DEPARTMENT OF HEALTH AND HUMAN SERVICES Program Information Assistance Listing # 93.137 Community Programs to Improve Minority Health Grant Program 2022-002 Policies and Procedures Material Weakness Criteria: The Code of Federal Regulations (CFR) Section 200.318 - 200.326 require written policies concerning methods of procurement for goods and services. Condition: The Organization did not have a written procurement policy that included all of the required elements during 2022. Cause: The Organization is smaller and while general procedures for the procurement of goods and services have been established, they were not written and did not meet all of the requirements of the CFR. Effect: The Organization is not in compliance with Section 200.318 - 200.326 of the Code of Federal Regulations. Auditor?s Recommendation: We recommend that the Organization adopt a formal written procurement policy in the format and with the elements required by 2 CFR Sections 200.318 to 200.326. Views of Responsible Officials and Planned Corrective Actions: The Organization agrees with the finding and adopted a ?Fiscal Policies and Procedures Manual? on October 1, 2022.
DEPARTMENT OF HEALTH AND HUMAN SERVICES Program Information Assistance Listing # 93.137 Community Programs to Improve Minority Health Grant Program 2022-002 Policies and Procedures Material Weakness Criteria: The Code of Federal Regulations (CFR) Section 200.318 - 200.326 require written policies concerning methods of procurement for goods and services. Condition: The Organization did not have a written procurement policy that included all of the required elements during 2022. Cause: The Organization is smaller and while general procedures for the procurement of goods and services have been established, they were not written and did not meet all of the requirements of the CFR. Effect: The Organization is not in compliance with Section 200.318 - 200.326 of the Code of Federal Regulations. Auditor?s Recommendation: We recommend that the Organization adopt a formal written procurement policy in the format and with the elements required by 2 CFR Sections 200.318 to 200.326. Views of Responsible Officials and Planned Corrective Actions: The Organization agrees with the finding and adopted a ?Fiscal Policies and Procedures Manual? on October 1, 2022.
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. In the case of an emergency or sole source purchase, proper documentation of this must be maintained. Condition: Emergency purchases for Federal awards were not adequately documented to support the lack of traditional procurement process being required. Questioned costs: None Context: In the testing of 6 of 10 procurement transactions, the County did not maintain appropriate documentation to support they were emergency purchases. Cause: With new federal funding opportunities arising due to the COVID-19 pandemic, and new guidance related to those grants, departmental grant personnel were not aware of these requirements. Effect: Lack of internal control procedures can lead to noncompliance with grant requirements. Repeat Finding: This is a repeat finding of part of prior year finding 2021-004 Recommendation: We recommend updating written procurement policies and ensuring procedures are complete and in accordance with Uniform Grant Guidance for any federal purchases, and proper documentation is maintained. The County should consider adding a Federal Procurement Checklist that covers the applicable Uniform Grant 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.
Criteria or Specific Requirement: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at Title 2 U.S. Code of Federal Regulations (CFR) sections 200.318 through 200.236. 2 CFR section 200.318(a) indicates the non-federal entity's documented procurement procedures must conform to the procurement standards identified in these sections. The general requirements are that the Organization maintain written standards of conduct, full and open competition, and methods of procurement to be followed including formal and informal procurement processes based on a defined threshold. Condition: The Organization lacks a documented procurement policy, therefore the procurement standards required may not be implemented. Cause: FRESHFARM Markets, Inc. does not have a process for reviewing its accounting and organizational policies on a regular basis. Effect or potential effect: Costs for purchases subject to the procurement standards could be disallowed if appropriate procedures are not followed. Repeat Finding: No. Recommendation: The Organization should design and implement a procurement policy. This policy should be reviewed annually, or more frequently, if necessary, to ensure any changes in laws and regulations are reflected in internal procedures.
Criteria or Specific Requirement: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at Title 2 U.S. Code of Federal Regulations (CFR) sections 200.318 through 200.236. 2 CFR section 200.318(a) indicates the non-federal entity's documented procurement procedures must conform to the procurement standards identified in these sections. The general requirements are that the Organization maintain written standards of conduct, full and open competition, and methods of procurement to be followed including formal and informal procurement processes based on a defined threshold. Condition: The Organization lacks a documented procurement policy, therefore the procurement standards required may not be implemented. Cause: FRESHFARM Markets, Inc. does not have a process for reviewing its accounting and organizational policies on a regular basis. Effect or potential effect: Costs for purchases subject to the procurement standards could be disallowed if appropriate procedures are not followed. Repeat Finding: No. Recommendation: The Organization should design and implement a procurement policy. This policy should be reviewed annually, or more frequently, if necessary, to ensure any changes in laws and regulations are reflected in internal procedures.
Finding Number: 2022-001 Agency: U.S. Department of Housing and Urban Development Federal program: Continuum of Care Program ALN: 14.267 Comliance requirement: Procurement Category: Compliance Questioned Costs: None Repeat finding: No Condition: During our audit procedures, we noted that four (4) transactions out of nine (9) examined did not include purchase orders. These four transactions were related to purchases which unit costs were above $250. Additionally, two (2) transactions out of nine (9) examined did not include documentation of verbal or written quotations for those transactions below $250. Criteria: 2 CFR ?200.318 requires that non-Federal entities 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. Non-Federal entities also must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders. Cause: Management is not following its internal control procedures established in its written procedures. The organization?s written procedures establish that all purchases over $250 require a purchase order (PO) as part of its procurement process. Furthermore, these procedures establish that for transactions under $250 require three quotations whether verbal or written. Effect: Failure to follow internal controls in the procurement process can have significant consequences for an organization. Internal controls are designed to safeguard the organization's assets, ensure compliance with policies and regulations, and prevent fraud, errors, and inefficiencies. Recommendation: To mitigate these consequences, organizations should establish and enforce robust internal controls for the procurement process, regularly review and update these controls, provide training to employees, and promote a culture of compliance and ethical behavior.
Identification of the Federal Program - Emergency Solutions Grant Program; Federal Assistance Listing ? 14.231 Criteria: The program is subject to the general procurement standards as applicable in Title 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance). 2 CFR 200.318 indicates that non-Federal entities must have and use documented procurement procedures consistent with state, local and tribal laws and regulations. Condition: The Organization?s procurement policy is not consistent with the general procurement standards as defined in Title 2, CFR Part 200. Certain provisions of the Organization?s policies were lacking or not consistent with the policies outlined in the general procurement standards. Cause: The Organization historically had not received a significant amount of federal grant awards and did not have a control structure in place to ensure that existing policies met the required elements. Since the COVID-19 pandemic, the Organization has been awarded several federal grant awards and as a result have needed some updates in policies. Effect: The Organization?s policies are not in compliance with the Uniform Guidance. Recommendation: We recommend that management review and revise its procurement policy to ensure it is in compliance with federal standards. Views of Responsible Officials: Management is aware of the deficiency of internal control over compliance related to the general procurement standards. The Organization is in the process of amending its financial policies and procedures to be more consistent with the requirements of 2 CFR 200.
Identification of the Federal Program - Emergency Solutions Grant Program; Federal Assistance Listing ? 14.231 Criteria: The program is subject to the general procurement standards as applicable in Title 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance). 2 CFR 200.318 indicates that non-Federal entities must have and use documented procurement procedures consistent with state, local and tribal laws and regulations. Condition: The Organization?s procurement policy is not consistent with the general procurement standards as defined in Title 2, CFR Part 200. Certain provisions of the Organization?s policies were lacking or not consistent with the policies outlined in the general procurement standards. Cause: The Organization historically had not received a significant amount of federal grant awards and did not have a control structure in place to ensure that existing policies met the required elements. Since the COVID-19 pandemic, the Organization has been awarded several federal grant awards and as a result have needed some updates in policies. Effect: The Organization?s policies are not in compliance with the Uniform Guidance. Recommendation: We recommend that management review and revise its procurement policy to ensure it is in compliance with federal standards. Views of Responsible Officials: Management is aware of the deficiency of internal control over compliance related to the general procurement standards. The Organization is in the process of amending its financial policies and procedures to be more consistent with the requirements of 2 CFR 200.
Finding - Procurement, Suspension and Debarment, CDFI Rapid Response Program, Assistance Listing Number 21.024, 2021-2023 Award Years, U.S. Department of Treasury; Criteria or Specific Requirement Non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. When a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. (2 CFR sections 200.212 and 200.318(h); 2 CFR section 180.300; 48 CFR section 52.209-6) Condition Found Out of five loans selected for testing, two of the loan agreements did not include a representation that the borrower is not currently debarred, suspended, excluded or disqualified by any Federal department or agency, and no other procedures were performed by the Organization to determine if these two borrowers were debarred, suspended, excluded or disqualified. A subsequent review of the borrowers determined that neither was debarred, suspended, excluded or disqualified. Cause A loan template from an outside entity was used which did not contain a representation that borrower is not currently debarred, suspended, excluded or disqualified, and no other procedures to check for suspension or debarment were conducted. Effect Loans to recipient borrowers that are debarred, suspended, excluded or disqualified could occur. Identification as a Repeat Finding Not a repeat finding. Questioned Costs None. Recommendation The award agreement requires that the Organization shall include in all of its procurement and nonprocurement contracts and agreements, between the Organization and an individual or entity receiving any portion of the CDFI RRP Assistance, a representation that such individual or entity is not currently debarred, suspended, excluded or disqualified by any Federal department or agency. We recommend procedures be implemented to include the review of agreements to determine that this required representation is included. View of Responsible Officials and Planned Corrective Action See corrective action plan.
FINDING 2022-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Procurement and Suspension and Debarment, Subrecipient Monitoring Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): CY2021 Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Procurement and Suspension and Debarment, Subrecipient Monitoring Audit Findings: Material Weakness, Modified Opinion Condition and Context The City made a payment to a non-profit agency (non-profit) in the amount of $350,000. The City could not provide documentation to support whether the non-profit was considered by the City to be a beneficiary or a subrecipient of State and Local Fiscal Recovery Funds (SLFRF). Documentation presented for audit to support the payment was an invoice from the non-profit and the City's approved Recovery Plan, neither of which included sufficient evidence to determine the relationship between the two entities. Due to the lack of sufficient audit evidence, we were unable to identify whether the payment was to a beneficiary or a subrecipient in order to perform the required corresponding audit procedures. If the non-profit had been determined by the City to be a subrecipient, the City would have been required to complete monitoring procedures designated for subrecipient relationships, including ensuring the non-profit complied with federal statutes, regulations, and the terms and conditions of the federal award. In addition, the City did not perform procedures to verify if the non-profit was suspended or debarred or otherwise prohibited from participating in federal awards prior to issuing the payment. Furthermore, the City did not have policies or procedures as part of a proper internal control system in place to ensure payments made from SLFRF funds were free of conflicts of interest. A conflict of interest arises when an employee, officer, or agent, any member of his or her immediate family, his or her partner, or an organization which employs or is about to employ any of the parties indicated, has a financial or other interest in or a tangible personal benefit from an entity considered for a payment. The Chief Executive Officer of the non-profit at the time that the payment of $350,000 was received was also the wife of the President of the Common Council. The President of the Common Council did not have a conflict-of-interest statement filed to disclose the circumstance, nor did the President of the Common Council abstain from voting on the City's plan for utilizing the SLFRF funding, which included the payment to the non-profit. In addition to the payment to the non-profit, the City paid premium pay, totaling $50,000, to ten exempt employees whose earnings exceeded the 150 percent of the average annual wage threshold. The City was required to notify the U.S. Department of the Treasury if the employees were classified as exempt or if the employees' wages were over the threshold. The City did not submit a reasoning for the premium pay payments. We consider the $400,000 paid to the non-profit and the employees to be questioned costs. The lack of internal controls and noncompliance were isolated to the payments as described 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). . . ." 31 CFR 35.6(b) states in part: "Responding to the public health emergency or its negative economic impacts. A recipient may use funds to respond to the public health emergency or its negative economic impacts if the use meets the criteria provided in paragraph (b)(1) of this section or is enumerated in paragraph (b)(3) of this section; . . . (1) Identifying eligible responses to the public health emergency or it negative impacts. (i) A program, service, or capital expenditure is eligible under this paragraph (b)(1) if a recipient identifies a harm or impact to a beneficiary or class of beneficiaries caused or exacerbated by the public health emergency or its negative impacts and the program, service, or capital expenditure responds to such harm. . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. . . . (g) be adequately documented. . . ." 31 CFR 35.3 states in part: ". . . Obligation means an order placed for property and services and entering into contracts, subawards, and similar transactions that require payment. . . ." Federal Register, Vol. 87, No.18, page 4400, states in part: ". . . as part of accepting the Award Terms and Conditions for SLFRF, each recipient agreed to maintain a conflict-of-interest policy consistent with 2 CFR 200.318(c) that is applicable to all activities funded with the SLFRF award. This award term requires recipients and subrecipients to report to Treasury or the pass-through agency, as appropriate, any potential conflict of interest related to the award funds per 2 CFR 200.112. . . ." 2 CFR 200.112 states: "The Federal awarding agency must establish conflict of interest policies for Federal awards. The non-Federal entity must disclose in writing any potential conflict of interest to the Federal awarding agency or pass-through entity in accordance with applicable Federal awarding agency policy." 2 CFR 200.318(c)(1) states in part: "The non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing actions of its employees engaged in the selection, award and administration of contracts. No employee, officer, or agent may participate in the selection, award, or administration of a contract supported by a Federal award if he or she has a real or apparent conflict of interest. Such a conflict of interest would arise when the employee, officer, or agent, any member of his or her immediate family, his or her partner, or an organization which employs or is about to employ any of the parties indicated herein, has a financial or other interest in or a tangible personal benefit from a firm considered for a contract. . . ." Coronavirus State and Local Fiscal Recovery Funds: Overview of the Final Rule, pages 35-36, states in part: "The Coronavirus State and Local Fiscal Recovery Funds may be used to provide premium pay to eligible workers performing essential work during the pandemic. Premium pay may be awarded to eligible workers up to $13 per hour. Premium pay must be in addition to wages or remuneration (i.e., compensation) the eligible worker otherwise receives. Premium pay may not exceed $25,000 for any single worker during the program. . . . 3. Confirm that the premium pay 'responds to' workers performing essential work during the COVID-19 public health emergency. Under the final rule, which broadened the share of eligible workers who can receive premium pay without a written justification, recipients may meet this requirement in one of three ways: ? Eligible worker receiving premium pay is earning (with the premium included) at or below 150 percent of their residing state or county's average annual wage for all occupations, as defined by the Bureau of Labor Statistics' Occupational Employment and Wage Statistics, whichever is higher, on an annual basis; or ? Eligible worker receiving premium pay is not exempt from the Fair Labor Standards Act overtime provisions; or ? If a worker does not meet either of the above requirements, the recipient must submit written justification to Treasury detailing how the premium pay is otherwise responsive to workers performing essential work during the public health emergency. This may include a description of the essential worker's duties, health, or financial risks faced due to COVID-19, and why the recipient determined that the premium pay was responsive. Treasury anticipates that recipients will easily be able to satisfy the justification requirement for front-line workers, like nurses and hospital staff. . . ." Cause The system of internal controls as established by management of the City was not properly designed, nor implemented. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect City management's views of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. These policies and procedures should include the preparation and retention of appropriate documentation to support a determination of the relationship with the non-profit. Additionally, policies and procedures were not in place to ensure conflict-of-interest statements or written justification for the premium pay paid to employees were filed as required. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result of the failure to identify, as well as document the relationship with the nonprofit, the City's compliance with the applicable compliance requirements could not be verified. If the City had determined the non-profit to be a subrecipient, the City would have been responsible for monitoring the non-profit, and additional audit procedures related to subrecipient monitoring would have been required. The failure to file a conflict-of-interest statement and abstain from voting on matters related to the SLFRF funds caused the payment to the non-profit to be a questioned cost of the federal award. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs Known questioned costs in the amount of $400,000 were identified as noted in the Condition and Context. Recommendation We recommended that management of the City design and implement a proper system of internal controls and develop policies and procedures to ensure adequate supporting documentation is retained to be presented for audit and that appropriate conflict-of-interest statements are filed. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
The District had inadequate controls for ensuring compliance with federal procurement and suspension and debarment requirements. Assistance Listing Number and Title: 93.323 ? COVID 19 ? Epidemiology and Laboratory Capacity for Infectious Diseases Federal Grantor Name: U.S. Department of Health and Human Services Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Health Pass-through Award/Contract Number: CLH31021 Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Description of Condition During fiscal year 2022, the District spent $514,448 in federal funding under the Epidemiology and Laboratory Capacity for Infectious Diseases program to provide contact tracing, case investigation, testing and community education related to the COVID-19 pandemic. Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Procurement policies and procedures Federal regulations require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR 200.318-327. The procedures must reflect the most restrictive of applicable federal requirements, state laws or local policies. Our audit found the District did not have written procurement policies or procedures, as federal regulations require. Procurement Federal regulations allow local governments to make purchases using a noncompetitive process for emergency and exigent circumstances. For a local government to use emergency procurement procedures, it must evaluate each procurement action individually and document its rationale for waiving competition. Our audit found the District?s internal controls were ineffective for ensuring it complied with federal procurement requirements and appropriately waived competitive procedures for contracted services. During the audit period, the District relied on the state?s general emergency declarations due to COVID-19 to waive competitive procedures for three purchased services contracts paid with federal funds. 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 District enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the contractors have not been suspended, debarred or otherwise excluded from participating in federal programs. The District may accomplish this verification by checking for exclusion records in the U.S General Services Administration?s System for Award Management (SAM.gov), obtaining a written certification from the contractor, or inserting a clause into the contract stating the contractor is not suspended or debarred. The District must perform this verification before entering into the contract, and it must keep documentation demonstrating compliance with this federal requirement. Our audit found the District?s internal controls were ineffective for ensuring it verified all contractors receiving $25,000 or more in federal funds were not suspended or debarred. The District did not obtain a written certification, include a clause in the contract, or document a search for exclusion records in SAM.gov to verify that three contractors were not suspended or debarred before entering into the contracts or charging costs to the federal award. The District paid these contractors a total of $172,846 during fiscal year 2022. We consider these deficiencies in internal controls to be material weaknesses, which led to material noncompliance. Cause of Condition Procurement policies and procedures District personnel did not prioritize adopting written procurement policies or procedures that conform to federal procurement standards. Procurement District personnel did not fully understand emergency procurement requirements. Suspension and debarment District personnel did not know about the suspension and debarment verification requirement. Effect of Condition Procurement policies and procedures Without written procurement procedures, the District is at greater risk of noncompliance with the most restrictive of federal, state, or local procurement methods when using federal funds to procure contractors. Procurement The District paid three contractors a total of $172,846 in federal program funds without competitively procuring or documenting its evaluation and rationale for using a noncompetitive process. Without effective internal controls, the District cannot ensure it allowed for full and open competition, received the best price, and complied with federal procurement requirements. Suspension and debarment Without adequate internal controls, the District cannot ensure the contractors paid with federal funds are eligible to participate in federal programs. Any program funds the District used to pay contractors that haven been suspended or debarred would be unallowable, and the grantor could potentially recover them. We subsequently verified the contractors were not suspended or debarred. Therefore, we are not questioning costs. Recommendation We recommend the District strengthen internal controls to ensure it: ? Develops written policies and procedures that conform with Uniform Guidance (2 CFR 200.318-327) for all procurement activities ? Procures goods and services in accordance with federal regulations, state law, and its own procurement policies and procedures ? Verifies that all contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred before entering into contracts with them or charging costs to a federal award, and maintain documentation demonstrating compliance with this requirement District?s Response We acknowledge that OCPHD does not have a current Procurement Policy and will prioritize establishing a policy for Board approval. We acknowledge that suspension and debarment documentation was not provided and will establish internal control measures to ensure contractors are eligible to participate in State and Federal programs. We understand the findings and are currently working to correct those internal controls. Auditor?s Remarks We appreciate the District's commitment to resolving the issues noted, and 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. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring goods and services, including noncompetitive procurement. Title 2 CFR Part 180, OMB Guidelines on Agencies on Governmentwide Department and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.
The District had inadequate controls for ensuring compliance with federal procurement and suspension and debarment requirements. Assistance Listing Number and Title: 93.323 ? COVID 19 ? Epidemiology and Laboratory Capacity for Infectious Diseases Federal Grantor Name: U.S. Department of Health and Human Services Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Health Pass-through Award/Contract Number: CLH31021 Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Description of Condition During fiscal year 2022, the District spent $514,448 in federal funding under the Epidemiology and Laboratory Capacity for Infectious Diseases program to provide contact tracing, case investigation, testing and community education related to the COVID-19 pandemic. Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Procurement policies and procedures Federal regulations require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR 200.318-327. The procedures must reflect the most restrictive of applicable federal requirements, state laws or local policies. Our audit found the District did not have written procurement policies or procedures, as federal regulations require. Procurement Federal regulations allow local governments to make purchases using a noncompetitive process for emergency and exigent circumstances. For a local government to use emergency procurement procedures, it must evaluate each procurement action individually and document its rationale for waiving competition. Our audit found the District?s internal controls were ineffective for ensuring it complied with federal procurement requirements and appropriately waived competitive procedures for contracted services. During the audit period, the District relied on the state?s general emergency declarations due to COVID-19 to waive competitive procedures for three purchased services contracts paid with federal funds. 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 District enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the contractors have not been suspended, debarred or otherwise excluded from participating in federal programs. The District may accomplish this verification by checking for exclusion records in the U.S General Services Administration?s System for Award Management (SAM.gov), obtaining a written certification from the contractor, or inserting a clause into the contract stating the contractor is not suspended or debarred. The District must perform this verification before entering into the contract, and it must keep documentation demonstrating compliance with this federal requirement. Our audit found the District?s internal controls were ineffective for ensuring it verified all contractors receiving $25,000 or more in federal funds were not suspended or debarred. The District did not obtain a written certification, include a clause in the contract, or document a search for exclusion records in SAM.gov to verify that three contractors were not suspended or debarred before entering into the contracts or charging costs to the federal award. The District paid these contractors a total of $172,846 during fiscal year 2022. We consider these deficiencies in internal controls to be material weaknesses, which led to material noncompliance. Cause of Condition Procurement policies and procedures District personnel did not prioritize adopting written procurement policies or procedures that conform to federal procurement standards. Procurement District personnel did not fully understand emergency procurement requirements. Suspension and debarment District personnel did not know about the suspension and debarment verification requirement. Effect of Condition Procurement policies and procedures Without written procurement procedures, the District is at greater risk of noncompliance with the most restrictive of federal, state, or local procurement methods when using federal funds to procure contractors. Procurement The District paid three contractors a total of $172,846 in federal program funds without competitively procuring or documenting its evaluation and rationale for using a noncompetitive process. Without effective internal controls, the District cannot ensure it allowed for full and open competition, received the best price, and complied with federal procurement requirements. Suspension and debarment Without adequate internal controls, the District cannot ensure the contractors paid with federal funds are eligible to participate in federal programs. Any program funds the District used to pay contractors that haven been suspended or debarred would be unallowable, and the grantor could potentially recover them. We subsequently verified the contractors were not suspended or debarred. Therefore, we are not questioning costs. Recommendation We recommend the District strengthen internal controls to ensure it: ? Develops written policies and procedures that conform with Uniform Guidance (2 CFR 200.318-327) for all procurement activities ? Procures goods and services in accordance with federal regulations, state law, and its own procurement policies and procedures ? Verifies that all contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred before entering into contracts with them or charging costs to a federal award, and maintain documentation demonstrating compliance with this requirement District?s Response We acknowledge that OCPHD does not have a current Procurement Policy and will prioritize establishing a policy for Board approval. We acknowledge that suspension and debarment documentation was not provided and will establish internal control measures to ensure contractors are eligible to participate in State and Federal programs. We understand the findings and are currently working to correct those internal controls. Auditor?s Remarks We appreciate the District's commitment to resolving the issues noted, and 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. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring goods and services, including noncompetitive procurement. Title 2 CFR Part 180, OMB Guidelines on Agencies on Governmentwide Department and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.
FINDING 2022-002 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 Number and Year (or Other Identifying Number): FY 2022 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The County elected to receive the standard revenue loss allowance, allowing them to claim its total State and Local Fiscal Recovery Funds (SLFRF) allocation of $6,597,109 as revenue loss to use for government services. As such, all SLFRF program funds to date were expended under the revenue loss eligible use category. The Department of the Treasury (Treasury) determined that there are no subawards under this eligible use category, and that recipients' use of revenue loss funds would not give rise to subrecipient relationships given that there is no federal program or purpose to carry out in the case of the revenue loss portion of the award. Prior to entering into subawards and covered transactions with SLFRF award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to contracts for goods and services awarded under procurement and non-procurement transactions (i.e. grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Due to Treasury's determination that the revenue loss eligible use category does not give rise to subawards, the County was only required to comply with suspension and debarment requirements related to covered transactions. Upon inquiry of the County's policies and procedures related to suspension and debarment requirements, the County divulged that they did not have policies or procedures in place for verifying that an entity with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded or disqualified from participating in federal assistance programs or activities. Two covered transactions for goods or services that equaled or exceeded $25,000 that were paid from SLFRF funds during the audit period were identified. Each transaction was examined to determine whether the County verified the suspension and debarment status of either vendor prior to payment. The first covered transaction in the amount of $77,764 was made to a contractor for the preparation of the County's SLFRF financial plan. The contract, as provided by the contractor included a clause stating they were neither excluded nor disqualified. Although the contract was signed by a County official, the contract was not appropriately reviewed by the County to ensure the suspension and debarment clause was included prior to signing. The second covered transaction in the amount of $227,253 was made for the purchase of police radios and associated accessories, as well as for the installation of the equipment. The County was unable to provide documentation to support whether the County verified the vendor's suspension and debarment status prior to issuing payment. The lack of internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to the second covered transaction as noted 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 200.214 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." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls was not designed by management of the County. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County establish a proper system of internal controls and develop policies and procedures to ensure contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. We also recommended that supporting documentation be retained in order to be presented for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
PROCUREMENT, SUSPENSION AND DEBARMENT (2022-004) Federal Agency: U.S. Department of the Treasury Federal Program Name: COVID-19 Coronavirus State and Local Fiscal Recovery Funds (SLFRF) Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP2889, 2022 Compliance Requirement Affected: Procurement, Suspension and Debarment Award Period: Year Ended December 31, 2022 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or Specific Requirement: According to Uniform Guidance 2 CFR 180.300, the County must check for federally suspended or debarred vendors prior to entering a covered transaction and the County must also comply with procurement requirements in accordance with Uniform Guidance 2 CFR 200.318. Condition: Support for the procurement method used by the County was not retained for one of two contracts tested. For suspension and debarment testing, the County did not verify one of two vendors were not suspended or debarred before entering into the contract. Questioned Costs: Unknown. Context: For one of two procurement contracts tested, support for the use of the noncompetitive proposal method was not retained. For one of two contracts tested for suspension and debarment, the County did not verify the vendor was not suspended or debarred before entering the contract. Cause: Lack of management oversight. Effect: The County could be using a vendor that is suspended or debarred at the time of the transaction or they could be overpaying for the transaction if not properly procured. Repeat Finding: No. Recommendation: We recommend the County adhere to its procurement policy. Views of Responsible Officials: There is no disagreement with the audit finding.
Criteria or specific requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award requires compliance with the provisions of suspension and debarment. The Loan Fund should have internal controls designed to ensure compliance with this provision. 2 CFR 200.318-200.321 outline requirements to maintain records sufficient to detail the history of procurement, requirements for competition, methods and purchasing thresholds, as well as other requirements for contracting with organizations with using federal funds. The Loan Fund?s policies do not meet these requirements. Condition: During our testing, we noted that the Loan Fund internal controls and accounting policies were not sufficient in regard to federal requirements for procurements and for ensuring vendors and contractors used are not suspended or debarred. Questioned costs: None. The Loan Fund did not enter into any contracts with disallowed parties, and there were no issues with mircopurchases tested. The Loan Fund policies and procedures do not contain necessary controls to ensure compliance with the requirements for suspension and debarment or procurements. As such, they were not sufficient to ensure material compliance with this compliance requirement. Context: See Condition. Cause: Lack of established controls and procedures over requirements for procurements and federal principals for suspension and debarment. Effect: Possible noncompliance with federal requirements for procurements using federal monies. Possibility to enter into a covered transaction with a noneligible contractor or vendor. Recommendation: We recommend that the Loan Fund reviews the current financial policies and procedures in order to better serve the organization in documenting compliance with federal cost principals and requirements. Views of responsible officials: There is no disagreement with the audit finding. Management accepts this finding and has made efforts to review and update our policies to meet federal cost principals and requirements. These are currently pending approval by the Board of Directors for implementation.
Criteria or specific requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award requires compliance with the provisions of suspension and debarment. The Loan Fund should have internal controls designed to ensure compliance with this provision. 2 CFR 200.318-200.321 outline requirements to maintain records sufficient to detail the history of procurement, requirements for competition, methods and purchasing thresholds, as well as other requirements for contracting with organizations with using federal funds. The Loan Fund?s policies do not meet these requirements. Condition: During our testing, we noted that the Loan Fund internal controls and accounting policies were not sufficient in regard to federal requirements for procurements and for ensuring vendors and contractors used are not suspended or debarred. Questioned costs: None. The Loan Fund did not enter into any contracts with disallowed parties, and there were no issues with mircopurchases tested. The Loan Fund policies and procedures do not contain necessary controls to ensure compliance with the requirements for suspension and debarment or procurements. As such, they were not sufficient to ensure material compliance with this compliance requirement. Context: See Condition. Cause: Lack of established controls and procedures over requirements for procurements and federal principals for suspension and debarment. Effect: Possible noncompliance with federal requirements for procurements using federal monies. Possibility to enter into a covered transaction with a noneligible contractor or vendor. Recommendation: We recommend that the Loan Fund reviews the current financial policies and procedures in order to better serve the organization in documenting compliance with federal cost principals and requirements. Views of responsible officials: There is no disagreement with the audit finding. Management accepts this finding and has made efforts to review and update our policies to meet federal cost principals and requirements. These are currently pending approval by the Board of Directors for implementation.
Criteria or specific requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award requires compliance with the provisions of suspension and debarment. The Loan Fund should have internal controls designed to ensure compliance with this provision. 2 CFR 200.318-200.321 outline requirements to maintain records sufficient to detail the history of procurement, requirements for competition, methods and purchasing thresholds, as well as other requirements for contracting with organizations with using federal funds. The Loan Fund?s policies do not meet these requirements. Condition: During our testing, we noted that the Loan Fund internal controls and accounting policies were not sufficient in regard to federal requirements for procurements and for ensuring vendors and contractors used are not suspended or debarred. Questioned costs: None. The Loan Fund did not enter into any contracts with disallowed parties, and there were no issues with mircopurchases tested. The Loan Fund policies and procedures do not contain necessary controls to ensure compliance with the requirements for suspension and debarment or procurements. As such, they were not sufficient to ensure material compliance with this compliance requirement. Context: See Condition. Cause: Lack of established controls and procedures over requirements for procurements and federal principals for suspension and debarment. Effect: Possible noncompliance with federal requirements for procurements using federal monies. Possibility to enter into a covered transaction with a noneligible contractor or vendor. Recommendation: We recommend that the Loan Fund reviews the current financial policies and procedures in order to better serve the organization in documenting compliance with federal cost principals and requirements. Views of responsible officials: There is no disagreement with the audit finding. Management accepts this finding and has made efforts to review and update our policies to meet federal cost principals and requirements. These are currently pending approval by the Board of Directors for implementation.
Criteria or specific requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award requires compliance with the provisions of suspension and debarment. The Loan Fund should have internal controls designed to ensure compliance with this provision. 2 CFR 200.318-200.321 outline requirements to maintain records sufficient to detail the history of procurement, requirements for competition, methods and purchasing thresholds, as well as other requirements for contracting with organizations with using federal funds. The Loan Fund?s policies do not meet these requirements. Condition: During our testing, we noted that the Loan Fund internal controls and accounting policies were not sufficient in regard to federal requirements for procurements and for ensuring vendors and contractors used are not suspended or debarred. Questioned costs: None. The Loan Fund did not enter into any contracts with disallowed parties, and there were no issues with mircopurchases tested. The Loan Fund policies and procedures do not contain necessary controls to ensure compliance with the requirements for suspension and debarment or procurements. As such, they were not sufficient to ensure material compliance with this compliance requirement. Context: See Condition. Cause: Lack of established controls and procedures over requirements for procurements and federal principals for suspension and debarment. Effect: Possible noncompliance with federal requirements for procurements using federal monies. Possibility to enter into a covered transaction with a noneligible contractor or vendor. Recommendation: We recommend that the Loan Fund reviews the current financial policies and procedures in order to better serve the organization in documenting compliance with federal cost principals and requirements. Views of responsible officials: There is no disagreement with the audit finding. Management accepts this finding and has made efforts to review and update our policies to meet federal cost principals and requirements. These are currently pending approval by the Board of Directors for implementation.
Finding 2022-002: Reportable Finding Considered a Significant Deficiency ? Procurement compliance Program Name: Market Access Plan Assistance listing #: 10.601 Federal Awarding Agency: U.S. Department of Agriculture Award Number: 12-4336-0-3-999 Compliance Requirement: Procurement, Suspension, and Debarment Criteria: According to 2 CFR 200.318(a) non-federal entities must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of 2 CFR 200.318 through 200.327, for the acquisition of property or services required under a Federal award. Condition: During our testing of vendor procurement compliance, we noted the entity had a procurement policy in line with the federal award?s specific procurement guidelines but not in line with standards of 2 CFR 200.318 through 200.327. In particular, the policy did not address methods of procurement based on micro-purchase, small purchase, and simplified acquisition purchase thresholds, circumstances in which noncompetitive procurement could be used, and procedures for verifying that a vendor with which it plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded. Cause: The auditee was not aware of the requirements outlined in 2 CFR 200.318 through 200.327, and believed the contracting guidelines outlined for their specific award were sufficient. Effect: The auditee was not in compliance with procurement policies outlined in of 2 CFR 200.318 through 200.327. There was a lack of full and open competition and auditee did not ensure the vendors with which it planned to enter into a covered transaction were not debarred, suspended, or otherwise excluded. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization adopt an updated procurement policy in line with 2 CFR 200 requirements and ensure all staff involved in the acquisition of property or services charged to federal grants are aware of relevant procurement requirements. Views of Responsible Officials and Corrective Action Plan (unaudited): See corrective action plan.
CFDA #10.760 USDA Water and Waste Disposal Procurement, Suspension & Debarment Finding 2022-002 ? Noncompliance with Federal Code of Regulations 2 CFR 200.318 Criteria: 2 CFR 200.318 requires the non-federal entity to maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. No employee, officer, or agent may participate in the selection, award, or administration of a contract supported by a Federal award if he or she has a real or apparent conflict of interest. The officers, employees and agents of the non-Federal entity may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. The standards of conduct must provide for disciplinary actions to be applied for violations of such standards by officers, employees, or agents of the non-Federal entity. Condition: The employee code of conduct does not specifically address Federal contracts. Cause: Management was unaware of the specific requirements noted in 2 CFR 200.318. Effect: Employees involved in the selection, award, or administration of Federal awards could have a conflict of interest with contractors, subcontractors, and/or vendors. Questioned Costs: There were no questioned costs. Context: There were no findings regarding apparent conflicts of interest between employees and Federal award contractors, subcontractors, or vendors. Repeat Finding: This is not a repeat finding, as this is a new federal award for 2022. Recommendation: We recommend management amend the code of conduct policy for both employees and board members to include specific language noted in 2 CFR 200.318. Views of Responsible Officials and Planned Corrective Action: Management agrees with the above finding and will amend the Employee and Board Codes of Conduct to address Federal Contracts.
2022-004 U.S. Department of Justice Federal Financial Assistance Listing #16.575 Victims of Crime Act (VOCA) Procurement, Suspension and Debarment Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria - Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Sections 200.318 through 200.326 set forth the procurement standards non-federal entities other than states must follow when operating federal programs and the procurement procedures required depending on the dollar amount of the transaction. Condition - During the course of our engagement, we identified that there was no observable documentation to indicate that the required procurement procedures were performed on vendors. Cause - Lack of oversight, awareness, or understanding of all of the specific requirements under the Uniform Guidance and all applicable CFR sections and controls were not adequately designed to ensure compliance with all of these requirements. Effect - A lack of established controls increases the overall risk that the Organization is contracting and awarding contracts which may not be the most cost advantageous. Questioned Costs - None reported Context/Sampling - A sample of 9 expenditures out of a population of 12 expenditures were selected for testing. Four of these met the conditions of the procurement policy (i.e., non- payroll related expenditures) and did not have the supporting documentation retained due to having entered into the contract during 2020 or prior to the implementation of the procurement policy in 2020. Two of these met the conditions of the procurement policy (i.e., non-payroll related expenditures) and did not go through the Organization?s procurement policy. Repeat Finding from Prior Year ? Yes, Finding 2021-004 Recommendation - We recommend that the Organization maintain the appropriate documentation evidencing that procurement procedures have been completed. Views of Responsible Officials - Management agrees with the finding.
2022-004 U.S. Department of Justice Federal Financial Assistance Listing #16.575 Victims of Crime Act (VOCA) Procurement, Suspension and Debarment Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria - Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Sections 200.318 through 200.326 set forth the procurement standards non-federal entities other than states must follow when operating federal programs and the procurement procedures required depending on the dollar amount of the transaction. Condition - During the course of our engagement, we identified that there was no observable documentation to indicate that the required procurement procedures were performed on vendors. Cause - Lack of oversight, awareness, or understanding of all of the specific requirements under the Uniform Guidance and all applicable CFR sections and controls were not adequately designed to ensure compliance with all of these requirements. Effect - A lack of established controls increases the overall risk that the Organization is contracting and awarding contracts which may not be the most cost advantageous. Questioned Costs - None reported Context/Sampling - A sample of 9 expenditures out of a population of 12 expenditures were selected for testing. Four of these met the conditions of the procurement policy (i.e., non- payroll related expenditures) and did not have the supporting documentation retained due to having entered into the contract during 2020 or prior to the implementation of the procurement policy in 2020. Two of these met the conditions of the procurement policy (i.e., non-payroll related expenditures) and did not go through the Organization?s procurement policy. Repeat Finding from Prior Year ? Yes, Finding 2021-004 Recommendation - We recommend that the Organization maintain the appropriate documentation evidencing that procurement procedures have been completed. Views of Responsible Officials - Management agrees with the finding.
2022-004 U.S. Department of Justice Federal Financial Assistance Listing #16.575 Victims of Crime Act (VOCA) Procurement, Suspension and Debarment Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria - Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Sections 200.318 through 200.326 set forth the procurement standards non-federal entities other than states must follow when operating federal programs and the procurement procedures required depending on the dollar amount of the transaction. Condition - During the course of our engagement, we identified that there was no observable documentation to indicate that the required procurement procedures were performed on vendors. Cause - Lack of oversight, awareness, or understanding of all of the specific requirements under the Uniform Guidance and all applicable CFR sections and controls were not adequately designed to ensure compliance with all of these requirements. Effect - A lack of established controls increases the overall risk that the Organization is contracting and awarding contracts which may not be the most cost advantageous. Questioned Costs - None reported Context/Sampling - A sample of 9 expenditures out of a population of 12 expenditures were selected for testing. Four of these met the conditions of the procurement policy (i.e., non- payroll related expenditures) and did not have the supporting documentation retained due to having entered into the contract during 2020 or prior to the implementation of the procurement policy in 2020. Two of these met the conditions of the procurement policy (i.e., non-payroll related expenditures) and did not go through the Organization?s procurement policy. Repeat Finding from Prior Year ? Yes, Finding 2021-004 Recommendation - We recommend that the Organization maintain the appropriate documentation evidencing that procurement procedures have been completed. Views of Responsible Officials - Management agrees with the finding.
2022-004 U.S. Department of Justice Federal Financial Assistance Listing #16.575 Victims of Crime Act (VOCA) Procurement, Suspension and Debarment Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria - Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Sections 200.318 through 200.326 set forth the procurement standards non-federal entities other than states must follow when operating federal programs and the procurement procedures required depending on the dollar amount of the transaction. Condition - During the course of our engagement, we identified that there was no observable documentation to indicate that the required procurement procedures were performed on vendors. Cause - Lack of oversight, awareness, or understanding of all of the specific requirements under the Uniform Guidance and all applicable CFR sections and controls were not adequately designed to ensure compliance with all of these requirements. Effect - A lack of established controls increases the overall risk that the Organization is contracting and awarding contracts which may not be the most cost advantageous. Questioned Costs - None reported Context/Sampling - A sample of 9 expenditures out of a population of 12 expenditures were selected for testing. Four of these met the conditions of the procurement policy (i.e., non- payroll related expenditures) and did not have the supporting documentation retained due to having entered into the contract during 2020 or prior to the implementation of the procurement policy in 2020. Two of these met the conditions of the procurement policy (i.e., non-payroll related expenditures) and did not go through the Organization?s procurement policy. Repeat Finding from Prior Year ? Yes, Finding 2021-004 Recommendation - We recommend that the Organization maintain the appropriate documentation evidencing that procurement procedures have been completed. Views of Responsible Officials - Management agrees with the finding.
Federal agency: U.S. Department of Treasury Federal program name: COVID-19 State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP3395, 2022 Award Period: 6/13/2021 ? 12/31/2026 Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance (Modified Opinion) Criteria or specific requirement: Non-federal entities other than states must follow the procurement standards set out at CFR sections 200.318 through 200.326. This includes utilizing one of the five allowable procurement methods, including small purchase guidelines for items over the micro-purchase threshold and sealed bids, competitive proposals, or noncompetitive proposals when items exceed the simplified acquisition threshold. In addition, the Uniform Guidance requires that the entity maintain records sufficient to detail the history of the procurement. Condition: In our testing for the State and Local Fiscal Recovery Funds procurements, it was noted that not all procurements followed the appropriate method and history of the transaction was not sufficiently documented. Questioned Costs: ALN 21.027 - $222,175.04 Context: Out of five procurement which were tested, we noted one for which the City did not retain documentation detailing the history of the procurement, including the rationale for choosing the particular vendor. Effect: The City is not in compliance with Uniform Guidance requirements for the proper documentation of all procurement transactions. Recommendation: We recommend the City reviews its procedures and controls over procurement to ensure that all procurements are documented such that a third party can clearly see and understand the detailed history of the procurement. Views of responsible officials: There is no disagreement with the audit finding.
Finding 2022-010 Lack of Internal Control over Procurement Federal Agency: U.S. Department of the Treasury Federal Program: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Number: None Award Years: 2021 Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: Uniform Guidance requires that entities receiving federal funding must have written policies and procedures related to procurement that meet the criteria listed in 2 CFR 200.318 and 200.320. Condition and Context: During our compliance testing of the program, management was unable to provide adequate supporting documentation to demonstrate that proper procurement procedures were followed in the purchase of an ambulance, a vehicle, and contract services. Cause: Lack of internal controls over procurement requirements. Effect: Failure to follow compliance requirements could result in loss of federal funding. Questioned Costs: None noted. Costs incurred under the program appeared reasonable based on our review. However, we were unable to determine procurement method or how the vendor was selected in the transaction. Repeat Finding: This is a repeat of Finding 2021-007 and since it is a repeat finding, we believe this to be a systemic issue. Recommendation: We recommend that all necessary purchases go through a formal procurement process to comply with grant requirements and that documentation of procurement is stored in an organized manner so that documentation can be provided to the auditors timely. Management?s Response: Management agrees with this finding. See Corrective Action Plan.
Federal Agency: U.S. Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Pass-Through Agency: State of Arizona, the Office of the Governor Pass-Through Number(s): GR-ARPA-HHF-030122-01 and GR-ARPA-090121-01 Award Period: January 1, 2022 ? November 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Condition/Context: The Organization did not maintain a formalized and written procurement policy. In addition, the Organization did follow the required solicitation process as follows: 1. Small purchase procedures for one vendor, with costs between $10,000 and $250,000 related to grant management and financial oversight, were not performed. 2. Formal procurement methods or noncompetitive procurement procedures for one vendor, with costs exceeding $250,000 related to mental health services, were not performed. The Organization contracted with this mental health vendor prior to accepting the Coronavirus State and Local Fiscal Recovery Funds and subsequently did not go through formal procurement procedures. 3. For two vendors, procedures to determine that the vendors were not included on the suspended or debarred vendor list maintained by the General Services Administration, were not performed. Criteria or specific requirement: In accordance with the Compliance Supplement, Part 6 ? Internal Control, 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. In accordance with 2 CFR 200.318 (a), the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in ?? 200.317 through 200.327. In accordance with 2 CFR 200.320 (a)(2)(i), 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. 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. Criteria or specific requirement (Continued) In accordance with 2 CFR 200.320 (b)(1 and 2), 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. Formal procurement methods - when the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with ? 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) sealed bids, or (2) proposals. In accordance with 2 CFR 200.320 (c), 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. Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement - can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. In accordance with 2 CFR 180.220, the non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. ?Covered transactions? include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220). All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. Questioned costs: None Cause: The Organization did not have established procurement policies and did not have internal controls designed to ensure compliance with those policies. Effect: The Organization was not in compliance with the Compliance Supplement and the Code of Federal Regulations related to procurement and suspension and debarment provisions. Repeat Finding: No Recommendation: We recommend that the Organization adopt a formal and written procurement policy. Additionally, management should develop controls to help ensure procurement procedures are followed and to monitor the amount spent with vendors throughout the year to ensure procurement procedures are initiated when the vendor costs exceed the procurement thresholds. These procedures will help ensure compliance with Compliance Supplement and the Code of Federal Regulations related to procurement and suspension and debarment provisions. Views of responsible officials: Management agrees with the audit condition.
Finding 2022-009 Program Affected: 66.818 Brownfields Assessment and Cleanup Cooperative Agreements U.S. Environmental Protection Agency Contract year: 2022 FAIN: 00A00664 / 00A00676 / 00A00909 Criteria: 2 CFR ?200.318(c) specifies 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 and Context: During the test of the Organization's procurement, suspension, and debarment requirements, the Organization was not able to provide a written procurement policy. The Organization did not maintain a written policy related to procurement of goods and services related to the federal program which prohibits conflicts of interest and governs the actions of the Organization's employees engaged in the selection, award, and administration of contracts. The Organization did not maintain a written policy providing for disciplinary actions to be applied for related violations. The Organization does not maintain a written policy that requires that procurements incorporate a clear and accurate description of the procurement and identifies all requirements which the offerors must fulfill and other factors to be used in evaluating bids/proposals, and requires the Organization to ensure all prequalified lists are current and include enough qualified sources to ensure open and free competition. Cause and Effect: The Organization does not comply with the requirements of the Uniform Guidance related to written policies. However, we did not identify actual noncompliance with the procurement processes required by the Uniform Guidance. Questioned Costs: N/A Identification of Repeat Findings: N/A Recommendation: We recommend the Organization implement written policies in accordance with the Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding. See attached Planned Corrective Actions.
2022-002: U.S. Department of Environment Protection ? Assistance Listing # 66.468 Capitalization Grants for Drinking Water State Revolving Fund (Drinking Water State Revolving Fund Cluster) Lack of Required Written Policies & Procedures ? Compliance Condition & Criteria: The Authority does not currently have all the written policies and procedures in place as required by the Uniform Guidance as it relates to financial management and determining allowability of costs for the federal program (Title 2 U.S. Code of Federal Regulations (CFR) 200.302 & 200.305). In addition CFR sections 200.318, 200.319, and 200.320 require there to be written policies and procedures regarding procurement and conflicts of interest. Effect: Although not likely, the oversight agency could disallow all costs associated with this program. Cause: This is the Authority?s first time subject to the requirements of the Uniform Guidance as they have not had any significant federal grant funding in a number of years. The Authority does have a set of informal policies and procedures that are followed as it relates to financial management, allowability of costs, procurement, and conflicts of interest, and have been very careful to carry out all federal program activities in accordance with established regulations; however the Authority was simply not aware of the requirement that these polices and procedures be documented in writing. Recommendation: We recommend that the Authority work towards getting those policies and procedures documented in writing so that they are in compliance with the requirements of the Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: The Authority understand the potential effects of the condition described above and will work towards getting the necessary policies and procedures in place as they relate to federal programs documented in writing.
Federal Agency: Department of Treasury Federal Program Name: COVID-19 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Assistance Listing Number: 21.027 Award Period: March 3, 2021 ? December 31, 2024 Compliance Requirement: Procurement Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Recipients may use award funds to enter into contracts to procure goods and services necessary to implement one or more of the eligible purposes outlined in sections 602(c) and 603(c) of the Act and Treasury?s Interim Final Rule and Final Rule. As such, recipients are expected to have procurement policies and procedures in place that comply with the procurement standards outlined in the Uniform Guidance. All other entities under the program, including subrecipients of a state, must 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. Condition: During our testing of internal control over procurement for CSLFRF, we noted the City did not have effective control over compliance. Questioned costs: None. Context: In our sample of five cases, there was one instance where the City did not follow its procurement policies and procedures. Cause: The City did not have adequate controls in place to ensure contracts it entered into followed its procurement policies and procedures. Effect: The City could obtain property and services in a manner that does not allow for cost-effectiveness nor providing full and open competition. Repeat Finding: No. Recommendation: We recommend the City implement controls to ensure its procurement policies and procedures are followed prior to entering into contracts. Views of responsible officials: There is no disagreement with the audit finding.
2022-002 The City did not have adequate internal controls in place to ensure compliance with federal procurement requirements. Assistance Listing Number and Title: 20.205 ? Highway Planning and Construction Federal Grantor Name: Federal Highway Administration Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Transportation Pass-through Award/Contract Number: STPUS-Y341(001) Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background Dural fiscal year 2022, the City spent $981,372 in federal funding from the Federal Highway Administration through the Highway Planning and Construction program. This program gives funding to help state and local government agencies plan and develop an integrated, interconnected transportation system. The City used this funding for the SW Mosman Ave Phase 2 construction project. Federal regulations require recipients to establish and follow internal controls for ensuring compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. 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 applicable federal requirements, state laws or local policies. Description of Condition Our audit found the City did not have adequate internal controls for ensuring compliance with federal procurement requirements. Although the City implemented a procurement policy in November 2022, it did not have written procurement policies or procedures at the time it procured the construction project to ensure compliance with federal requirements. We consider this deficiency in internal controls to be a significant deficiency. Cause of Condition The City relied on the Washington State Department of Transportation?s Local Agency Guidelines (LAG) manual. The City was required to follow these guidelines under the terms and conditions of the award, and staff thought this would be sufficient to meet federal procurement requirements. Effect of Condition Without written policies and procedures, the City is at greater risk of noncompliance with the most restrictive of federal, state or local procurement methods when using federal funds to procure contractors. Although the City did not have policies in place at the time of procurement, we verified it followed the LAG manual and properly procured the contractor for the project we reviewed. Recommendation We recommend the City strengthen its internal controls to ensure required policies and procedures are in place when procuring with federal funds, as required by Uniform Guidance. City?s Response The City of Yelm holds its responsibility for enabling internal controls to ensure compliance with federal requirements in the highest regard. Management is committed to ensuring the City has internal controls and procedures in place designed to ensure that it complies with all requirements governing the administration of federal grant programs. The City contracted with a CPA firm in August 2022 to assist with developing a Procurement Policy that ensured compliance with all Federal, State, and Local Office of the Washington State Auditor sao.wa.gov laws and regulations regarding City Procurement. Together with Finance and Department Director?s input, the policy was refined and adopted by City Council via Resolution #629 on December 13, 2022. The development of this policy was communicated to the auditors in the prior audit. The policy is required to be followed by all departments during the procurement process. Auditor?s Remarks We appreciate the steps the City is taking to resolve this issue. We will review the corrective action taken during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring goods and services, including noncompetitive procurement.
Finding 2022-002 U.S. Department of Health and Human Services 93.421 ? Strengthening Public Health Systems and Services through National Partnerships to Improve and Protect the Nation?s Health Procurement (Significant Deficiency) Criteria: In accordance with Title 2 CFR Part 200.318, the Organization must maintain records to document the history of procurement of a contractor. Records include, but are not limited to, rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition: For 2 procurements made during fiscal year 2022, the competitive bid documentation did not include evidence of review or approval by a department/market supervisor or the procurement team. Further, such documentation was not maintained with the signed contractor agreement. Cause: Documentation supporting the procurement of contractors was not maintained in a logical manner to document the history of procurement. Effect: Without appropriate documentation, the Organization may be unable to support whether the procurement of the contractors was performed in accordance with the procurement standards noted in Title 2 CFR Part 200.318. Recommendation: Management should develop an approval policy for competitive bids documentation as well as a records retention policy for procurement decisions made that includes the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Vendor files should be stored in a centralized location within the Organization. Management should also perform a periodic review of contractor files to ensure such documentation is maintained. Views of Responsible Officials: Although sole source and competitive bid information were obtained, they were not located in a centralized location and the written supporting approvals were not maintained. By the end of October 2023, Management will update, enforce, and retrain team members on procurement policies to include competitive bid documentation and record retention requirements. The required supporting documentation will also be housed in a centralized location and Management will perform periodic reviews to ensure it is properly maintained. To further expand training, by the end of October 2023, all key finance and program personnel will also complete Federal Grants Management training offered by the CDC Foundation.
Finding 2022-001: Noncompliance with Procurement Policy Requirements Programs - CFDA 21.023 Emergency Rental Assistance Program, and CFDA 93.391 Activities to Support State, Tribal, Local, and Territorial (STLT) Health Department Response to Public Health or Healthcare Crisis Criteria: As required by 2 CFR 200, Subparts D and E (2 CFR sections 200.300 and 200.400, respectively), entities are required to maintain written policies, procedures, and standards of conduct (?policies?) for certain areas of its operation. The following sections of the Uniform Guidance require nonfederal entities that receive federal awards to establish written policies, procedures, or standards of conduct: ? Financial management (200.302) ? Federal payment (200.305) ? General procurement standards (200.318) ? Competition (200.319) ? Methods of procurement to be followed (200.320) ? Compensation?fringe benefits (200.431) ? Relocation costs of employees (200.464) ? Travel costs (200.475) Condition: Review of the Organization?s Financial Procedure manual noted it was updated August 2023, with the previous update being done in February 2014 ? prior to the year under audit. The 2014 update did not contain all of the required elements under 2 CFR 200, Subparts D and E (2 CFR sections 200.300 and 200.400). Cause: The Financial Procedures have not been updated recently to incorporate the current Federal regulation requirements. Effect: The Organization is not compliant with Federal regulations requiring written policies and procedures. Recommendation: We recommend that the Organization approve and incorporate the policy updates incorporated within the August 2023 updated policies and procedures to ensure compliance with required regulations. Views of Responsible Officials: Management agrees with this recommendation and will review and update its current Financial Procedures to ensure compliance.
Finding 2022-001: Noncompliance with Procurement Policy Requirements Programs - CFDA 21.023 Emergency Rental Assistance Program, and CFDA 93.391 Activities to Support State, Tribal, Local, and Territorial (STLT) Health Department Response to Public Health or Healthcare Crisis Criteria: As required by 2 CFR 200, Subparts D and E (2 CFR sections 200.300 and 200.400, respectively), entities are required to maintain written policies, procedures, and standards of conduct (?policies?) for certain areas of its operation. The following sections of the Uniform Guidance require nonfederal entities that receive federal awards to establish written policies, procedures, or standards of conduct: ? Financial management (200.302) ? Federal payment (200.305) ? General procurement standards (200.318) ? Competition (200.319) ? Methods of procurement to be followed (200.320) ? Compensation?fringe benefits (200.431) ? Relocation costs of employees (200.464) ? Travel costs (200.475) Condition: Review of the Organization?s Financial Procedure manual noted it was updated August 2023, with the previous update being done in February 2014 ? prior to the year under audit. The 2014 update did not contain all of the required elements under 2 CFR 200, Subparts D and E (2 CFR sections 200.300 and 200.400). Cause: The Financial Procedures have not been updated recently to incorporate the current Federal regulation requirements. Effect: The Organization is not compliant with Federal regulations requiring written policies and procedures. Recommendation: We recommend that the Organization approve and incorporate the policy updates incorporated within the August 2023 updated policies and procedures to ensure compliance with required regulations. Views of Responsible Officials: Management agrees with this recommendation and will review and update its current Financial Procedures to ensure compliance.
Finding 2022-001: Noncompliance with Procurement Policy Requirements Programs - CFDA 21.023 Emergency Rental Assistance Program, and CFDA 93.391 Activities to Support State, Tribal, Local, and Territorial (STLT) Health Department Response to Public Health or Healthcare Crisis Criteria: As required by 2 CFR 200, Subparts D and E (2 CFR sections 200.300 and 200.400, respectively), entities are required to maintain written policies, procedures, and standards of conduct (?policies?) for certain areas of its operation. The following sections of the Uniform Guidance require nonfederal entities that receive federal awards to establish written policies, procedures, or standards of conduct: ? Financial management (200.302) ? Federal payment (200.305) ? General procurement standards (200.318) ? Competition (200.319) ? Methods of procurement to be followed (200.320) ? Compensation?fringe benefits (200.431) ? Relocation costs of employees (200.464) ? Travel costs (200.475) Condition: Review of the Organization?s Financial Procedure manual noted it was updated August 2023, with the previous update being done in February 2014 ? prior to the year under audit. The 2014 update did not contain all of the required elements under 2 CFR 200, Subparts D and E (2 CFR sections 200.300 and 200.400). Cause: The Financial Procedures have not been updated recently to incorporate the current Federal regulation requirements. Effect: The Organization is not compliant with Federal regulations requiring written policies and procedures. Recommendation: We recommend that the Organization approve and incorporate the policy updates incorporated within the August 2023 updated policies and procedures to ensure compliance with required regulations. Views of Responsible Officials: Management agrees with this recommendation and will review and update its current Financial Procedures to ensure compliance.
2022-001 The District?s internal controls were inadequate for ensuring compliance with federal suspension and debarment requirements. Assistance Listing Number and Title: 93.323 COVID 19 ? Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Federal Grantor Name: U.S. Department of Health and Human Services Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Health Pass-through Award/Contract Number: CLH18244 Known Questioned Cost Amount: $0 Description of Condition The objective of the Epidemiology and Laboratory Capacity for Infectious Diseases program is to protect the public?s health and safety by enhancing the capacity of public health agencies to effectively detect, respond, prevent, and control known, emerging, or reemerging infectious diseases. In 2022, the District spent $1,252,430 in federal funding to operate a COVID-19 testing site. 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 prohibit recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the District enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify contractors are not suspended, debarred or otherwise excluded from participating in federal programs. The District may accomplish this verification 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 District must perform this verification before entering into the contract, and it must maintain documentation demonstrating compliance with this federal requirement. Our audit found the District?s internal controls were ineffective for ensuring it verified all contractors were not suspended or debarred. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition District staff did not know they needed to check the suspension and debarment status of contractors paid more than $25,000 in program funds. Effect of Condition Without verification, the District increases its risk of awarding federal funds to contractors that are excluded from participating in federal programs. Any program funds the District made to an ineligible party would be unallowable, and the federal grantor could potentially recover them. The District did not verify the suspension and debarment status for two contractors that were paid $76,815 during the audit period. We subsequently verified the contractors were not suspended or debarred, so we are not questioning the related costs. Recommendation We recommend the District improve its internal controls to ensure all contractors paid $25,000 or more, all or in part with federal funds, are not suspended or debarred before entering into contracts with them. District?s Response Grant County Health District agrees with the finding and will update its written procurement policy and procedures that conform with Uniform Guidance standards (2 CFR 200.318-327) that will formalize a process to check all new contractor?s exclusion records in the System for Award Management (SAM.gov) and to retain copies of those searches in the vendor?s file including those searches where the vendor is not found in the system. Auditor?s Remarks We appreciate the steps the District is taking to resolve this issue. We will review the condition during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.
2022-004 Federal Agency: U.S. Department of Agriculture Federal Program Name: State Administrative Matching Grants for Supplemental Nutrition Assistance Program (SNAP Cluster) Assistance Listing Number: 10.561 Federal Award Identification Number and Year: 22MN101S2514, 2022 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 22MN101S2514 Compliance Requirement Affected: Procurement, Suspension and Debarment Award Period: Year Ended December 31, 2022 Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or Specific Requirement: According to Uniform Guidance 2 CFR 180.300, the County must check for federally suspended or debarred vendors prior to entering into a covered transaction and the County must also comply with procurement requirements in accordance with Uniform Guidance 2 CFR 200.318. Condition: Support for the procurement method used by the County was not retained. For suspension and debarment, the County did not retain documentation that the verification was done. Questioned Costs: Unknown. Context: For four of five procurement transactions tested, support for the use of noncompetitive proposals method was not retained. For four of four transactions tested for suspension and debarment, the County did not retain documentation that the procedures were done. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Cause: County policy does not align with federal requirements. Effect: County could be using a vendor that is suspended or debarred at the time of the transaction or they could be overpaying for the transaction if not properly procured. Repeat Finding: No. Recommendation: We recommend the County align their county wide policies to address any necessary modifications to the process if procurement transactions are federally funded. Views of responsible officials: There is no disagreement with the audit finding.
2022-004 Federal Agency: U.S. Department of Agriculture Federal Program Name: State Administrative Matching Grants for Supplemental Nutrition Assistance Program (SNAP Cluster) Assistance Listing Number: 10.561 Federal Award Identification Number and Year: 22MN101S2514, 2022 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 22MN101S2514 Compliance Requirement Affected: Procurement, Suspension and Debarment Award Period: Year Ended December 31, 2022 Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or Specific Requirement: According to Uniform Guidance 2 CFR 180.300, the County must check for federally suspended or debarred vendors prior to entering into a covered transaction and the County must also comply with procurement requirements in accordance with Uniform Guidance 2 CFR 200.318. Condition: Support for the procurement method used by the County was not retained. For suspension and debarment, the County did not retain documentation that the verification was done. Questioned Costs: Unknown. Context: For four of five procurement transactions tested, support for the use of noncompetitive proposals method was not retained. For four of four transactions tested for suspension and debarment, the County did not retain documentation that the procedures were done. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Cause: County policy does not align with federal requirements. Effect: County could be using a vendor that is suspended or debarred at the time of the transaction or they could be overpaying for the transaction if not properly procured. Repeat Finding: No. Recommendation: We recommend the County align their county wide policies to address any necessary modifications to the process if procurement transactions are federally funded. Views of responsible officials: There is no disagreement with the audit finding.
2022-004 Federal Agency: U.S. Department of Agriculture Federal Program Name: State Administrative Matching Grants for Supplemental Nutrition Assistance Program (SNAP Cluster) Assistance Listing Number: 10.561 Federal Award Identification Number and Year: 22MN101S2514, 2022 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 22MN101S2514 Compliance Requirement Affected: Procurement, Suspension and Debarment Award Period: Year Ended December 31, 2022 Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or Specific Requirement: According to Uniform Guidance 2 CFR 180.300, the County must check for federally suspended or debarred vendors prior to entering into a covered transaction and the County must also comply with procurement requirements in accordance with Uniform Guidance 2 CFR 200.318. Condition: Support for the procurement method used by the County was not retained. For suspension and debarment, the County did not retain documentation that the verification was done. Questioned Costs: Unknown. Context: For four of five procurement transactions tested, support for the use of noncompetitive proposals method was not retained. For four of four transactions tested for suspension and debarment, the County did not retain documentation that the procedures were done. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Cause: County policy does not align with federal requirements. Effect: County could be using a vendor that is suspended or debarred at the time of the transaction or they could be overpaying for the transaction if not properly procured. Repeat Finding: No. Recommendation: We recommend the County align their county wide policies to address any necessary modifications to the process if procurement transactions are federally funded. Views of responsible officials: There is no disagreement with the audit finding.
2022-003 Federal Agency: U.S. Department of the Treasury Federal Program Name: COVID-19 Coronavirus State and Local Fiscal Recovery Funds (SLFRF) Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP2889, 2022 Compliance Requirement Affected: Procurement, Suspension and Debarment Award Period: Year Ended December 31, 2022 Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or Specific Requirement: According to Uniform Guidance 2 CFR 180.300, the County must check for federally suspended or debarred vendors prior to entering a covered transaction and the County must also comply with procurement requirements in accordance with Uniform Guidance 2 CFR 200.318. Condition: Support for the procurement method used by the County was not retained. For suspension and debarment, the County did not retain documentation for the date that the verification was done. Questioned Costs: Unknown. Context: For one of five procurement transactions tested, support for the use of noncompetitive proposals method was not retained. For one of five procurement transactions tested the proper procurement method was not used. For five of five transactions tested for suspension and debarment, the County retained documentation the procedures were done; however, the date of verification was not kept on file to support verification was done prior to the transaction taking place. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Cause: County policy does not align with federal requirements. Effect: County could be using a vendor that is suspended or debarred at the time of the transaction or they could be overpaying for the transaction if not properly procured. Repeat Finding: No. Recommendation: We recommend the County align their county-wide policies to address any necessary modifications to the process if procurement transactions are federally funded. Views of responsible officials: There is no disagreement with the audit finding.
2022-003 Federal Agency: U.S. Department of the Treasury Federal Program Name: COVID-19 Coronavirus State and Local Fiscal Recovery Funds (SLFRF) Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP2889, 2022 Compliance Requirement Affected: Procurement, Suspension and Debarment Award Period: Year Ended December 31, 2022 Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or Specific Requirement: According to Uniform Guidance 2 CFR 180.300, the County must check for federally suspended or debarred vendors prior to entering a covered transaction and the County must also comply with procurement requirements in accordance with Uniform Guidance 2 CFR 200.318. Condition: Support for the procurement method used by the County was not retained. For suspension and debarment, the County did not retain documentation for the date that the verification was done. Questioned Costs: Unknown. Context: For one of five procurement transactions tested, support for the use of noncompetitive proposals method was not retained. For one of five procurement transactions tested the proper procurement method was not used. For five of five transactions tested for suspension and debarment, the County retained documentation the procedures were done; however, the date of verification was not kept on file to support verification was done prior to the transaction taking place. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Cause: County policy does not align with federal requirements. Effect: County could be using a vendor that is suspended or debarred at the time of the transaction or they could be overpaying for the transaction if not properly procured. Repeat Finding: No. Recommendation: We recommend the County align their county-wide policies to address any necessary modifications to the process if procurement transactions are federally funded. Views of responsible officials: There is no disagreement with the audit finding.
Finding 2022-001: Significant deficiency in internal control over procurement. Federal Agency Program: U.S. Department of Treasury, Passed through State of Oregon ? Department of Administrative Services Federal Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Award Period: January 1, 2022 ? December 31, 2022 Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200.318 requires that non-Federal entities must have and use documented procurement procedures, which must conform to the procurement standards in 2 CFR Part 200.318 through 200.327. Procurement procedures must reflect applicable State and local laws and regulations and compliance with the award terms and conditions. The Federal Award agreement stipulated the Organization to require its contractors and sub-contractors to pay the applicable prevailing wage rate. Condition: During the audit, we noted that the Organization was not able to provide documentation to demonstrate that a contractor was required to comply with the prevailing wage requirement in one contract awarded under the Federal Award. Context: There was one contract awarded under the Federal Award, which was selected for testing. Cause: The Organization received increased support during the year ended December 31, 2022, increasing the complexities of compliance with Federal awards. Policies and procedures over procurement were not adequately documented. Effect: Without adequate written policies and procedures over procurement, there is an increased risk of non-compliance with the procurement requirements of 2 CFR 200 and with the terms and conditions of Federal Awards. Questioned costs: None. Repeat Finding: No. Recommendation: The Organization should update its written policies and procedures over procurement consistent with the framework set forth by 2 CFR 200 to ensure compliance with procurement requirements and terms and conditions of Federal Awards. Views of Responsible Officials: Management notes the details of this finding. Management will implement procedures to mitigate the outlined issues in our Corrective Action Plan.
Criteria: Non-federal entities are expected to have procurement policies and procedures in place that comply with the procurement standards outlined in the Uniform Guidance in 2 CFR sections 200.318 through 200.327 as well as verifying such contractors are not suspended, debarred or otherwise excluded pursuant to 31 CFR section 19.300. Condition: FamilyForward was selected to receive funds by the awarding entity in a non-competitive manner subsequent to the solicitation of bids for the construction of the campus for training and research on trauma informed care, which was the requirement per the contract. Accordingly, the procurement policies and procedures as well as the suspension and debarment procedures were not performed in accordance with Uniform Guidance. FamilyForward was determined to be uniquely qualified as a single feasible source as the only eligible entity to receive funds appropriated by the awarding entity. The construction vendor FamilyForward contracted with prior to the award of funds was not on the suspension and debarment list. FamilyForward provided a copy of the campus construction contract to the awarding entity as required prior to disbursement of funds. Effect: The competitive bidding procedures were performed at the subcontractor level by the general contractor however were not performed at the non-federal entity level. Cause: Award of funds was received after the contract agreements were solicited. Recommendation: While procurement processes appear to be completed, it does not appear procurement processes were completed was done under applicable Uniform Guidance. We recommend if grant funding is received for projects already in process, the procurement be discussed with the grantor and process/procedure be agreed upon to maintain compliance under the grant.
2022-003 ? Procurement, Suspension and Debarment Federal program information: Funding Agency: U.S. Departments of the Treasury and Health and Human Services Title: Coronavirus State and Local Fiscal Recovery Funds and Indian Health Services Self-Governance Assistance Listing Number: 21.027 and 93.210 Award Periods: March 3, 2021 ? December 31, 2024 Criteria: Uniform Guidance regulations section CFR 200.318(a) and CFR 200.320(a) state, the non-Federal entity must use its own documented procurement procedures which reflect applicable state, local, and tribal laws and regulations, provided that the procurement conform to applicable federal law and the standards identified. Procurement by micro-purchase is the acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold. During 2022, the Tribe?s procurement policy has a micro purchase threshold of $2,000. The Tribe?s policy states ?Duckwater will conduct procurement in a manner that prohibits the use of statutorily or administratively imposed data, local, or tribal geographical preferences in the evaluation of bids or proposals?. Recipients of federal awards must not contract with or make sub-awards to parties that are suspended or debarred. Contractors receiving individual awards for $25,000 or more and all sub-recipients must certify that the organization and its principals are not suspended or debarred. This verification may be accomplished by checking the Systems for Award Management (SAM) website, collecting a certification from the entity, or adding a clause or condition to the covered transaction with that entity. Condition: The Tribe does not have a policy in place to ensure vendors are not suspended or disbarred. In addition, we found the following: ? Coronavirus State and Local Fiscal Recovery Funds: We reviewed five vendors that were paid in excess of $2,000; however, we were not provided with bids or quotes for these purchases. In addition, for two vendors that were paid over $25,000, there was no documentation verifying that the vendors were checked for suspension and debarment. ? Indian Health Services Self-Governance: We reviewed six vendors that were paid in excess of $2,000; however, we were not provided with bids or quotes. In addition, for one vendor that was paid over $25,000, there was no documentation verifying that the vendor was checked for suspension and debarment. Context: For Coronavirus State and Local Fiscal Recovery Funds, nine of forty-four expenditures tested. For Indian Health Services Self-Governance, ten of forty-four expenditures tested. Some of the expenditures mentioned above were paid to the same vendor. Questioned Costs: None. Cause: The Tribe?s procurement policies and procedures were not enforced during the year. In addition, the Tribe did not have suspension and debarment policies and procedures established during the year. Effect: The Tribe is not always ensuring that all goods and services are obtained at a fair price and the Tribe is not in compliance with their procurement policy. Lastly, the Tribe is not ensuring that vendors doing business under federal awards are properly reviewed for suspension and debarment. Auditors? Recommendation: Enforce procurement policies and procedures at all times. In addition, Tribe should consider increasing the procurement threshold to match the micro-purchase threshold of $10,000 set by the Federal Acquisition Regulation (FAR) as well as adding a number of bids or quotes to be obtained. Lastly, the Tribe should add a suspension and debarment policy to their policies and procedures. This verification may be accomplished by checking the Systems for Award Management (SAM) website, collecting a certification from the entity, or adding a clause or condition to the covered transaction with that entity. Management Response: The Tribe will amend its Financial Management System to increase the micro-purchase procurement threshold from $2,000 to $10,000, set by the Federal Acquisition Regulation. When processing purchase orders, the purchasing clerk will verify that a minimum of three bids or quotes have been submitted with the purchase order request, for those items costing $10,000 or more. This requirement will help ensure that goods and services are being obtained at a fair price. The Tribe will also amend its Financial Management System to include a policy on suspension and debarment. For purchases exceeding $25,000, the Finance Manager will perform a search of the vendor on the Systems for Award Management (SAM) website, to verify that the vendor receiving payment has not been suspended or debarred.
2022-003 ? Procurement, Suspension and Debarment Federal program information: Funding Agency: U.S. Departments of the Treasury and Health and Human Services Title: Coronavirus State and Local Fiscal Recovery Funds and Indian Health Services Self-Governance Assistance Listing Number: 21.027 and 93.210 Award Periods: March 3, 2021 ? December 31, 2024 Criteria: Uniform Guidance regulations section CFR 200.318(a) and CFR 200.320(a) state, the non-Federal entity must use its own documented procurement procedures which reflect applicable state, local, and tribal laws and regulations, provided that the procurement conform to applicable federal law and the standards identified. Procurement by micro-purchase is the acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold. During 2022, the Tribe?s procurement policy has a micro purchase threshold of $2,000. The Tribe?s policy states ?Duckwater will conduct procurement in a manner that prohibits the use of statutorily or administratively imposed data, local, or tribal geographical preferences in the evaluation of bids or proposals?. Recipients of federal awards must not contract with or make sub-awards to parties that are suspended or debarred. Contractors receiving individual awards for $25,000 or more and all sub-recipients must certify that the organization and its principals are not suspended or debarred. This verification may be accomplished by checking the Systems for Award Management (SAM) website, collecting a certification from the entity, or adding a clause or condition to the covered transaction with that entity. Condition: The Tribe does not have a policy in place to ensure vendors are not suspended or disbarred. In addition, we found the following: ? Coronavirus State and Local Fiscal Recovery Funds: We reviewed five vendors that were paid in excess of $2,000; however, we were not provided with bids or quotes for these purchases. In addition, for two vendors that were paid over $25,000, there was no documentation verifying that the vendors were checked for suspension and debarment. ? Indian Health Services Self-Governance: We reviewed six vendors that were paid in excess of $2,000; however, we were not provided with bids or quotes. In addition, for one vendor that was paid over $25,000, there was no documentation verifying that the vendor was checked for suspension and debarment. Context: For Coronavirus State and Local Fiscal Recovery Funds, nine of forty-four expenditures tested. For Indian Health Services Self-Governance, ten of forty-four expenditures tested. Some of the expenditures mentioned above were paid to the same vendor. Questioned Costs: None. Cause: The Tribe?s procurement policies and procedures were not enforced during the year. In addition, the Tribe did not have suspension and debarment policies and procedures established during the year. Effect: The Tribe is not always ensuring that all goods and services are obtained at a fair price and the Tribe is not in compliance with their procurement policy. Lastly, the Tribe is not ensuring that vendors doing business under federal awards are properly reviewed for suspension and debarment. Auditors? Recommendation: Enforce procurement policies and procedures at all times. In addition, Tribe should consider increasing the procurement threshold to match the micro-purchase threshold of $10,000 set by the Federal Acquisition Regulation (FAR) as well as adding a number of bids or quotes to be obtained. Lastly, the Tribe should add a suspension and debarment policy to their policies and procedures. This verification may be accomplished by checking the Systems for Award Management (SAM) website, collecting a certification from the entity, or adding a clause or condition to the covered transaction with that entity. Management Response: The Tribe will amend its Financial Management System to increase the micro-purchase procurement threshold from $2,000 to $10,000, set by the Federal Acquisition Regulation. When processing purchase orders, the purchasing clerk will verify that a minimum of three bids or quotes have been submitted with the purchase order request, for those items costing $10,000 or more. This requirement will help ensure that goods and services are being obtained at a fair price. The Tribe will also amend its Financial Management System to include a policy on suspension and debarment. For purchases exceeding $25,000, the Finance Manager will perform a search of the vendor on the Systems for Award Management (SAM) website, to verify that the vendor receiving payment has not been suspended or debarred.
2022-001 The City 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: N/A Background During fiscal year 2022, the City spent $904,897 in grant funds from the Waste and Water Disposal Systems for Rural Communities program. The objective of this program is to assist rural communities in obtaining safe drinking water and adequate waste disposal facilities. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established program controls. Federal regulations require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR 200.318-327. The procedures must reflect the most restrictive of applicable federal requirements, state laws or local policies. The entity must also have written standards of conduct that cover conflicts of interest and expectations for its employees who are involved in selecting, awarding, and administrating contracts and purchases. Description of Condition Our audit found the City did not have adequate internal controls for ensuring compliance with federal procurement requirements. Specifically, the City did not have procurement policies or procedures to ensure compliance with federal requirements. Further, the City did not have a conflict of interest policy. We consider this deficiency in internal controls to be a material weakness, which led to material noncompliance. Cause of Condition This is the City?s first federal program audit since 2014. Since the City does not regularly manage federal funds, staff did not know about the requirement to have written conflict of interest and procurement policies and procedures. Effect of Condition Without written policies and procedures, the City is at a greater risk of noncompliance with the most restrictive of federal, state or local procurement methods and standards of conduct requirements when using federal funds to procure contractors. Although the City did not have policies in place, we verified that it properly procured the contractor for the project we reviewed. Recommendation We recommend the City develop written policies and procedures that conform with Uniform Guidance (2 CFR 200.318-327) for procurement activity and conflict of interest requirements. City?s Response The City will develop and adopt written policies and procedures that conform with Uniform Guidance (2 CFR 200.318-327) for procurement activity and conflict of interest requirements. Auditor?s Remarks We appreciate the steps the City is taking to resolve this issue. We will review the corrective action taken 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, sections 317 through 327, Procurement Standards, establishes requirements for procurement and conflict of interest policies related to federal program expenditures.
2022-001 The City 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: N/A Background During fiscal year 2022, the City spent $904,897 in grant funds from the Waste and Water Disposal Systems for Rural Communities program. The objective of this program is to assist rural communities in obtaining safe drinking water and adequate waste disposal facilities. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established program controls. Federal regulations require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR 200.318-327. The procedures must reflect the most restrictive of applicable federal requirements, state laws or local policies. The entity must also have written standards of conduct that cover conflicts of interest and expectations for its employees who are involved in selecting, awarding, and administrating contracts and purchases. Description of Condition Our audit found the City did not have adequate internal controls for ensuring compliance with federal procurement requirements. Specifically, the City did not have procurement policies or procedures to ensure compliance with federal requirements. Further, the City did not have a conflict of interest policy. We consider this deficiency in internal controls to be a material weakness, which led to material noncompliance. Cause of Condition This is the City?s first federal program audit since 2014. Since the City does not regularly manage federal funds, staff did not know about the requirement to have written conflict of interest and procurement policies and procedures. Effect of Condition Without written policies and procedures, the City is at a greater risk of noncompliance with the most restrictive of federal, state or local procurement methods and standards of conduct requirements when using federal funds to procure contractors. Although the City did not have policies in place, we verified that it properly procured the contractor for the project we reviewed. Recommendation We recommend the City develop written policies and procedures that conform with Uniform Guidance (2 CFR 200.318-327) for procurement activity and conflict of interest requirements. City?s Response The City will develop and adopt written policies and procedures that conform with Uniform Guidance (2 CFR 200.318-327) for procurement activity and conflict of interest requirements. Auditor?s Remarks We appreciate the steps the City is taking to resolve this issue. We will review the corrective action taken 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, sections 317 through 327, Procurement Standards, establishes requirements for procurement and conflict of interest policies related to federal program expenditures.
FINDING 2022-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): CY 2022 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Significant Deficiency, Noncompliance Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2021-003. Condition and Context Nonfederal entities are required to maintain written standards of conduct covering conflicts of interest and governing actions of its employees engaged in the selection, award, and administration of contracts. As part of accepting the State and Local Fiscal Recovery Funds (SLFRF) the County agreed to maintain a conflict-of-interest policy, which is applicable to all activities funded with the SLFRF award. The County addressed conflicts of interest in the County's Personnel Policies Handbook. However, it did not include standards of conduct covering conflicts of interest or how to govern the actions of its employees engaged in selection, award, and administration of contracts supported by federal awards. The lack of controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(c)(1) states: "The non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. No employee, officer, or agent may participate in the selection, award, or administration of a contract supported by a Federal award if he or she has a real or apparent conflict of interest. Such a conflict of interest would arise when the employee, officer, or agent, any member of his or her immediate family, his or her partner, or an organization which employs or is about to employ any of the parties indicated herein, has a financial or other interest in or a tangible personal benefit from a firm considered for a contract. The officers, employees, and agents of the non-Federal entity may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. However, non-Federal entities may set standards for situations in which the financial interest is not substantial or the gift is an unsolicited item of nominal value. The standards of conduct must provide for disciplinary actions to be applied for violations of such standards by officers, employees, or agents of the non-Federal entity." Federal Register, Vol. 87, No.18, page 4400, states in part: ". . . as part of accepting the Award Terms and Conditions for SLFRF, each recipient agreed to maintain a conflict-of-interest policy consistent with 2 CFR 200.318(c) that is applicable to all activities funded with the SLFRF award. This award term requires recipients and subrecipients to report to Treasury or the pass-through agency, as appropriate, any potential conflict of interest related to the award funds per 2 CFR 200.112. . . ." Cause The system of internal controls as established by management of the County was not properly implemented to ensure that policies adequately addressed all required elements related to procurement. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County establish a proper system of internal controls, including strengthening its policies and procedures to ensure its compliance with requirements related to procurement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2022-002: Procurement Policy (Material Weakness) Information on the Federal Program: U.S. Department of State ALN 19.040 Criteria or Specific Requirement: 2 CFR Section 200.318 requires that the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in ?? 200.317 through 200.327. Condition: FCE does not have a formal written procurement policy that conforms to the requirements of the Uniform Guidance. As a result, no procurement files were maintained to document FCE's procurement actions. Questioned Costs: None Cause: FCE has no accounting policies and procedures in place to provide guidance to management on the documentary evidence requirements in accordance with proper internal controls and the Uniform Guidance. Effect or Potential Effect: Without either a procurement policy or procurement documentation, there is a risk that FCE did not perform a proper evaluation of each potential vendor whose costs were charged to federal programs. Recommendation: FCE should develop accounting policies and procedures to provide guidance to management regarding the proper internal controls over both financial reporting and compliance with federal awards. Included in those policies and procedures should be a procurement policy that conforms to the requirements of the Uniform Guidance. Furthermore, FCE should maintain documentation in its files to provide evidence to support that it followed the procurement policy.
Criteria or specific requirement: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. This procurement process must be documented with proper supporting documentation. Condition: The County did not have proper procurement documentation available for the contracts tested in the audit. Questioned costs: None Context: Five of the five contracts tested did not have the proper supporting documentation to demonstrate that procurement procedures were followed in accordance with the County?s procurement policy. Cause: The contracts were in process before the funding was assigned to the projects and there was turnover at the County. Effect: Failure to document the procurement process exposes the County to the risk that the County?s procurement policy was not followed before the contracts were awarded. Repeat Finding: No. Recommendation: CLA recommends the County follow their internal procurement policy procedures and keep documentation of such procedures to ensure compliance with the federal procurement requirements. Views of responsible officials: There is no disagreement with the audit finding.