Criteria: According to 2 CFR §200.303, 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). Additionally, according to 2 CFR §200.318 Procurement standards, 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. Title 2, Subtitle A Chapter II Part 200 Subpart D 200.319 Procurement Standards. All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and §200.320. The non-Federal entity must have written procedures for procurement transactions. These procedures must ensure that all solicitations: (1) Incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Such description must not, in competitive procurements, contain features which unduly restrict competition. The description may include a statement of the qualitative nature of the material, product or service to be procured and, when necessary, must set forth those minimum essential characteristics and standards to which it must conform if it is to satisfy its intended use. Noncompetitive procurements can only be awarded in accordance with §200.320(c). According to 2 CFR §200.320 Procurement Standards, there are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: 1. The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); 2. The item is available only from a single source; 3. The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; 4. The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or 5. After solicitation of a number of sources, competition is determined inadequate. Condition: During our testing over procurement, we determined that the Center did not clearly document the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. In addition, for noncompetitive procurements, there was no documentation to support which of the five criteria was met to allow for the noncompetitive procurement. Cause: Management did not have effective internal controls in place to ensure that procurement requirements were adequately documented and retained. Effect or Potential Effect: Procurement records were insufficient to meet the requirements noted in the Criteria section above, as well as the Center's internal procurement policy. Questioned Costs: None. Context: We noted that several items selected for testing did not document the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. In addition, we noted that several items selected for testing for noncompetitive procurements did not maintain documentation of which of the five criteria were met to allow for the noncompetitive procurement. Identification as a Repeat Finding: Not applicable. Recommendation: We recommend the Center retain sufficient procurement documentation to meet the requirements noted in the Criteria section above.
Criteria: According to 2 CFR §200.303, 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). Additionally, according to 2 CFR §200.318 Procurement standards, 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. Title 2, Subtitle A Chapter II Part 200 Subpart D 200.319 Procurement Standards. All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and §200.320. The non-Federal entity must have written procedures for procurement transactions. These procedures must ensure that all solicitations: (1) Incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Such description must not, in competitive procurements, contain features which unduly restrict competition. The description may include a statement of the qualitative nature of the material, product or service to be procured and, when necessary, must set forth those minimum essential characteristics and standards to which it must conform if it is to satisfy its intended use. Noncompetitive procurements can only be awarded in accordance with §200.320(c). According to 2 CFR §200.320 Procurement Standards, there are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: 1. The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); 2. The item is available only from a single source; 3. The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; 4. The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or 5. After solicitation of a number of sources, competition is determined inadequate. Condition: During our testing over procurement, we determined that the Center did not clearly document the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. In addition, for noncompetitive procurements, there was no documentation to support which of the five criteria was met to allow for the noncompetitive procurement. Cause: Management did not have effective internal controls in place to ensure that procurement requirements were adequately documented and retained. Effect or Potential Effect: Procurement records were insufficient to meet the requirements noted in the Criteria section above, as well as the Center's internal procurement policy. Questioned Costs: None. Context: We noted that several items selected for testing did not document the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. In addition, we noted that several items selected for testing for noncompetitive procurements did not maintain documentation of which of the five criteria were met to allow for the noncompetitive procurement. Identification as a Repeat Finding: Not applicable. Recommendation: We recommend the Center retain sufficient procurement documentation to meet the requirements noted in the Criteria section above.
Finding 2022-006: Procurement Criteria: According to 2 CFR §200.303, 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). Additionally, according to 2 CFR §200.318 Procurement standards, 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. Title 2, Subtitle A Chapter II Part 200 Subpart D 200.319 Procurement Standards. All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and §200.320. The non-Federal entity must have written procedures for procurement transactions. These procedures must ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Such description must not, in competitive procurements, contain features which unduly restrict competition. The description may include a statement of the qualitative nature of the material, product or service to be procured and, when necessary, must set forth those minimum essential characteristics and standards to which it must conform if it is to satisfy its intended use. Noncompetitive procurements can only be awarded in accordance with §200.320(c). According to 2 CFR §200.320 Procurement Standards, there are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: 1. The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); 2. The item is available only from a single source; 3. The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; 4. The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or 5. After solicitation of a number of sources, competition is determined inadequate. Condition: During our testing over procurement, we determined that SAMU did not clearly document the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. In addition, we noted that vendors did not always have a signed contract in place to outline the price and nature of services to be provided to SAMU. Cause: Management did not have effective internal controls in place to ensure that procurement requirements were adequately documented and retained. Effect or Potential Effect: Procurement records were insufficient to meet the requirements noted in the Criteria section above, as well as SAMU's internal procurement policy. Questioned Costs: None. Context: We noted that items selected for testing did not document the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. In addition, there were instances in which vendors selected for testing did not have a signed contract in place with SAMU. Identification as a Repeat Finding, if Applicable: Not applicable. Recommendation: We recommend SAMU retain sufficient procurement documentation to meet the requirements noted in the Criteria section above.
Finding 2022-003 Information on the Federal Program: Assistance Listing Number 21.027 – Coronavirus State and Local Fiscal Recovery Funds. Compliance Requirement: Procurement and Suspension and Debarment. Type of Finding: Significant deficiency in internal control over major federal programs. Criteria: Uniform Guidance requirements indicate recipients 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: We noted one expenditure for which general procurement policies and procedures related to obtaining a bid were not followed prior to entering into a contract with a vendor. Cause: County staff are not familiar enough with County procurement policies and procedures. Effect or Potential Effect: The County has a significant deficiency in internal control with respect to its procurement policies and procedures which could result in significant noncompliance or questioned costs in the future. Recommendation: County management should ensure that procurement policies and procedures are being following by all County personnel. In addition, we recommend that County management provide training related to procurement policies and procedures to all County personnel with the ability to enter into a contract
Finding 2022-003 Information on the Federal Program: Assistance Listing Number 21.027 – Coronavirus State and Local Fiscal Recovery Funds. Compliance Requirement: Procurement and Suspension and Debarment. Type of Finding: Significant deficiency in internal control over major federal programs. Criteria: Uniform Guidance requirements indicate recipients 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: We noted one expenditure for which general procurement policies and procedures related to obtaining a bid were not followed prior to entering into a contract with a vendor. Cause: County staff are not familiar enough with County procurement policies and procedures. Effect or Potential Effect: The County has a significant deficiency in internal control with respect to its procurement policies and procedures which could result in significant noncompliance or questioned costs in the future. Recommendation: County management should ensure that procurement policies and procedures are being following by all County personnel. In addition, we recommend that County management provide training related to procurement policies and procedures to all County personnel with the ability to enter into a contract
Item: 2022-004 Assistance Listing Number: 21.027 Programs: Coronavirus State and Local Fiscal Recovery Funds Federal Agency: U.S. Department of the Treasury Pass-Through Agencies: Arizona State Office of the Governor; Maricopa County Pass-Through Grantor Identifying Number: Unknown Award Year: January 1, 2022 to December 31, 2024; January 28, 2022 to June 30, 2023 Compliance Requirement: Procurement, suspension and debarment Criteria: In accordance with 2 CFR § 200.318 - General procurement standards - the entity must use its own documented procurement procedures which reflect applicable. State and local laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in 2 CFR § 200.318. Condition: The entity does not have a documented procurement policy and procedures that address the provisions of 2 CFR § 200.318 Questioned Costs: n/a Context: In a population of 79 procurements for program costs, we conducted a non-statistical sample of 8 transactions. In our sample of 8 transactions, it was noted that all procurements were below the micro-purchase threshold, but there was no documented procurement policies or controls to ensure compliance with 2 CFR § 200.318. Effect: Undocumented procurement decisions could violate the requirements of 2 CFR § 200.318 Cause: Special Olympics Arizona, Inc. did not prepare written procurement policies, nor implement controls to ensure adherence to the policies, that conform to 2 CFR § 200.318. Identification as a Repeat Finding: Not a repeat finding Recommendation: The entity should prepare written procurement policies and implement controls to ensure adherence to the policies that conform to 2 CFR § 200.318. Views of Responsible Officials: Management of the Organization concurs with the finding. See Corrective Action Plan.
U.S. Department of the Treasury Passed through State of Arizona, Maricopa County (Maricopa County), Federal Financial Assistance Listing #21.027, PE386182260A4 2022, Coronavirus State and Local Fiscal Recovery Funds Procurement, Suspension and Debarment Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over federal awards that provides reasonable assurance that the Foundation is managing the federal award in compliance with federal statutes, regulations and terms and conditions of the federal award. The non‐Federal entity’s documented procurement procedures must conform to the procurement standards identified in 2 CFR 200.318 through 200.327 which also requires documentation to be retained to detail the history of procurements. In addition, as outlined in 2 CFR 180, recipients must not utilize any vendor which is suspended or debarred or is otherwise excluded from the central contractor registry. Condition: The Foundation did not retain documentation to support performance a price analysis nor provide the opportunity for open competition. Additionally, the Foundation did not review for suspension or debarment and required contract provisions were not followed. Cause: The Organization has limited staffing and did not have proper controls in place relating to review of procurement. Effect: Improper expenses may be paid and charged to the federal program and covered transactions could be potentially entered into with suspended or debarred parties. Questioned Costs: Questioned costs were unable to be determined. Context: A nonstatistical sample of 12 transactions out of 60 total transactions were selected for testing totaling $148,605 of $275,567 procurement expenditures. Repeat Finding from Prior Years: No Recommendation: We recommend the Foundation follow designed control processes which includes performing required procurement procedures and maintaining within the procurement file documentation of a review to ensure the party to the covered transaction is not suspended or debarred. Views of Responsible Officials: Management agrees with the finding.
FINDING 2022-005 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): FY 2022 Pass-Through Entity: Department of the Treasury Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The City had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. Indiana Code provides that the proper purchasing method would be the bidding process, unless the purchase meets certain other qualifications. INDIANA STATE BOARD OF ACCOUNTS 22 CITY OF MUNCIE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Six vendors fell within the simplified acquisition threshold. All six vendors were selected for testing. For three of the vendors tested, there were no requests for proposals received and no documentation to support the history of the procurement, including the rationale for the method of procurement, nor selection of the contract. In addition, there was no documentation that a cost or price analysis was performed for the three contracts. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.324(a) states: "The non-Federal entity must perform a cost or price analysis in connection with every procurement action in excess of the Simplified Acquisition Threshold including contract modifications. The method and degree of analysis is dependent on the facts surrounding the particular procurement situation, but as a starting point, the non-Federal entity must make independent estimates before receiving bids or proposals." 2 CFR 200.320 states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. . . . INDIANA STATE BOARD OF ACCOUNTS 23 CITY OF MUNCIE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. . . ." INDIANA STATE BOARD OF ACCOUNTS 24 CITY OF MUNCIE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The system of internal controls as established by the City was not properly implemented to ensure that goods and services that exceeded the simplified acquisition threshold were properly procured. A proper system of internal controls was not designed by management of the City. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management statements 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, proper procurement procedures were not adhered to for all vendors. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City establish a proper system of internal controls, and develop policies and procedures to ensure proper procurement procedures are adhered to for all purchases of good and services paid with federal awards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Criteria: The Uniform Guidance requires nonfederal entities that receive federal awards to establish written policies, procedures, or standards of conduct as described in the following sections: • Equipment (2 CFR 200.313) • General procurement standards (2 CFR 200.318) • Competition (2 CFR 200.319) • Methods of procurement to be followed (2 CFR 200.320) Condition: The Town did not have written policies, procedures, and standards of conduct relative to federal awards as required by the Uniform Guidance. Cause: The Town’s management was not aware of these requirements. Effect: The Town is not in compliance with the Uniform Guidance with respect to these written policies. Questioned Costs: N/A Repeat Finding: No Recommendation: We recommend that the Town update its policies and procedures to comply with the Uniform Guidance requirements mentioned above. Management’s Response: Management agrees with the finding.
Criteria: The Uniform Guidance requires nonfederal entities that receive federal awards to establish written policies, procedures, or standards of conduct as described in the following sections: • Equipment (2 CFR 200.313) • General procurement standards (2 CFR 200.318) • Competition (2 CFR 200.319) • Methods of procurement to be followed (2 CFR 200.320) Condition: The Town did not have written policies, procedures, and standards of conduct relative to federal awards as required by the Uniform Guidance. Cause: The Town’s management was not aware of these requirements. Effect: The Town is not in compliance with the Uniform Guidance with respect to these written policies. Questioned Costs: N/A Repeat Finding: No Recommendation: We recommend that the Town update its policies and procedures to comply with the Uniform Guidance requirements mentioned above. Management’s Response: Management agrees with the finding.
Criteria: The Uniform Guidance requires nonfederal entities that receive federal awards to establish written policies, procedures, or standards of conduct as described in the following sections: • Equipment (2 CFR 200.313) • General procurement standards (2 CFR 200.318) • Competition (2 CFR 200.319) • Methods of procurement to be followed (2 CFR 200.320) Condition: The Town did not have written policies, procedures, and standards of conduct relative to federal awards as required by the Uniform Guidance. Cause: The Town’s management was not aware of these requirements. Effect: The Town is not in compliance with the Uniform Guidance with respect to these written policies. Questioned Costs: N/A Repeat Finding: No Recommendation: We recommend that the Town update its policies and procedures to comply with the Uniform Guidance requirements mentioned above. Management’s Response: Management agrees with the finding.
Criteria: The Uniform Guidance requires nonfederal entities that receive federal awards to establish written policies, procedures, or standards of conduct as described in the following sections: • Equipment (2 CFR 200.313) • General procurement standards (2 CFR 200.318) • Competition (2 CFR 200.319) • Methods of procurement to be followed (2 CFR 200.320) Condition: The Town did not have written policies, procedures, and standards of conduct relative to federal awards as required by the Uniform Guidance. Cause: The Town’s management was not aware of these requirements. Effect: The Town is not in compliance with the Uniform Guidance with respect to these written policies. Questioned Costs: N/A Repeat Finding: No Recommendation: We recommend that the Town update its policies and procedures to comply with the Uniform Guidance requirements mentioned above. Management’s Response: Management agrees with the finding.
Federal Agency: U.S. Department of Agriculture Federal Program Name: Supplemental Nutrition Assistance Program Cluster Assistance Listing Number: 10.561 Federal Award Identification Number and Year: 222MN101S2514 – 2022 Passed Through Entity: Minnesota Department of Human Services Pass Through Number: H55210010 Award Period: 2022 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: The County should have procedures for verifying that an entity with which it plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded per 2 CFR sections 200.212 and 200.318(h); 2 CFR section 180.300. Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: It was noted that for 1 of the 5 vendors tested, the County was not able to provide documentation those vendors were not suspended or debarred prior to working with them during 2022. Questioned costs: None Context: 1 of the 5 vendors tested were missing documentation. Cause: The County has updated their contract templates to include a self-certification for the federal suspension and debarment. However, this does not cover vendors that don’t have official contracts with the county or for instance when an old template contract might have been used. Effect: It would be possible for the County to work with a vendor that is federally suspended or debarred and then pay them with federal funds. Repeat finding: Yes – 2021-005 Recommendation: We recommend that the County ensure it is either checking sam.gov and documenting that check or has a contract in place with the required self-certification language for each vendor paid over $25,000 for a type of service or item that was paid for in whole or in part by federal funds. Views of responsible officials: There is no disagreement with the finding.
Finding 2022-003: Procurement Criteria: CFR 200.318 states that non-Federal entities must have and use documented procurement procedures consistent with the requirements for procurement regulations included in paragraphs 318 through 327. Condition: We noted procurement procedures are outsourced to a third party and management is heavily involved in the ultimate decision. However, this policy is not formalized. Cause: USTTI did not have a documented formal procurement policy in place. Effect: A lack of a formal procurement policy is insufficient to meet the requirements noted in the Criteria section above. Questioned Costs: None. Context: USTTI does not have a formal procurement policy, and hence, not in compliance with Federal standards. Our audit work in this area consisted of internal control testwork over a random sample of expenditures, as well as substantive testwork over transactions above a defined threshold from select expense accounts that were charged to the Federal program. We consider our samples to be representative of the respective populations, and thus, are statistically valid samples. The issue is considered systemic in nature. Identification as a Repeat Finding: Not applicable. Recommendation: We recommend USTTI formalize a procurement policy to be in compliance with 2 CFR 200. We then recommend that USTTI management ensure its policy is distributed and communicated in a formal manner to its employees, and that management properly enforce compliance with its policy. All procurement actions should be clearly documented in writing and maintained in the vendor or contractor files.
Finding 2022-003: Procurement Criteria: CFR 200.318 states that non-Federal entities must have and use documented procurement procedures consistent with the requirements for procurement regulations included in paragraphs 318 through 327. Condition: We noted procurement procedures are outsourced to a third party and management is heavily involved in the ultimate decision. However, this policy is not formalized. Cause: USTTI did not have a documented formal procurement policy in place. Effect: A lack of a formal procurement policy is insufficient to meet the requirements noted in the Criteria section above. Questioned Costs: None. Context: USTTI does not have a formal procurement policy, and hence, not in compliance with Federal standards. Our audit work in this area consisted of internal control testwork over a random sample of expenditures, as well as substantive testwork over transactions above a defined threshold from select expense accounts that were charged to the Federal program. We consider our samples to be representative of the respective populations, and thus, are statistically valid samples. The issue is considered systemic in nature. Identification as a Repeat Finding: Not applicable. Recommendation: We recommend USTTI formalize a procurement policy to be in compliance with 2 CFR 200. We then recommend that USTTI management ensure its policy is distributed and communicated in a formal manner to its employees, and that management properly enforce compliance with its policy. All procurement actions should be clearly documented in writing and maintained in the vendor or contractor files.
Finding 2022-003: Procurement Criteria: CFR 200.318 states that non-Federal entities must have and use documented procurement procedures consistent with the requirements for procurement regulations included in paragraphs 318 through 327. Condition: We noted procurement procedures are outsourced to a third party and management is heavily involved in the ultimate decision. However, this policy is not formalized. Cause: USTTI did not have a documented formal procurement policy in place. Effect: A lack of a formal procurement policy is insufficient to meet the requirements noted in the Criteria section above. Questioned Costs: None. Context: USTTI does not have a formal procurement policy, and hence, not in compliance with Federal standards. Our audit work in this area consisted of internal control testwork over a random sample of expenditures, as well as substantive testwork over transactions above a defined threshold from select expense accounts that were charged to the Federal program. We consider our samples to be representative of the respective populations, and thus, are statistically valid samples. The issue is considered systemic in nature. Identification as a Repeat Finding: Not applicable. Recommendation: We recommend USTTI formalize a procurement policy to be in compliance with 2 CFR 200. We then recommend that USTTI management ensure its policy is distributed and communicated in a formal manner to its employees, and that management properly enforce compliance with its policy. All procurement actions should be clearly documented in writing and maintained in the vendor or contractor files.
2022-001 Procurement, Suspension and Debarment ALN Number Name of Federal Program 10.760 Water and Waste Disposal Systems Identification as a Repeat Finding: Repeat of Finding 2021-001 Finding: The Association did not have a written procurement policy that complies with the procurement standards established in 2 CFR sections 200.318 through 200.326 in place for the full compliance year. Criteria: Non-Federal entities other than States must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR 200. Condition and context: Sallal Water Association adopted a procurement policy for goods and service providers that complies with federal procurement standards in December 2022. As such, it was non-compliant with the federal standards for 11 months of the compliance year. Sample size and population: Sampling was not applicable to this finding. Effect: The result of the finding is that Sallal Water Association is not in compliance with federal procurement standards for 11 months of the compliance year. Recommendation: None as the Association adopted a written procurement policy in December 2022. Question Costs: None Management Response and Corrective Action Plan: See Corrective Action Plan Contact Person: Kristina Parker, Director of Finance and Operations
Information on the Federal Programs: All Programs Criteria: CFR 200.318 states that non-Federal entities must have and use documented procurement procedures consistent with the requirements for procurement regulations included in paragraphs 318 through 327. Condition: The Organization maintains a procurement policy however its practices do not consistenly evidence a documented process. During our audit we noted several instances where consultants were engaged without any documentation of procurement process or justification to support using a noncompetitive procurement process in accordance with CFR 200.320(c). Cause: The Organization did not follow its policies related to noncompetitive procurements. Context: The Organization may be at risk of entering into contracts for goods or services under federal awards that were not adequately procured based on the regulations in the Uniform Guidance and the awarding agency or pass-through entity could disallow the costs paid for the goods or services. Effect: The Organization may have disallowed costs for not properly procuring goods or services. Questioned Costs: None noted. Identification as a Repeat Finding, if Applicable: Not applicable. Recommendation: We recommend the Organization follow its procurement policy to ensure compliance with CFR 200. Any procurements related to noncompetitive solicitations should be documented according to the provisions in CFR 200.320(c).
Information on the Federal Programs: All Programs Criteria: CFR 200.318 states that non-Federal entities must have and use documented procurement procedures consistent with the requirements for procurement regulations included in paragraphs 318 through 327. Condition: The Organization maintains a procurement policy however its practices do not consistenly evidence a documented process. During our audit we noted several instances where consultants were engaged without any documentation of procurement process or justification to support using a noncompetitive procurement process in accordance with CFR 200.320(c). Cause: The Organization did not follow its policies related to noncompetitive procurements. Context: The Organization may be at risk of entering into contracts for goods or services under federal awards that were not adequately procured based on the regulations in the Uniform Guidance and the awarding agency or pass-through entity could disallow the costs paid for the goods or services. Effect: The Organization may have disallowed costs for not properly procuring goods or services. Questioned Costs: None noted. Identification as a Repeat Finding, if Applicable: Not applicable. Recommendation: We recommend the Organization follow its procurement policy to ensure compliance with CFR 200. Any procurements related to noncompetitive solicitations should be documented according to the provisions in CFR 200.320(c).
Information on the Federal Programs: All Programs Criteria: CFR 200.318 states that non-Federal entities must have and use documented procurement procedures consistent with the requirements for procurement regulations included in paragraphs 318 through 327. Condition: The Organization maintains a procurement policy however its practices do not consistenly evidence a documented process. During our audit we noted several instances where consultants were engaged without any documentation of procurement process or justification to support using a noncompetitive procurement process in accordance with CFR 200.320(c). Cause: The Organization did not follow its policies related to noncompetitive procurements. Context: The Organization may be at risk of entering into contracts for goods or services under federal awards that were not adequately procured based on the regulations in the Uniform Guidance and the awarding agency or pass-through entity could disallow the costs paid for the goods or services. Effect: The Organization may have disallowed costs for not properly procuring goods or services. Questioned Costs: None noted. Identification as a Repeat Finding, if Applicable: Not applicable. Recommendation: We recommend the Organization follow its procurement policy to ensure compliance with CFR 200. Any procurements related to noncompetitive solicitations should be documented according to the provisions in CFR 200.320(c).
The Transit Authority’s internal controls were inadequate for ensuring compliance with suspension, debarment and federal procurement requirements. Assistance Listing Number and Title: 20.526 – Buses and Bus Facilities Formula, Competitive, and Low or No Emissions Program. Federal Grantor Name: Federal Transit Administration Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Transportation Pass-through Award/Contract Number: PTD0486 Known Questioned Cost Amount: N/A Prior Year Audit Finding: N/A Background The Transit Authority spent $873,562 in program funds from the Bus and Bus Facilities Formula, Competitive, and Low or No Emissions Program. The objective of the program is to provide financial assistance to replace, rehabilitate, and purchase buses and related equipment, as well as construct bus-related facilities through both formula and competitive selection procedures. Federal regulations require federal award recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Suspension and Debarment Federal requirements prohibit grant recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the Transit Authority 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 or debarred or otherwise excluded. The Transit Authority may accomplish this verification by collecting a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at SAM.gov. The Transit Authority must perform this verification before entering into the contract and charging the costs to a federal award, and it must maintain documentation demonstrating compliance with this federal requirement. Procurement Federal regulations require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR § 200.318-327. The procedures must reflect the most restrictive of applicable federal requirements, state laws and local policies. When using federal funds to procure goods and services, governments must apply the most restrictive federal requirements, state law or local policies by obtaining quotes or following a competitive procurement process, depending on the estimated cost of the procurement activity. Additionally, state and federal requirements, as well as the Transit Authority’s policy, allow it to bypass normal procurement laws through a process commonly referred to as “piggybacking.” This process allows entities to purchase goods and services using contracts awarded by another government or group of governments via an interlocal agreement or cooperative. To comply with piggybacking requirements, the entity must enter into an agreement before it purchases services or goods from the other entity’s bid contract. If the Transit Authority uses such an agreement, federal regulations require it to confirm the awarding entity followed all procurement laws and regulations applicable to the awarding entity when selecting the contractor. Description of Condition Suspension and Debarment The Transit Authority’s controls were ineffective for ensuring it verified the suspension and debarment status of contractors receiving $25,000 or more, all or in part with federal funds. The Transit Authority could not demonstrate it obtained a written certification, included a clause in the contract, or searched for exclusion records in SAM.gov to verify that one contractor subject to this requirement was not suspended or debarred before entering into the contract or charging costs to the federal award. The Transit Authority paid this contractor $873,562 in program funds during fiscal year 2022. Procurement Although the Transit Authority has an established written procurement policy, it does not conform to the most restrictive of federal, state and local requirements, and does not include all required procedures to follow when procuring purchases of materials, supplies and equipment through piggybacking. Additionally, the Transit Authority’s policy does not include other required procedures for procuring transactions, such as contracting with small and minority business owners, bonding requirements, contract cost or price analysis, contract provisions, and more. Our audit found the Transit Authority did not perform competitive procurement procedures, nor did it establish an interlocal agreement to piggyback onto another entity’s contract before using $873,562 in program funds to purchase two buses. In addition, the Transit Authority did not review the other entity’s procurement documentation to ensure it followed competitive procurement procedures, nor did the Transit Authority complete a cost or price analysis to ensure the bus prices were reasonable. We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance. These issues were not reported as a finding in the prior audit. Cause of Condition Suspension and Debarment Transit Authority employees knew about the requirement and gave us a copy of the SAM.gov printout. However, the printout was not dated, so staff were unable to demonstrate they verified the contractor’s status before entering into the purchase contract. Procurement The Transit Authority has historically received federal funding to purchase buses, and management has been intentional about having controls in place over procurement to ensure compliance with all applicable requirements. The state agency contract from which the Transit Authority historically purchased buses did not procure a contract in 2022. As a result, the Transit Authority purchased buses from another entity’s contract, and employees were not aware they needed to establish an interlocal agreement with that entity before purchasing, as state law requires. Additionally, employees did not know they needed to review support to ensure the other entity followed competitive procurement procedures, or that the Transit Authority needed to complete a cost or price analysis. Effect of Condition Suspension and Debarment Without this verification, the Transit Authority increases its risk of providing federal funds to contractors that are excluded from participating in federal programs. Any payments the Transit Authority made to an ineligible party would be unallowable, and the federal grantor could potentially recover them. We subsequently verified the contractor was not suspended and debarred, so we are not questioning costs. Procurement Without written procurement procedures, the Transit Authority is at greater risk of noncompliance with the most restrictive of federal, state, or local procurement methods when using federal funds to procure contractors. Without effective internal controls over procurement and piggybacking procedures, the Transit Authority cannot demonstrate compliance with applicable federal procurement requirements. Additionally, the Transit Authority cannot ensure it received the best price for the bus purchases. Recommendation We recommend the Transit Authority strengthen internal controls to ensure it: • Updates 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 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 Transit Authority’s Response Grant Transit Authority (GTA) was awarded funding through the FTA 5339 Bus and Bus Facilities Formula Grant Program in the 2019-2021 Biennium for two heavy-duty transit buses. During the period of 2020-2021 when GTA turned to the Washington Department of Enterprise Services (DES) to start the procurement process for these buses, it was determined that DES did not have a Master Contract in place for the purchase of heavy-duty buses and most likely would not have a contract in place for quite some time. Several Washington State Transit Agencies reached out to WSDOT for direction and options, as we were all in the same predicament in having been awarded funding to replace aging heavy-duty buses but no Master Contract in place through Washington State for these procurements. WSDOT recommended the effected transit agencies utilize the Commonwealth of Virginia (State) Cooperative Purchasing Master Contract for those of us wishing to purchase heavy-duty buses from Gillig LLC. The GTA submitted the Commonwealth of Virginia Master Contract procurement document package to WSDOT for review and WSDOT acknowledged that they had previously reviewed and were familiar with this Master Contract for Gillig LLC buses and that it met the FTA required qualifications. The GTA was given authorization by WSDOT to move forward with obtaining the required procurement documents including a Board approved purchase order. Once acquired, the GTA submitted all documents to WSDOT and obtained the final approval to move forward. The GTA staffing involved with this procurement, assumed, and relied upon WSDOT’s approval, and did not realize the need for the agency itself to evaluate and ensure that the Commonwealth of Virginia Master Contract met and followed all FTA guidelines prior to procuring, and instead relied solely upon WSDOT’s approval. Prior to obtaining approval from the Board for the Purchase Orders for two Gillig buses, GTA did perform a search in Sam.Gov to verify that Gillig LLC had not been debarred or suspended and had printed the results from this search. The printed document, however, did not have a date on it proving when it had been pulled. The vendor documents are updated in Sam.Gov on an annual basis and the pulled document did show that it was in effect for the year these vehicles were procured. The GTA has now corrected this process to ensure that all future procurements have dates on the Sam.gov search document prior to moving forward with the procurement. Additionally, WSDOT requires this document to be included in the approval packet of documents submitted to WSDOT for verification, prior to their approving the agency procurement. The GTA is a rural transit and receives their grant funding as a pass-through from WSDOT versus being a direct FTA recipient. Therefore, the GTA relies upon the review, verifications and approvals provided by WSDOT for these procurements. One step that WSDOT failed to mention until after the fact, was the need for an Interlocal Agreement when piggybacking off another state contract. The GTA contacted the Commonwealth of Virginia when WSDOT sent a request asking us to obtain an Interlocal for our file. Because the Interlocal is not a requirement by the FTA, the Commonwealth of Virginia was not willing to sign an Interlocal at first, but after explaining that it was required by the State of Washington, the GTA finally received a signed Interlocal Agreement post procurement. The Grant Transit Authority agrees with the finding and appreciates the conclusions of the audit and the recommendations provided. The GTA is committed to making necessary improvements to ensure compliance with Federal Policies, State Law, and Local Policies. The recommendations provided the goal have apprised the GTA of the need for updating our procurement policy and including written step by step procedures that will allow for management and staff to have a functional and practical document to follow while working towards a goal of strengthening our internal controls. The GTA will ensure that the written policy and procedures conform with the Uniform Guidance (2 CFR 200.318-327) for all procurement activities. Auditor’s Remarks We appreciate the steps the Transit Authority has taken to address these issues. We will follow up on the condition 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 with Federal funds by nonfederal entities. Title 2 CFR Part 180, OMB Guidelines on Agencies on Governmentwide Department and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.
Information on the Federal Program: Assistance Listing Number 10.763—Emergency Community Water Assistance Grants, United States Department of Agriculture. Compliance Requirements: Procurement. Type of Finding: Material Noncompliance. Criteria: 2 CFR § 200.318(c)(1) requires that the non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Condition: We noted that the City did not have written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts in fiscal year 2022. Cause: The City was not aware of the requirement to have written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Effect: Failure to have written standards of conduct could result in noncompliance with Uniform Guidance requirements. Questioned Costs: There are no questioned costs. Recommendation: We recommend that the City develop written standards of conduct that include the requirements of 2 CFR § 200.318(c)(1).
Information on the Federal Program: Assistance Listing Number 10.763—Emergency Community Water Assistance Grants, United States Department of Agriculture. Compliance Requirements: Procurement. Type of Finding: Material Noncompliance. Criteria: 2 CFR § 200.319(d) requires that the non-Federal entity must maintain written procedures for procurement transactions. Condition: We noted that the City did not have written procedures for procurement transactions that include the provisions required by the Procurement Standards 2 CFR § 200.318 through 2 CFR § 200.327 in fiscal year 2022. Cause: The City was not aware of the requirement to have written procedures for procurement transactions. Effect: Failure to have adequate written procedures for procurement transactions could result in the acquisition of goods or services in violation with administrative requirements, federal regulations, other procurement requirements, and Uniform Guidance requirements. Questioned Costs: There are no questioned costs. Recommendation: We recommend that the City identify grants that are subject to Uniform Guidance on a timely basis to ensure all compliance requirements are met and develop adequate written policies and procedures for procurement transactions.
Information on the Federal Program: Assistance Listing Number 10.763—Emergency Community Water Assistance Grants, United States Department of Agriculture. Compliance Requirements: Procurement. Type of Finding: Material Noncompliance. Criteria: 2 CFR § 200.318(c)(1) requires that the non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Condition: We noted that the City did not have written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts in fiscal year 2022. Cause: The City was not aware of the requirement to have written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Effect: Failure to have written standards of conduct could result in noncompliance with Uniform Guidance requirements. Questioned Costs: There are no questioned costs. Recommendation: We recommend that the City develop written standards of conduct that include the requirements of 2 CFR § 200.318(c)(1).
Information on the Federal Program: Assistance Listing Number 10.763—Emergency Community Water Assistance Grants, United States Department of Agriculture. Compliance Requirements: Procurement. Type of Finding: Material Noncompliance. Criteria: 2 CFR § 200.319(d) requires that the non-Federal entity must maintain written procedures for procurement transactions. Condition: We noted that the City did not have written procedures for procurement transactions that include the provisions required by the Procurement Standards 2 CFR § 200.318 through 2 CFR § 200.327 in fiscal year 2022. Cause: The City was not aware of the requirement to have written procedures for procurement transactions. Effect: Failure to have adequate written procedures for procurement transactions could result in the acquisition of goods or services in violation with administrative requirements, federal regulations, other procurement requirements, and Uniform Guidance requirements. Questioned Costs: There are no questioned costs. Recommendation: We recommend that the City identify grants that are subject to Uniform Guidance on a timely basis to ensure all compliance requirements are met and develop adequate written policies and procedures for procurement transactions.
2022-001: Procurement Requirements Criteria: The Organization is required to establish a procurement policy in accordance with Uniform Guidance requirements, as specified in the compliance supplement. Condition: The Organization did not establish a procurement policy in accordance with Uniform Guidance 2 CFR 200.318 ? 200.327, as required for the major program. The Organization developed and implemented a policy during 2022 but it was not in effect for the whole organization for the entire year. Questioned costs: None Cause and Effect: By not having an updated procurement policy the Organization could expense funds that are not in accordance with the procurement policies established by Uniform Guidance Recommendation: We recommend the Organization establish a procurement policy based on the requirements noted in 2 CFR 200.318-200.327. Auditee Response: The Organization established and implemented a procurement policy in accordance with Uniform Guidance requirements during the year in 2022.
2022-001: Procurement Requirements Criteria: The Organization is required to establish a procurement policy in accordance with Uniform Guidance requirements, as specified in the compliance supplement. Condition: The Organization did not establish a procurement policy in accordance with Uniform Guidance 2 CFR 200.318 ? 200.327, as required for the major program. The Organization developed and implemented a policy during 2022 but it was not in effect for the whole organization for the entire year. Questioned costs: None Cause and Effect: By not having an updated procurement policy the Organization could expense funds that are not in accordance with the procurement policies established by Uniform Guidance Recommendation: We recommend the Organization establish a procurement policy based on the requirements noted in 2 CFR 200.318-200.327. Auditee Response: The Organization established and implemented a procurement policy in accordance with Uniform Guidance requirements during the year in 2022.
2022-001: Procurement Requirements Criteria: The Organization is required to establish a procurement policy in accordance with Uniform Guidance requirements, as specified in the compliance supplement. Condition: The Organization did not establish a procurement policy in accordance with Uniform Guidance 2 CFR 200.318 ? 200.327, as required for the major program. The Organization developed and implemented a policy during 2022 but it was not in effect for the whole organization for the entire year. Questioned costs: None Cause and Effect: By not having an updated procurement policy the Organization could expense funds that are not in accordance with the procurement policies established by Uniform Guidance Recommendation: We recommend the Organization establish a procurement policy based on the requirements noted in 2 CFR 200.318-200.327. Auditee Response: The Organization established and implemented a procurement policy in accordance with Uniform Guidance requirements during the year in 2022.
FINDING 2022-001 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): SLFRP2971 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not in place at the County to ensure compliance with the requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement The County's purchasing policy did not reflect applicable state laws and regulations. In addition, the policy did not include procedures to avoid acquisition of unnecessary or duplicative items, or procedures to ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Suspension and Debarment Prior to entering into subawards and covered transactions with State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Upon inquiry of the County to review the 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, the County divulged that it was unaware of the suspension and debarment requirements related to the SLFRF awards. A population of four covered transactions, totaling $990,897, that equaled or exceeded $25,000 paid from SLFRF funds during the audit period was identified. For each of the four transactions, the County did not verify the suspension and debarment status prior to payment due to the County not having any policies or procedures in place to verify that contractors and subrecipients were neither suspended nor debarred, or otherwise excluded or disqualified from participating in federal assistance programs or activities. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in ?? 200.317 through 200.327." 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 control, 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 and subrecipients 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 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. Additionally, we recommend the County establish documented procurement procedures consistent with state and local laws for the acquisition of property or services required under a federal award or subaward. The nonfederal entity's documented procurement procedures must conform to the procurement standards identified in ?? 200.317 through 200.327. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2022-005 Finding Federal Program Coronavirus State and Local Fiscal Recovery Funds (21.027) Federal Award Number and Year ? SLFRP2882, 2021 Procurement, Suspension, and Debarment Material Weakness Criteria Uniform Guidance requires all non-federal entities, other than states must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. Non-federal entities are also prohibited from entering into a covered transaction equal to or exceeding $25,000 with a vendor who has been suspended or disbarred from receiving federal funds. Condition We noted during testing procurement, suspension, and debarment that the County doesn?t have a procurement policy that follows Uniform Guidance. We also noted during testing for suspension and debarment that 3 of our 4 vendors tested were not reviewed to ensure they were not suspended or disbarred from federal funds. Cause Lack of oversight by management. Questioned Costs None Context Uniform Guidance states ?Review the non-federal entity?s procedures for verifying that an entity with which it plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded (2 CFR sections 200.212 and 200.318(h); 2 CFR section 180.300; 48 CFR section 52.2096)?. During this review, we noted that during our testing of procurement, suspension, and debarment that the County doesn?t have a procurement policy that follows Uniform Guidance. We also noted during testing for suspension and debarment that 3 of our 4 vendors tested were not reviewed to ensure they were not suspended or disbarred from federal funds. Effect The County has an increased risk of not being compliance with federal procurement requirements and increased risk of entering into a covered transaction with a vendor who is suspended or disbarred from federal funds. Repeat Finding Yes ? see 2021-005 Recommendation The County should update their Procurement Policy to include suspension and debarment verbiage. Views of Responsible Officials See Corrective Action Plan.
2022-002 Significant Deficiency Federal Program Coronavirus State and Local Fiscal Recovery Funds (21.027) Procurement, Suspension, and Debarment Criteria Uniform Guidance states an entity needs to have procedures in place to ensure they do not enter into a covered transaction with a vendor that is suspended or disbarred from federal funds. Condition During testing of the City?s Procurement Policy, we noted that suspension and debarment verbiage was missing. Question Costs None ? This was a test based on the City?s Procurement Policy and this policy does not show financial information. Context Uniform Guidance states ?Review the non-federal entity?s procedures for verifying that an entity with which it plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded (2 CFR sections 200.212 and 200.318(h); 2 CFR section 180.300; 48 CFR section 52.2096)?. During this review, we noted that the city does not have procedures in place for verifying that they don?t enter into a covered transaction with a debarred or suspended vendor. Effect The City is not in compliance with requirements set by Uniform Guidance. Repeat Finding No Views of Responsible Officials The finance department experienced a significant turnover of experienced employees and in their absence the suspension and disbarment requirement was not reviewed prior to bids being awarded in some cases. The City is in the process of updating its procurement policy to include the suspension and debarment requirement.
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.