00 - Legal fees paid for income tax advice to the owners of the privately owned local business. 10) $787.50 - Other legal fees paid on behalf of the privately owned local business. 11) $329,500.00 - Design fees for a new beef plant. 12) $49,500.00 - Enterprise Zone fees for privately owned local business. G. Lack of required justification including all elements for capital expenditures equal to or greater than $1,000,000 - The Final Rule required the County to prepare a written justification for capital expenditures equal to or greater than $1,000,000; however, a written justification that included all required elements was not prepared. The written justification should have include the following: 1. Description of harm or need to be addresses (i.e. number of individuals). Recipients should provide a description of the specific harm or need to be addressed, and why the harm was exacerbated or caused by the public health emergency. When appropriate, recipients may provide quantitative information on the extent and type of the harm, such as the number of individuals or entities affected. 2. Explanation of why the capital expenditure is appropriate (i.e. why existing resources are inadequate). Recipients should provide an independent assessment demonstrating why a capital expenditure is appropriate to address the specified harm or need. This should include an explanation of why existing capital equipment, property, or facilities would be inadequate to addressing the harm or need and why policy changes or additional funding to pertinent programs or services would be insufficient without the corresponding capital expenditures. Recipients are not required to demonstrate that the harm or need would be irremediable but for the additional capital expenditure; rather, they may show that other interventions would be inefficient, costly, or otherwise not reasonably designed to remedy the harm without additional capital expenditure. 3. Comparison of proposed capital expenditure project against at least two alternative capital expenditures and why the proposed capital expenditure is superior. Recipients should provide an objective comparison of the proposed capital expenditure against at least two alternative capital expenditures and demonstrate why their proposed capital expenditure is superior to alternative capital expenditures that could be made. Specifically, recipients should assess the proposed capital expenditure against at least two alternative types or sizes of capital expenditures that are potentially effective and reasonably feasible. Where relevant, recipients should compare the proposal against the alternative of improving existing capital assets already owned or leasing other capital assets. Recipients should use quantitative data when available, although they are encouraged to supplement with qualitative information and narrative description. Recipients that complete analyses with minimal or no quantitative data should provide an explanation for doing so. H. Unallowable Costs –$200,000 ARPA Award - Another privately owned business with a restaurant location in another County was awarded $200,000 as an ARPA subrecipient to open a different restaurant location in the County. The purpose of the award was to fund remodeling costs for the new location. The location in another County was open prior to the declaration of the pandemic. However, the new location in the County was not. CAUSE: Lack of application of allowable costs principles and appropriate monitoring of allowable costs principles as stated in the 2022 Final Rule. EFFECT: Grant funds were awarded to subrecipients that did not have eligible projects under the terms and conditions of COVID-19 - Provider Relief Fund and American Rescue Plan (ARPA) Coronavirus State and Local Fiscal Recovery Fund QUESTIONED COSTS: For the $1,000,000 ARPA Award - $549,437.47 of grant expenditures for the year ended November 30, 2023. For the $200,000 ARPA Award - $100,000 of grant expenditures for the year ended November 30, 2023. IDENTIFICATION OF REPEATED FINDINGS: None. RECOMMENDATION: We recommend that the County review the allowable costs principles and consult with the grant body to determine if grant repayment is required. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS: See corrective action plan. ANCITPATED COMPLETION DATE: See corrective action plan.
Finding 2023-003 Significant deficiency in internal controls over compliance related to procurement. Federal Agency: U.S. Department of Commerce Program Title: Pacific Fisheries Data Program Assistance Listing Number: 11.437 Award Numbers: NOAA-NMFS-AK-2023-2007663 Award Period: October 1, 2022 to September 30, 2027 Criteria 2 U.S. Code of Federal Regulations (CFR) Part 200 Uniform Administrative Requirements, Procurement Standards require that awardees use documented procurement procedures for the acquisition of property or services required under a Federal award or subaward. Condition/Context for Evaluation IPHC's internal controls over procurement do not include the controls and procedures required by 2 CFR 200.318(a) Questioned Costs Not applicable. Cause IPHC has not yet modified its procurement policies with the requirements of the 2 CFR Part 200 Subpart D Procurement Standards. Effect or Potential Effect As a result, IPHC cannot be certain that procurements were conducted in accordance with the 2 CFR Part 200 Subpart D Procurement Standards. Repeat Finding Not applicable. Recommendation We recommend that IPHC update its procurement policy to include all procurement requirements of 2 CFR Part 200 Subpart D. Views of Responsible Officials of Auditee Management concurs with the finding and has provided the accompanying corrective action plan.
Signficiant Deficiency - Internal Controls over Procurement Department of Treasury - Direct Program- COVID 19 Coronavirus State and Local Fiscal Recovery Funds - ALN 21.027 - Program Year 2023 Criteria - Coronavirus State and Local Fiscal Recovery Fund (CSLFRF) award funds may be used to enter into contracts to procure goods and services necessary to implement one or more of the eligible purposes outline in 42 sections 802(c) and 803(c) and the Treasury's Interim and Final Rules. Recipients are expected to have procurement standards outline in the Uniform Guidance as set out in 2 CFR sections 200.318 through 200.326. Condition- The County did not obtain the supporting documentation from the Medical Examiner's Office at the time of the purchases to support that the procurement standards as outline in Uniform Guidance had been followed. Cause/Effect - The State of Florida Medical Examiner does have procurement policies in place that state that the County's Medical Examiner shall follow the procurement standards as outline in the Uniform Guidance. The County Medical Examiner follows the procurement policies of the State of Florida Medical Examiner. However, the County did not obtain documentation from the County Medical Examiner to support the procurement policies and Uniform Guidance had been followed as of the time of the purchase. Questioned Costs- None Auditor's Recommendation - We recommend the County obtain all documentation to support compliance with procurement under Uniform Guidance prior to the purchase of goods or services. Management Response - See Correction Plan Letter
Finding 2023-003 Significant deficiency in internal controls over compliance related to procurement. Federal Agency: U.S. Department of Commerce Program Title: Pacific Fisheries Data Program Assistance Listing Number: 11.437 Award Numbers: NOAA-NMFS-AK-2023-2007663 Award Period: October 1, 2022 to September 30, 2027 Criteria 2 U.S. Code of Federal Regulations (CFR) Part 200 Uniform Administrative Requirements, Procurement Standards require that awardees use documented procurement procedures for the acquisition of property or services required under a Federal award or subaward. Condition/Context for Evaluation IPHC's internal controls over procurement do not include the controls and procedures required by 2 CFR 200.318(a) Questioned Costs Not applicable. Cause IPHC has not yet modified its procurement policies with the requirements of the 2 CFR Part 200 Subpart D Procurement Standards. Effect or Potential Effect As a result, IPHC cannot be certain that procurements were conducted in accordance with the 2 CFR Part 200 Subpart D Procurement Standards. Repeat Finding Not applicable. Recommendation We recommend that IPHC update its procurement policy to include all procurement requirements of 2 CFR Part 200 Subpart D. Views of Responsible Officials of Auditee Management concurs with the finding and has provided the accompanying corrective action plan.
2023-002 Compliance with Procurement, Suspension and Debarment Requirement Information on the Federal Program: U.S. Department of State Assistance Listing Number: 19.517 Assistance Listing Name: Overseas Refugee Assistance for Africa Grant Award Number: Direct Award Number Award Period SPRMCO23CA0016 November 21, 2022 through July 31, 2024 Criteria or Specific Requirement: In accordance with 2 CFR §200.318(a), General Procurement Standards, the non-federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable federal law and the standards identified in General Procurement Standards. Additionally, §200.318(i) states that the non-federal entity must maintain records sufficient to detail the history of the procurement. These records are required to include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. In accordance with §200.213 and §180.300, Suspension and Debarment, non-federal entities cannot enter into awards, subawards, or contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in federal assistance programs or activities. Non-federal entities must either check for exclusions in the System for Award Management (SAM); collect a certification from the entity, or add a clause or condition to the covered transaction with the entity prior to entering into a covered transaction with a non-federal entity. In addition, in accordance with §180.415(b), non-federal entities cannot renew or extend covered transactions (other than no-cost time extension) with any excluded person, or under which an excluded person is a principal, unless the non-federal entity obtains an exception under §180.135. Condition: During our testing of the procurement, suspension and debarment compliance requirements, we identified one procurement sample out of a total of six procurement samples tested wherein management was unable to provide evidence that the suspension and debarment check was performed prior to entering into contract with the vendor. Management has subsequently determined that the vendor was not suspended or debarred. Questioned Costs: There are no known or likely questioned costs. Context: This is a condition based on testing of CRS’s compliance with specified requirements. The prevalence of the finding is detailed in the condition section above. The samples were selected using a non-statistical method. Cause: CRS country office personnel did not adhere to CRS’s documented policies and procedures for ensuring proper suspension and debarment validations were performed prior to entering a covered transaction. Effect: Failure to timely verify that a vendor is not suspended or debarred could result in transactions involving unreasonable costs or result in unintentionally entering into a contract with an entity that is barred from performing work for the Federal government. Repeat Finding: This is a repeat of finding 2022-003. Recommendation: We recommend that management ensure that suspension and debarment regulations are followed. Views of Responsible Officials: Management notes that the total comprehensive checks executed against major watchlists (including SAM.gov) in CRS totaled 24,513 (unaudited) in FY 2023 alone. While management agrees with BDO's assessment of the samples, it should be noted that CRS is strongly committed to compliance with applicable suspension and debarment regulations. Please see Appendix B for Management’s Corrective Action Plan.
U.S. Department of the Treasury Federal Financial Assistance Listing 21.027 COVID‐19 – Coronavirus State and Local Fiscal Recovery Funds Procurement, Suspension, and Debarment Material Weakness in Internal Control over Compliance 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: We noted that while the City does have a purchasing policy, elements as required by Uniform Guidance are absent from the policy. In addition, elements that are required to be included in contracts with vendors who are paid using federal monies were missing from the contracts. Cause: The City had not had single audits performed until recently as a result of the increase in funding due to the COVID‐19 pandemic. Because of this, they had not updated their purchasing policy to be compliance with Uniform Guidance. Effect: While our testing noted no instances of noncompliance, the absence of internal controls over compliance as it relates to having a Uniform Guidance compliant policy, could lead the City to enter into covered transactions that are not compliant with federal regulations. Questioned Costs: None reported. Context/Sampling: Sampling was not used to test the policy. Repeat Finding from Prior Year(s): No Recommendation: The City should review the applicable provisions of the CFR to ensure their written procurement policy is compliant with Uniform Guidance requirements. Views of Responsible Officials: Management agrees with the finding.
Finding 2023-002 Significant Deficiency in Internal Control over Compliance and Noncompliance – Procurement, Suspension, and Debarment Standards. Identification of federal program: 84.356 Alaska Native Educational Program. Criteria or specific requirement: § 200.318(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 200.317 through 200.327. § 200.318(i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not 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: It was noted that Chugachmiut has documented procurement policies consistent with the Uniform Guidance, however Chugachmiut did not maintain evidence that they followed their own documented procurement policy for procurements greater than the micro-purchase threshold. Cause: Chugachmiut does not have an administrative review process to ensure that the procurement documentation supporting purchases greater than the micropurchase threshold are maintained in accordance with Chugachmiut’s procurement policies. Effect or potential effect: Chugachmiut is out of compliance with Uniform Guidance procurement standards. Questioned Costs: None Context: For this program, it was noted during the auditor’s review of certain contracts exceeding the micro-purchase threshold that procurement was not followed for a purchase charged to this federal program. It was noted that the contract was documented as a sole source contract; however it was not evident that the contract met the criteria to be appropriately considered as such. Management has since performed an internal review of their procurement policies and has made certain changes in roles and responsibilities to ensure that procurement standards are appropriately followed. Identification of Repeat Finding: Not applicable. Recommendations: We recommend that as a part of Chugachmiut’s internal control structure over compliance with Uniform Guidance, that Chugachmiut prepare a checklist, reflective of Chugachmiut’s approved procurement policies, to be completed before procurements can be awarded and all documents supporting that checklist be filed together. Views of Responsible Officials: See Corrective Action Plan
Reference Number: 2023-001 Compliance Requirement: Procurement and Suspension/Debarment Type of Finding: Compliance Internal Control Impact: None Compliance Impact: Material Noncompliance AL Number and Title: 84.425 - COVID-19 Education Stabilization Fund Federal Awarding Agency: U. S. Department of Education Federal Award Number: None Pass-through Entity: Alabama Department of Education Pass-through Award Number: None Questioned Costs: $1,029,533.57 Items purchased were not competitively bid in accordance with Procurement and Suspension/Debarment requirements. Finding The U.S. Code of Federal Regulations Title 2, Part 200.318, of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) states that non-Federal entities must have and use its own documented procurement procedures which reflect State and local laws and regulations provided that the procurements conform to applicable Federal law and the standards identified within that section. The Code of Alabama 1975, Title 39, which is a State law, requires the construction, installation, repair, renovation of public buildings in excess of $50,000.00 that are paid, in whole or part, with public funds to be bid under the provisions of the Public Works Law. In addition, the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) 2CFR 200.320, states that when the aggregate dollar amount is higher than the simplified acquisition threshold ($250,000.00), the Uniform Guidance requires one of the two “formal procurement methods”, sealed bids or formal request for proposals should be used. The Blount County Board of Education (the “Board”) entered a Public Works contract in November 2021 for the purchase and installation of HVAC units at multiple local schools totaling $1,576,971.00 of which $1,029,533.57 of COVID-19 Education Stabilization Funds were expended during the audit period, The Board did not obtain bids on the project in accordance with the State of Alabama Public Works Law. The Board used a purchasing consortium contract which is not allowed under the Public Works Law or the procurement guidelines contained in the Uniform Guidance for purchases greater than the simplified acquisition threshold. As a result, the Board did not comply with Uniform Guidance procurement requirements for these purchases. Recommendation: The Board should ensure compliance with the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) 2 CFR 200.318 and CFR 200.320 and the Code of Alabama 1975, Title 39. Views of Responsible Officials of the Auditee The Board agrees with the finding.
Reference Number: 2023-001 Compliance Requirement: Procurement and Suspension/Debarment Type of Finding: Compliance Internal Control Impact: None Compliance Impact: Material Noncompliance AL Number and Title: 84.425 - COVID-19 Education Stabilization Fund Federal Awarding Agency: U. S. Department of Education Federal Award Number: None Pass-through Entity: Alabama Department of Education Pass-through Award Number: None Questioned Costs: $1,029,533.57 Items purchased were not competitively bid in accordance with Procurement and Suspension/Debarment requirements. Finding The U.S. Code of Federal Regulations Title 2, Part 200.318, of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) states that non-Federal entities must have and use its own documented procurement procedures which reflect State and local laws and regulations provided that the procurements conform to applicable Federal law and the standards identified within that section. The Code of Alabama 1975, Title 39, which is a State law, requires the construction, installation, repair, renovation of public buildings in excess of $50,000.00 that are paid, in whole or part, with public funds to be bid under the provisions of the Public Works Law. In addition, the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) 2CFR 200.320, states that when the aggregate dollar amount is higher than the simplified acquisition threshold ($250,000.00), the Uniform Guidance requires one of the two “formal procurement methods”, sealed bids or formal request for proposals should be used. The Blount County Board of Education (the “Board”) entered a Public Works contract in November 2021 for the purchase and installation of HVAC units at multiple local schools totaling $1,576,971.00 of which $1,029,533.57 of COVID-19 Education Stabilization Funds were expended during the audit period, The Board did not obtain bids on the project in accordance with the State of Alabama Public Works Law. The Board used a purchasing consortium contract which is not allowed under the Public Works Law or the procurement guidelines contained in the Uniform Guidance for purchases greater than the simplified acquisition threshold. As a result, the Board did not comply with Uniform Guidance procurement requirements for these purchases. Recommendation: The Board should ensure compliance with the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) 2 CFR 200.318 and CFR 200.320 and the Code of Alabama 1975, Title 39. Views of Responsible Officials of the Auditee The Board agrees with the finding.
Reference Number: 2023-001 Compliance Requirement: Procurement and Suspension/Debarment Type of Finding: Compliance Internal Control Impact: None Compliance Impact: Material Noncompliance AL Number and Title: 84.425 - COVID-19 Education Stabilization Fund Federal Awarding Agency: U. S. Department of Education Federal Award Number: None Pass-through Entity: Alabama Department of Education Pass-through Award Number: None Questioned Costs: $1,029,533.57 Items purchased were not competitively bid in accordance with Procurement and Suspension/Debarment requirements. Finding The U.S. Code of Federal Regulations Title 2, Part 200.318, of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) states that non-Federal entities must have and use its own documented procurement procedures which reflect State and local laws and regulations provided that the procurements conform to applicable Federal law and the standards identified within that section. The Code of Alabama 1975, Title 39, which is a State law, requires the construction, installation, repair, renovation of public buildings in excess of $50,000.00 that are paid, in whole or part, with public funds to be bid under the provisions of the Public Works Law. In addition, the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) 2CFR 200.320, states that when the aggregate dollar amount is higher than the simplified acquisition threshold ($250,000.00), the Uniform Guidance requires one of the two “formal procurement methods”, sealed bids or formal request for proposals should be used. The Blount County Board of Education (the “Board”) entered a Public Works contract in November 2021 for the purchase and installation of HVAC units at multiple local schools totaling $1,576,971.00 of which $1,029,533.57 of COVID-19 Education Stabilization Funds were expended during the audit period, The Board did not obtain bids on the project in accordance with the State of Alabama Public Works Law. The Board used a purchasing consortium contract which is not allowed under the Public Works Law or the procurement guidelines contained in the Uniform Guidance for purchases greater than the simplified acquisition threshold. As a result, the Board did not comply with Uniform Guidance procurement requirements for these purchases. Recommendation: The Board should ensure compliance with the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) 2 CFR 200.318 and CFR 200.320 and the Code of Alabama 1975, Title 39. Views of Responsible Officials of the Auditee The Board agrees with the finding.
Federal Agency: Department of Treasury Assistance Listing Number and Title: 21.027 – Coronavirus State and Local Fiscal Recovery Funds Funding Year(s): 2023-2026 Criteria: Per 2 CFR §200.318, General procurement standards, the entity must establish policies for procurement of equipment, real property and other services funded by federal funds. The procurement records and files for purchases in excess of the micro purchase threshold shall include at a minimum the following items: the basis for contractor selection, justification for lack of competition when competitive bids are not obtained, and basis for award cost or price. In addition, award recipients must not utilize any vendor which is suspended or debarred or is otherwise excluded from the central contractor registry. To ensure this is done, recipients should utilize the Excluded Parties List System website. Condition/Context: For our sample of one (representing the entire population), there was no documentation of policies and procedures for procurement of equipment, real property and other services funded by federal funds. We determined for this program that rate quotations and rationale for limited competition was not retained for the vendor. It was also determined that there was no documentation retained regarding verification of vendor suspension or debarment for the vendor. Questioned Costs: None noted. Cause: The entity has written policies for construction procurements, including requirements to obtain at least 2 competitive bids for projects over $5,000 and two proposals for architectural services over $100,000. The entity’s policies also require use of American Institute of Architects contract agreements for construction projects among other requirements. However, the entity does not have policies and procedures designed for procurements under the Uniform Guidance, and therefore, there is not a formal process established to document the performance of such controls. We note that inadequate controls could result in a reasonable possibility that the entity would not be able to detect and correct noncompliance in a timely manner. Effect: Costs charged to federal awards without appropriate documentation of procurement policies and processes may be subject to disallowance. Repeat Finding: No. Recommendation: We recommend developing written procurement policies in accordance with the Uniform Guidance and implementing a system of review and approval controls to complement the design of processes over the procurement, suspension, and debarment compliance requirements. In addition, we recommend retaining documentation regarding procurement decisions including rate quotations and verification of vendor suspension and debarment checks. Views of Responsible Officials: Management notes the details of this finding and the resulting material weakness. Management will enact processes outlined in our Corrective Action Plan to correct this deficiency in the future.
Federal Agency: Department of Treasury Assistance Listing Number and Title: 21.027 – Coronavirus State and Local Fiscal Recovery Funds Funding Year(s): 2023-2026 Criteria: Per 2 CFR §200.318, General procurement standards, the entity must establish policies for procurement of equipment, real property and other services funded by federal funds. The procurement records and files for purchases in excess of the micro purchase threshold shall include at a minimum the following items: the basis for contractor selection, justification for lack of competition when competitive bids are not obtained, and basis for award cost or price. In addition, award recipients must not utilize any vendor which is suspended or debarred or is otherwise excluded from the central contractor registry. To ensure this is done, recipients should utilize the Excluded Parties List System website. Condition/Context: For our sample of one (representing the entire population), there was no documentation of policies and procedures for procurement of equipment, real property and other services funded by federal funds. We determined for this program that rate quotations and rationale for limited competition was not retained for the vendor. It was also determined that there was no documentation retained regarding verification of vendor suspension or debarment for the vendor. Questioned Costs: None noted. Cause: The entity has written policies for construction procurements, including requirements to obtain at least 2 competitive bids for projects over $5,000 and two proposals for architectural services over $100,000. The entity’s policies also require use of American Institute of Architects contract agreements for construction projects among other requirements. However, the entity does not have policies and procedures designed for procurements under the Uniform Guidance, and therefore, there is not a formal process established to document the performance of such controls. We note that inadequate controls could result in a reasonable possibility that the entity would not be able to detect and correct noncompliance in a timely manner. Effect: Costs charged to federal awards without appropriate documentation of procurement policies and processes may be subject to disallowance. Repeat Finding: No. Recommendation: We recommend developing written procurement policies in accordance with the Uniform Guidance and implementing a system of review and approval controls to complement the design of processes over the procurement, suspension, and debarment compliance requirements. In addition, we recommend retaining documentation regarding procurement decisions including rate quotations and verification of vendor suspension and debarment checks. Views of Responsible Officials: Management notes the details of this finding and the resulting material weakness. Management will enact processes outlined in our Corrective Action Plan to correct this deficiency in the future.