CFDA #10.760 USDA Water and Waste Disposal Procurement, Suspension & Debarment Finding 2022-002 ? Noncompliance with Federal Code of Regulations 2 CFR 200.318 Criteria: 2 CFR 200.318 requires the non-federal entity to maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. No employee, officer, or agent may participate in the selection, award, or administration of a contract supported by a Federal award if he or she has a real or apparent conflict of interest. The officers, employees and agents of the non-Federal entity may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. The standards of conduct must provide for disciplinary actions to be applied for violations of such standards by officers, employees, or agents of the non-Federal entity. Condition: The employee code of conduct does not specifically address Federal contracts. Cause: Management was unaware of the specific requirements noted in 2 CFR 200.318. Effect: Employees involved in the selection, award, or administration of Federal awards could have a conflict of interest with contractors, subcontractors, and/or vendors. Questioned Costs: There were no questioned costs. Context: There were no findings regarding apparent conflicts of interest between employees and Federal award contractors, subcontractors, or vendors. Repeat Finding: This is not a repeat finding, as this is a new federal award for 2022. Recommendation: We recommend management amend the code of conduct policy for both employees and board members to include specific language noted in 2 CFR 200.318. Views of Responsible Officials and Planned Corrective Action: Management agrees with the above finding and will amend the Employee and Board Codes of Conduct to address Federal Contracts.
2022-004 U.S. Department of Justice Federal Financial Assistance Listing #16.575 Victims of Crime Act (VOCA) Procurement, Suspension and Debarment Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria - Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Sections 200.318 through 200.326 set forth the procurement standards non-federal entities other than states must follow when operating federal programs and the procurement procedures required depending on the dollar amount of the transaction. Condition - During the course of our engagement, we identified that there was no observable documentation to indicate that the required procurement procedures were performed on vendors. Cause - Lack of oversight, awareness, or understanding of all of the specific requirements under the Uniform Guidance and all applicable CFR sections and controls were not adequately designed to ensure compliance with all of these requirements. Effect - A lack of established controls increases the overall risk that the Organization is contracting and awarding contracts which may not be the most cost advantageous. Questioned Costs - None reported Context/Sampling - A sample of 9 expenditures out of a population of 12 expenditures were selected for testing. Four of these met the conditions of the procurement policy (i.e., non- payroll related expenditures) and did not have the supporting documentation retained due to having entered into the contract during 2020 or prior to the implementation of the procurement policy in 2020. Two of these met the conditions of the procurement policy (i.e., non-payroll related expenditures) and did not go through the Organization?s procurement policy. Repeat Finding from Prior Year ? Yes, Finding 2021-004 Recommendation - We recommend that the Organization maintain the appropriate documentation evidencing that procurement procedures have been completed. Views of Responsible Officials - Management agrees with the finding.
2022-004 U.S. Department of Justice Federal Financial Assistance Listing #16.575 Victims of Crime Act (VOCA) Procurement, Suspension and Debarment Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria - Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Sections 200.318 through 200.326 set forth the procurement standards non-federal entities other than states must follow when operating federal programs and the procurement procedures required depending on the dollar amount of the transaction. Condition - During the course of our engagement, we identified that there was no observable documentation to indicate that the required procurement procedures were performed on vendors. Cause - Lack of oversight, awareness, or understanding of all of the specific requirements under the Uniform Guidance and all applicable CFR sections and controls were not adequately designed to ensure compliance with all of these requirements. Effect - A lack of established controls increases the overall risk that the Organization is contracting and awarding contracts which may not be the most cost advantageous. Questioned Costs - None reported Context/Sampling - A sample of 9 expenditures out of a population of 12 expenditures were selected for testing. Four of these met the conditions of the procurement policy (i.e., non- payroll related expenditures) and did not have the supporting documentation retained due to having entered into the contract during 2020 or prior to the implementation of the procurement policy in 2020. Two of these met the conditions of the procurement policy (i.e., non-payroll related expenditures) and did not go through the Organization?s procurement policy. Repeat Finding from Prior Year ? Yes, Finding 2021-004 Recommendation - We recommend that the Organization maintain the appropriate documentation evidencing that procurement procedures have been completed. Views of Responsible Officials - Management agrees with the finding.
2022-004 U.S. Department of Justice Federal Financial Assistance Listing #16.575 Victims of Crime Act (VOCA) Procurement, Suspension and Debarment Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria - Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Sections 200.318 through 200.326 set forth the procurement standards non-federal entities other than states must follow when operating federal programs and the procurement procedures required depending on the dollar amount of the transaction. Condition - During the course of our engagement, we identified that there was no observable documentation to indicate that the required procurement procedures were performed on vendors. Cause - Lack of oversight, awareness, or understanding of all of the specific requirements under the Uniform Guidance and all applicable CFR sections and controls were not adequately designed to ensure compliance with all of these requirements. Effect - A lack of established controls increases the overall risk that the Organization is contracting and awarding contracts which may not be the most cost advantageous. Questioned Costs - None reported Context/Sampling - A sample of 9 expenditures out of a population of 12 expenditures were selected for testing. Four of these met the conditions of the procurement policy (i.e., non- payroll related expenditures) and did not have the supporting documentation retained due to having entered into the contract during 2020 or prior to the implementation of the procurement policy in 2020. Two of these met the conditions of the procurement policy (i.e., non-payroll related expenditures) and did not go through the Organization?s procurement policy. Repeat Finding from Prior Year ? Yes, Finding 2021-004 Recommendation - We recommend that the Organization maintain the appropriate documentation evidencing that procurement procedures have been completed. Views of Responsible Officials - Management agrees with the finding.
2022-004 U.S. Department of Justice Federal Financial Assistance Listing #16.575 Victims of Crime Act (VOCA) Procurement, Suspension and Debarment Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria - Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Sections 200.318 through 200.326 set forth the procurement standards non-federal entities other than states must follow when operating federal programs and the procurement procedures required depending on the dollar amount of the transaction. Condition - During the course of our engagement, we identified that there was no observable documentation to indicate that the required procurement procedures were performed on vendors. Cause - Lack of oversight, awareness, or understanding of all of the specific requirements under the Uniform Guidance and all applicable CFR sections and controls were not adequately designed to ensure compliance with all of these requirements. Effect - A lack of established controls increases the overall risk that the Organization is contracting and awarding contracts which may not be the most cost advantageous. Questioned Costs - None reported Context/Sampling - A sample of 9 expenditures out of a population of 12 expenditures were selected for testing. Four of these met the conditions of the procurement policy (i.e., non- payroll related expenditures) and did not have the supporting documentation retained due to having entered into the contract during 2020 or prior to the implementation of the procurement policy in 2020. Two of these met the conditions of the procurement policy (i.e., non-payroll related expenditures) and did not go through the Organization?s procurement policy. Repeat Finding from Prior Year ? Yes, Finding 2021-004 Recommendation - We recommend that the Organization maintain the appropriate documentation evidencing that procurement procedures have been completed. Views of Responsible Officials - Management agrees with the finding.
Federal agency: U.S. Department of Treasury Federal program name: COVID-19 State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP3395, 2022 Award Period: 6/13/2021 ? 12/31/2026 Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance (Modified Opinion) Criteria or specific requirement: Non-federal entities other than states must follow the procurement standards set out at CFR sections 200.318 through 200.326. This includes utilizing one of the five allowable procurement methods, including small purchase guidelines for items over the micro-purchase threshold and sealed bids, competitive proposals, or noncompetitive proposals when items exceed the simplified acquisition threshold. In addition, the Uniform Guidance requires that the entity maintain records sufficient to detail the history of the procurement. Condition: In our testing for the State and Local Fiscal Recovery Funds procurements, it was noted that not all procurements followed the appropriate method and history of the transaction was not sufficiently documented. Questioned Costs: ALN 21.027 - $222,175.04 Context: Out of five procurement which were tested, we noted one for which the City did not retain documentation detailing the history of the procurement, including the rationale for choosing the particular vendor. Effect: The City is not in compliance with Uniform Guidance requirements for the proper documentation of all procurement transactions. Recommendation: We recommend the City reviews its procedures and controls over procurement to ensure that all procurements are documented such that a third party can clearly see and understand the detailed history of the procurement. Views of responsible officials: There is no disagreement with the audit finding.
Finding 2022-010 Lack of Internal Control over Procurement Federal Agency: U.S. Department of the Treasury Federal Program: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Number: None Award Years: 2021 Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: Uniform Guidance requires that entities receiving federal funding must have written policies and procedures related to procurement that meet the criteria listed in 2 CFR 200.318 and 200.320. Condition and Context: During our compliance testing of the program, management was unable to provide adequate supporting documentation to demonstrate that proper procurement procedures were followed in the purchase of an ambulance, a vehicle, and contract services. Cause: Lack of internal controls over procurement requirements. Effect: Failure to follow compliance requirements could result in loss of federal funding. Questioned Costs: None noted. Costs incurred under the program appeared reasonable based on our review. However, we were unable to determine procurement method or how the vendor was selected in the transaction. Repeat Finding: This is a repeat of Finding 2021-007 and since it is a repeat finding, we believe this to be a systemic issue. Recommendation: We recommend that all necessary purchases go through a formal procurement process to comply with grant requirements and that documentation of procurement is stored in an organized manner so that documentation can be provided to the auditors timely. Management?s Response: Management agrees with this finding. See Corrective Action Plan.
Federal Agency: U.S. Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Pass-Through Agency: State of Arizona, the Office of the Governor Pass-Through Number(s): GR-ARPA-HHF-030122-01 and GR-ARPA-090121-01 Award Period: January 1, 2022 ? November 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Condition/Context: The Organization did not maintain a formalized and written procurement policy. In addition, the Organization did follow the required solicitation process as follows: 1. Small purchase procedures for one vendor, with costs between $10,000 and $250,000 related to grant management and financial oversight, were not performed. 2. Formal procurement methods or noncompetitive procurement procedures for one vendor, with costs exceeding $250,000 related to mental health services, were not performed. The Organization contracted with this mental health vendor prior to accepting the Coronavirus State and Local Fiscal Recovery Funds and subsequently did not go through formal procurement procedures. 3. For two vendors, procedures to determine that the vendors were not included on the suspended or debarred vendor list maintained by the General Services Administration, were not performed. Criteria or specific requirement: In accordance with the Compliance Supplement, Part 6 ? Internal Control, 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. In accordance with 2 CFR 200.318 (a), the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in ?? 200.317 through 200.327. In accordance with 2 CFR 200.320 (a)(2)(i), the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. Small purchase procedures - the acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. Criteria or specific requirement (Continued) In accordance with 2 CFR 200.320 (b)(1 and 2), the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. Formal procurement methods - when the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with ? 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) sealed bids, or (2) proposals. In accordance with 2 CFR 200.320 (c), the non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement - can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. In accordance with 2 CFR 180.220, the non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. ?Covered transactions? include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220). All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. Questioned costs: None Cause: The Organization did not have established procurement policies and did not have internal controls designed to ensure compliance with those policies. Effect: The Organization was not in compliance with the Compliance Supplement and the Code of Federal Regulations related to procurement and suspension and debarment provisions. Repeat Finding: No Recommendation: We recommend that the Organization adopt a formal and written procurement policy. Additionally, management should develop controls to help ensure procurement procedures are followed and to monitor the amount spent with vendors throughout the year to ensure procurement procedures are initiated when the vendor costs exceed the procurement thresholds. These procedures will help ensure compliance with Compliance Supplement and the Code of Federal Regulations related to procurement and suspension and debarment provisions. Views of responsible officials: Management agrees with the audit condition.
Finding 2022-009 Program Affected: 66.818 Brownfields Assessment and Cleanup Cooperative Agreements U.S. Environmental Protection Agency Contract year: 2022 FAIN: 00A00664 / 00A00676 / 00A00909 Criteria: 2 CFR ?200.318(c) specifies that "the non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts." Condition and Context: During the test of the Organization's procurement, suspension, and debarment requirements, the Organization was not able to provide a written procurement policy. The Organization did not maintain a written policy related to procurement of goods and services related to the federal program which prohibits conflicts of interest and governs the actions of the Organization's employees engaged in the selection, award, and administration of contracts. The Organization did not maintain a written policy providing for disciplinary actions to be applied for related violations. The Organization does not maintain a written policy that requires that procurements incorporate a clear and accurate description of the procurement and identifies all requirements which the offerors must fulfill and other factors to be used in evaluating bids/proposals, and requires the Organization to ensure all prequalified lists are current and include enough qualified sources to ensure open and free competition. Cause and Effect: The Organization does not comply with the requirements of the Uniform Guidance related to written policies. However, we did not identify actual noncompliance with the procurement processes required by the Uniform Guidance. Questioned Costs: N/A Identification of Repeat Findings: N/A Recommendation: We recommend the Organization implement written policies in accordance with the Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding. See attached Planned Corrective Actions.
2022-002: U.S. Department of Environment Protection ? Assistance Listing # 66.468 Capitalization Grants for Drinking Water State Revolving Fund (Drinking Water State Revolving Fund Cluster) Lack of Required Written Policies & Procedures ? Compliance Condition & Criteria: The Authority does not currently have all the written policies and procedures in place as required by the Uniform Guidance as it relates to financial management and determining allowability of costs for the federal program (Title 2 U.S. Code of Federal Regulations (CFR) 200.302 & 200.305). In addition CFR sections 200.318, 200.319, and 200.320 require there to be written policies and procedures regarding procurement and conflicts of interest. Effect: Although not likely, the oversight agency could disallow all costs associated with this program. Cause: This is the Authority?s first time subject to the requirements of the Uniform Guidance as they have not had any significant federal grant funding in a number of years. The Authority does have a set of informal policies and procedures that are followed as it relates to financial management, allowability of costs, procurement, and conflicts of interest, and have been very careful to carry out all federal program activities in accordance with established regulations; however the Authority was simply not aware of the requirement that these polices and procedures be documented in writing. Recommendation: We recommend that the Authority work towards getting those policies and procedures documented in writing so that they are in compliance with the requirements of the Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: The Authority understand the potential effects of the condition described above and will work towards getting the necessary policies and procedures in place as they relate to federal programs documented in writing.
Federal Agency: Department of Treasury Federal Program Name: COVID-19 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Assistance Listing Number: 21.027 Award Period: March 3, 2021 ? December 31, 2024 Compliance Requirement: Procurement Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Recipients may use award funds to enter into contracts to procure goods and services necessary to implement one or more of the eligible purposes outlined in sections 602(c) and 603(c) of the Act and Treasury?s Interim Final Rule and Final Rule. As such, recipients are expected to have procurement policies and procedures in place that comply with the procurement standards outlined in the Uniform Guidance. All other entities under the program, including subrecipients of a state, must follow the procurement standards in 2 CFR sections 200.318 through 200.327, including ensuring that the procurement method used for the contracts are appropriate based on the dollar amount and conditions specified in 2 CFR section 200.320. Condition: During our testing of internal control over procurement for CSLFRF, we noted the City did not have effective control over compliance. Questioned costs: None. Context: In our sample of five cases, there was one instance where the City did not follow its procurement policies and procedures. Cause: The City did not have adequate controls in place to ensure contracts it entered into followed its procurement policies and procedures. Effect: The City could obtain property and services in a manner that does not allow for cost-effectiveness nor providing full and open competition. Repeat Finding: No. Recommendation: We recommend the City implement controls to ensure its procurement policies and procedures are followed prior to entering into contracts. Views of responsible officials: There is no disagreement with the audit finding.
2022-002 The City did not have adequate internal controls in place to ensure compliance with federal procurement requirements. Assistance Listing Number and Title: 20.205 ? Highway Planning and Construction Federal Grantor Name: Federal Highway Administration Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Transportation Pass-through Award/Contract Number: STPUS-Y341(001) Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background Dural fiscal year 2022, the City spent $981,372 in federal funding from the Federal Highway Administration through the Highway Planning and Construction program. This program gives funding to help state and local government agencies plan and develop an integrated, interconnected transportation system. The City used this funding for the SW Mosman Ave Phase 2 construction project. Federal regulations require recipients to establish and follow internal controls for ensuring compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Federal regulations require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR 200.318-327. The procedures must reflect the most restrictive applicable federal requirements, state laws or local policies. Description of Condition Our audit found the City did not have adequate internal controls for ensuring compliance with federal procurement requirements. Although the City implemented a procurement policy in November 2022, it did not have written procurement policies or procedures at the time it procured the construction project to ensure compliance with federal requirements. We consider this deficiency in internal controls to be a significant deficiency. Cause of Condition The City relied on the Washington State Department of Transportation?s Local Agency Guidelines (LAG) manual. The City was required to follow these guidelines under the terms and conditions of the award, and staff thought this would be sufficient to meet federal procurement requirements. Effect of Condition Without written policies and procedures, the City is at greater risk of noncompliance with the most restrictive of federal, state or local procurement methods when using federal funds to procure contractors. Although the City did not have policies in place at the time of procurement, we verified it followed the LAG manual and properly procured the contractor for the project we reviewed. Recommendation We recommend the City strengthen its internal controls to ensure required policies and procedures are in place when procuring with federal funds, as required by Uniform Guidance. City?s Response The City of Yelm holds its responsibility for enabling internal controls to ensure compliance with federal requirements in the highest regard. Management is committed to ensuring the City has internal controls and procedures in place designed to ensure that it complies with all requirements governing the administration of federal grant programs. The City contracted with a CPA firm in August 2022 to assist with developing a Procurement Policy that ensured compliance with all Federal, State, and Local Office of the Washington State Auditor sao.wa.gov laws and regulations regarding City Procurement. Together with Finance and Department Director?s input, the policy was refined and adopted by City Council via Resolution #629 on December 13, 2022. The development of this policy was communicated to the auditors in the prior audit. The policy is required to be followed by all departments during the procurement process. Auditor?s Remarks We appreciate the steps the City is taking to resolve this issue. We will review the corrective action taken during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures. Title 2 CFR Part 200, Uniform Guidance, section 320, Methods of procurement to be followed, establishes requirements for procuring goods and services, including noncompetitive procurement.
Finding 2022-002 U.S. Department of Health and Human Services 93.421 ? Strengthening Public Health Systems and Services through National Partnerships to Improve and Protect the Nation?s Health Procurement (Significant Deficiency) Criteria: In accordance with Title 2 CFR Part 200.318, the Organization must maintain records to document the history of procurement of a contractor. Records include, but are not limited to, rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition: For 2 procurements made during fiscal year 2022, the competitive bid documentation did not include evidence of review or approval by a department/market supervisor or the procurement team. Further, such documentation was not maintained with the signed contractor agreement. Cause: Documentation supporting the procurement of contractors was not maintained in a logical manner to document the history of procurement. Effect: Without appropriate documentation, the Organization may be unable to support whether the procurement of the contractors was performed in accordance with the procurement standards noted in Title 2 CFR Part 200.318. Recommendation: Management should develop an approval policy for competitive bids documentation as well as a records retention policy for procurement decisions made that includes the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Vendor files should be stored in a centralized location within the Organization. Management should also perform a periodic review of contractor files to ensure such documentation is maintained. Views of Responsible Officials: Although sole source and competitive bid information were obtained, they were not located in a centralized location and the written supporting approvals were not maintained. By the end of October 2023, Management will update, enforce, and retrain team members on procurement policies to include competitive bid documentation and record retention requirements. The required supporting documentation will also be housed in a centralized location and Management will perform periodic reviews to ensure it is properly maintained. To further expand training, by the end of October 2023, all key finance and program personnel will also complete Federal Grants Management training offered by the CDC Foundation.
Finding 2022-001: Noncompliance with Procurement Policy Requirements Programs - CFDA 21.023 Emergency Rental Assistance Program, and CFDA 93.391 Activities to Support State, Tribal, Local, and Territorial (STLT) Health Department Response to Public Health or Healthcare Crisis Criteria: As required by 2 CFR 200, Subparts D and E (2 CFR sections 200.300 and 200.400, respectively), entities are required to maintain written policies, procedures, and standards of conduct (?policies?) for certain areas of its operation. The following sections of the Uniform Guidance require nonfederal entities that receive federal awards to establish written policies, procedures, or standards of conduct: ? Financial management (200.302) ? Federal payment (200.305) ? General procurement standards (200.318) ? Competition (200.319) ? Methods of procurement to be followed (200.320) ? Compensation?fringe benefits (200.431) ? Relocation costs of employees (200.464) ? Travel costs (200.475) Condition: Review of the Organization?s Financial Procedure manual noted it was updated August 2023, with the previous update being done in February 2014 ? prior to the year under audit. The 2014 update did not contain all of the required elements under 2 CFR 200, Subparts D and E (2 CFR sections 200.300 and 200.400). Cause: The Financial Procedures have not been updated recently to incorporate the current Federal regulation requirements. Effect: The Organization is not compliant with Federal regulations requiring written policies and procedures. Recommendation: We recommend that the Organization approve and incorporate the policy updates incorporated within the August 2023 updated policies and procedures to ensure compliance with required regulations. Views of Responsible Officials: Management agrees with this recommendation and will review and update its current Financial Procedures to ensure compliance.
Finding 2022-001: Noncompliance with Procurement Policy Requirements Programs - CFDA 21.023 Emergency Rental Assistance Program, and CFDA 93.391 Activities to Support State, Tribal, Local, and Territorial (STLT) Health Department Response to Public Health or Healthcare Crisis Criteria: As required by 2 CFR 200, Subparts D and E (2 CFR sections 200.300 and 200.400, respectively), entities are required to maintain written policies, procedures, and standards of conduct (?policies?) for certain areas of its operation. The following sections of the Uniform Guidance require nonfederal entities that receive federal awards to establish written policies, procedures, or standards of conduct: ? Financial management (200.302) ? Federal payment (200.305) ? General procurement standards (200.318) ? Competition (200.319) ? Methods of procurement to be followed (200.320) ? Compensation?fringe benefits (200.431) ? Relocation costs of employees (200.464) ? Travel costs (200.475) Condition: Review of the Organization?s Financial Procedure manual noted it was updated August 2023, with the previous update being done in February 2014 ? prior to the year under audit. The 2014 update did not contain all of the required elements under 2 CFR 200, Subparts D and E (2 CFR sections 200.300 and 200.400). Cause: The Financial Procedures have not been updated recently to incorporate the current Federal regulation requirements. Effect: The Organization is not compliant with Federal regulations requiring written policies and procedures. Recommendation: We recommend that the Organization approve and incorporate the policy updates incorporated within the August 2023 updated policies and procedures to ensure compliance with required regulations. Views of Responsible Officials: Management agrees with this recommendation and will review and update its current Financial Procedures to ensure compliance.
Finding 2022-001: Noncompliance with Procurement Policy Requirements Programs - CFDA 21.023 Emergency Rental Assistance Program, and CFDA 93.391 Activities to Support State, Tribal, Local, and Territorial (STLT) Health Department Response to Public Health or Healthcare Crisis Criteria: As required by 2 CFR 200, Subparts D and E (2 CFR sections 200.300 and 200.400, respectively), entities are required to maintain written policies, procedures, and standards of conduct (?policies?) for certain areas of its operation. The following sections of the Uniform Guidance require nonfederal entities that receive federal awards to establish written policies, procedures, or standards of conduct: ? Financial management (200.302) ? Federal payment (200.305) ? General procurement standards (200.318) ? Competition (200.319) ? Methods of procurement to be followed (200.320) ? Compensation?fringe benefits (200.431) ? Relocation costs of employees (200.464) ? Travel costs (200.475) Condition: Review of the Organization?s Financial Procedure manual noted it was updated August 2023, with the previous update being done in February 2014 ? prior to the year under audit. The 2014 update did not contain all of the required elements under 2 CFR 200, Subparts D and E (2 CFR sections 200.300 and 200.400). Cause: The Financial Procedures have not been updated recently to incorporate the current Federal regulation requirements. Effect: The Organization is not compliant with Federal regulations requiring written policies and procedures. Recommendation: We recommend that the Organization approve and incorporate the policy updates incorporated within the August 2023 updated policies and procedures to ensure compliance with required regulations. Views of Responsible Officials: Management agrees with this recommendation and will review and update its current Financial Procedures to ensure compliance.
2022-001 The District?s internal controls were inadequate for ensuring compliance with federal suspension and debarment requirements. Assistance Listing Number and Title: 93.323 COVID 19 ? Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Federal Grantor Name: U.S. Department of Health and Human Services Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Health Pass-through Award/Contract Number: CLH18244 Known Questioned Cost Amount: $0 Description of Condition The objective of the Epidemiology and Laboratory Capacity for Infectious Diseases program is to protect the public?s health and safety by enhancing the capacity of public health agencies to effectively detect, respond, prevent, and control known, emerging, or reemerging infectious diseases. In 2022, the District spent $1,252,430 in federal funding to operate a COVID-19 testing site. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations prohibit recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the District enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify contractors are not suspended, debarred or otherwise excluded from participating in federal programs. The District may accomplish this verification by obtaining a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration?s System for Award Management at SAM.gov. The District must perform this verification before entering into the contract, and it must maintain documentation demonstrating compliance with this federal requirement. Our audit found the District?s internal controls were ineffective for ensuring it verified all contractors were not suspended or debarred. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition District staff did not know they needed to check the suspension and debarment status of contractors paid more than $25,000 in program funds. Effect of Condition Without verification, the District increases its risk of awarding federal funds to contractors that are excluded from participating in federal programs. Any program funds the District made to an ineligible party would be unallowable, and the federal grantor could potentially recover them. The District did not verify the suspension and debarment status for two contractors that were paid $76,815 during the audit period. We subsequently verified the contractors were not suspended or debarred, so we are not questioning the related costs. Recommendation We recommend the District improve its internal controls to ensure all contractors paid $25,000 or more, all or in part with federal funds, are not suspended or debarred before entering into contracts with them. District?s Response Grant County Health District agrees with the finding and will update its written procurement policy and procedures that conform with Uniform Guidance standards (2 CFR 200.318-327) that will formalize a process to check all new contractor?s exclusion records in the System for Award Management (SAM.gov) and to retain copies of those searches in the vendor?s file including those searches where the vendor is not found in the system. Auditor?s Remarks We appreciate the steps the District is taking to resolve this issue. We will review the condition during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.
2022-004 Federal Agency: U.S. Department of Agriculture Federal Program Name: State Administrative Matching Grants for Supplemental Nutrition Assistance Program (SNAP Cluster) Assistance Listing Number: 10.561 Federal Award Identification Number and Year: 22MN101S2514, 2022 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 22MN101S2514 Compliance Requirement Affected: Procurement, Suspension and Debarment Award Period: Year Ended December 31, 2022 Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or Specific Requirement: According to Uniform Guidance 2 CFR 180.300, the County must check for federally suspended or debarred vendors prior to entering into a covered transaction and the County must also comply with procurement requirements in accordance with Uniform Guidance 2 CFR 200.318. Condition: Support for the procurement method used by the County was not retained. For suspension and debarment, the County did not retain documentation that the verification was done. Questioned Costs: Unknown. Context: For four of five procurement transactions tested, support for the use of noncompetitive proposals method was not retained. For four of four transactions tested for suspension and debarment, the County did not retain documentation that the procedures were done. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Cause: County policy does not align with federal requirements. Effect: County could be using a vendor that is suspended or debarred at the time of the transaction or they could be overpaying for the transaction if not properly procured. Repeat Finding: No. Recommendation: We recommend the County align their county wide policies to address any necessary modifications to the process if procurement transactions are federally funded. Views of responsible officials: There is no disagreement with the audit finding.
2022-004 Federal Agency: U.S. Department of Agriculture Federal Program Name: State Administrative Matching Grants for Supplemental Nutrition Assistance Program (SNAP Cluster) Assistance Listing Number: 10.561 Federal Award Identification Number and Year: 22MN101S2514, 2022 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 22MN101S2514 Compliance Requirement Affected: Procurement, Suspension and Debarment Award Period: Year Ended December 31, 2022 Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or Specific Requirement: According to Uniform Guidance 2 CFR 180.300, the County must check for federally suspended or debarred vendors prior to entering into a covered transaction and the County must also comply with procurement requirements in accordance with Uniform Guidance 2 CFR 200.318. Condition: Support for the procurement method used by the County was not retained. For suspension and debarment, the County did not retain documentation that the verification was done. Questioned Costs: Unknown. Context: For four of five procurement transactions tested, support for the use of noncompetitive proposals method was not retained. For four of four transactions tested for suspension and debarment, the County did not retain documentation that the procedures were done. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Cause: County policy does not align with federal requirements. Effect: County could be using a vendor that is suspended or debarred at the time of the transaction or they could be overpaying for the transaction if not properly procured. Repeat Finding: No. Recommendation: We recommend the County align their county wide policies to address any necessary modifications to the process if procurement transactions are federally funded. Views of responsible officials: There is no disagreement with the audit finding.
2022-004 Federal Agency: U.S. Department of Agriculture Federal Program Name: State Administrative Matching Grants for Supplemental Nutrition Assistance Program (SNAP Cluster) Assistance Listing Number: 10.561 Federal Award Identification Number and Year: 22MN101S2514, 2022 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 22MN101S2514 Compliance Requirement Affected: Procurement, Suspension and Debarment Award Period: Year Ended December 31, 2022 Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or Specific Requirement: According to Uniform Guidance 2 CFR 180.300, the County must check for federally suspended or debarred vendors prior to entering into a covered transaction and the County must also comply with procurement requirements in accordance with Uniform Guidance 2 CFR 200.318. Condition: Support for the procurement method used by the County was not retained. For suspension and debarment, the County did not retain documentation that the verification was done. Questioned Costs: Unknown. Context: For four of five procurement transactions tested, support for the use of noncompetitive proposals method was not retained. For four of four transactions tested for suspension and debarment, the County did not retain documentation that the procedures were done. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Cause: County policy does not align with federal requirements. Effect: County could be using a vendor that is suspended or debarred at the time of the transaction or they could be overpaying for the transaction if not properly procured. Repeat Finding: No. Recommendation: We recommend the County align their county wide policies to address any necessary modifications to the process if procurement transactions are federally funded. Views of responsible officials: There is no disagreement with the audit finding.
2022-003 Federal Agency: U.S. Department of the Treasury Federal Program Name: COVID-19 Coronavirus State and Local Fiscal Recovery Funds (SLFRF) Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP2889, 2022 Compliance Requirement Affected: Procurement, Suspension and Debarment Award Period: Year Ended December 31, 2022 Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or Specific Requirement: According to Uniform Guidance 2 CFR 180.300, the County must check for federally suspended or debarred vendors prior to entering a covered transaction and the County must also comply with procurement requirements in accordance with Uniform Guidance 2 CFR 200.318. Condition: Support for the procurement method used by the County was not retained. For suspension and debarment, the County did not retain documentation for the date that the verification was done. Questioned Costs: Unknown. Context: For one of five procurement transactions tested, support for the use of noncompetitive proposals method was not retained. For one of five procurement transactions tested the proper procurement method was not used. For five of five transactions tested for suspension and debarment, the County retained documentation the procedures were done; however, the date of verification was not kept on file to support verification was done prior to the transaction taking place. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Cause: County policy does not align with federal requirements. Effect: County could be using a vendor that is suspended or debarred at the time of the transaction or they could be overpaying for the transaction if not properly procured. Repeat Finding: No. Recommendation: We recommend the County align their county-wide policies to address any necessary modifications to the process if procurement transactions are federally funded. Views of responsible officials: There is no disagreement with the audit finding.
2022-003 Federal Agency: U.S. Department of the Treasury Federal Program Name: COVID-19 Coronavirus State and Local Fiscal Recovery Funds (SLFRF) Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP2889, 2022 Compliance Requirement Affected: Procurement, Suspension and Debarment Award Period: Year Ended December 31, 2022 Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or Specific Requirement: According to Uniform Guidance 2 CFR 180.300, the County must check for federally suspended or debarred vendors prior to entering a covered transaction and the County must also comply with procurement requirements in accordance with Uniform Guidance 2 CFR 200.318. Condition: Support for the procurement method used by the County was not retained. For suspension and debarment, the County did not retain documentation for the date that the verification was done. Questioned Costs: Unknown. Context: For one of five procurement transactions tested, support for the use of noncompetitive proposals method was not retained. For one of five procurement transactions tested the proper procurement method was not used. For five of five transactions tested for suspension and debarment, the County retained documentation the procedures were done; however, the date of verification was not kept on file to support verification was done prior to the transaction taking place. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Cause: County policy does not align with federal requirements. Effect: County could be using a vendor that is suspended or debarred at the time of the transaction or they could be overpaying for the transaction if not properly procured. Repeat Finding: No. Recommendation: We recommend the County align their county-wide policies to address any necessary modifications to the process if procurement transactions are federally funded. Views of responsible officials: There is no disagreement with the audit finding.
Finding 2022-001: Significant deficiency in internal control over procurement. Federal Agency Program: U.S. Department of Treasury, Passed through State of Oregon ? Department of Administrative Services Federal Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Award Period: January 1, 2022 ? December 31, 2022 Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200.318 requires that non-Federal entities must have and use documented procurement procedures, which must conform to the procurement standards in 2 CFR Part 200.318 through 200.327. Procurement procedures must reflect applicable State and local laws and regulations and compliance with the award terms and conditions. The Federal Award agreement stipulated the Organization to require its contractors and sub-contractors to pay the applicable prevailing wage rate. Condition: During the audit, we noted that the Organization was not able to provide documentation to demonstrate that a contractor was required to comply with the prevailing wage requirement in one contract awarded under the Federal Award. Context: There was one contract awarded under the Federal Award, which was selected for testing. Cause: The Organization received increased support during the year ended December 31, 2022, increasing the complexities of compliance with Federal awards. Policies and procedures over procurement were not adequately documented. Effect: Without adequate written policies and procedures over procurement, there is an increased risk of non-compliance with the procurement requirements of 2 CFR 200 and with the terms and conditions of Federal Awards. Questioned costs: None. Repeat Finding: No. Recommendation: The Organization should update its written policies and procedures over procurement consistent with the framework set forth by 2 CFR 200 to ensure compliance with procurement requirements and terms and conditions of Federal Awards. Views of Responsible Officials: Management notes the details of this finding. Management will implement procedures to mitigate the outlined issues in our Corrective Action Plan.
Criteria: Non-federal entities are expected to have procurement policies and procedures in place that comply with the procurement standards outlined in the Uniform Guidance in 2 CFR sections 200.318 through 200.327 as well as verifying such contractors are not suspended, debarred or otherwise excluded pursuant to 31 CFR section 19.300. Condition: FamilyForward was selected to receive funds by the awarding entity in a non-competitive manner subsequent to the solicitation of bids for the construction of the campus for training and research on trauma informed care, which was the requirement per the contract. Accordingly, the procurement policies and procedures as well as the suspension and debarment procedures were not performed in accordance with Uniform Guidance. FamilyForward was determined to be uniquely qualified as a single feasible source as the only eligible entity to receive funds appropriated by the awarding entity. The construction vendor FamilyForward contracted with prior to the award of funds was not on the suspension and debarment list. FamilyForward provided a copy of the campus construction contract to the awarding entity as required prior to disbursement of funds. Effect: The competitive bidding procedures were performed at the subcontractor level by the general contractor however were not performed at the non-federal entity level. Cause: Award of funds was received after the contract agreements were solicited. Recommendation: While procurement processes appear to be completed, it does not appear procurement processes were completed was done under applicable Uniform Guidance. We recommend if grant funding is received for projects already in process, the procurement be discussed with the grantor and process/procedure be agreed upon to maintain compliance under the grant.
2022-003 ? Procurement, Suspension and Debarment Federal program information: Funding Agency: U.S. Departments of the Treasury and Health and Human Services Title: Coronavirus State and Local Fiscal Recovery Funds and Indian Health Services Self-Governance Assistance Listing Number: 21.027 and 93.210 Award Periods: March 3, 2021 ? December 31, 2024 Criteria: Uniform Guidance regulations section CFR 200.318(a) and CFR 200.320(a) state, the non-Federal entity must use its own documented procurement procedures which reflect applicable state, local, and tribal laws and regulations, provided that the procurement conform to applicable federal law and the standards identified. Procurement by micro-purchase is the acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold. During 2022, the Tribe?s procurement policy has a micro purchase threshold of $2,000. The Tribe?s policy states ?Duckwater will conduct procurement in a manner that prohibits the use of statutorily or administratively imposed data, local, or tribal geographical preferences in the evaluation of bids or proposals?. Recipients of federal awards must not contract with or make sub-awards to parties that are suspended or debarred. Contractors receiving individual awards for $25,000 or more and all sub-recipients must certify that the organization and its principals are not suspended or debarred. This verification may be accomplished by checking the Systems for Award Management (SAM) website, collecting a certification from the entity, or adding a clause or condition to the covered transaction with that entity. Condition: The Tribe does not have a policy in place to ensure vendors are not suspended or disbarred. In addition, we found the following: ? Coronavirus State and Local Fiscal Recovery Funds: We reviewed five vendors that were paid in excess of $2,000; however, we were not provided with bids or quotes for these purchases. In addition, for two vendors that were paid over $25,000, there was no documentation verifying that the vendors were checked for suspension and debarment. ? Indian Health Services Self-Governance: We reviewed six vendors that were paid in excess of $2,000; however, we were not provided with bids or quotes. In addition, for one vendor that was paid over $25,000, there was no documentation verifying that the vendor was checked for suspension and debarment. Context: For Coronavirus State and Local Fiscal Recovery Funds, nine of forty-four expenditures tested. For Indian Health Services Self-Governance, ten of forty-four expenditures tested. Some of the expenditures mentioned above were paid to the same vendor. Questioned Costs: None. Cause: The Tribe?s procurement policies and procedures were not enforced during the year. In addition, the Tribe did not have suspension and debarment policies and procedures established during the year. Effect: The Tribe is not always ensuring that all goods and services are obtained at a fair price and the Tribe is not in compliance with their procurement policy. Lastly, the Tribe is not ensuring that vendors doing business under federal awards are properly reviewed for suspension and debarment. Auditors? Recommendation: Enforce procurement policies and procedures at all times. In addition, Tribe should consider increasing the procurement threshold to match the micro-purchase threshold of $10,000 set by the Federal Acquisition Regulation (FAR) as well as adding a number of bids or quotes to be obtained. Lastly, the Tribe should add a suspension and debarment policy to their policies and procedures. This verification may be accomplished by checking the Systems for Award Management (SAM) website, collecting a certification from the entity, or adding a clause or condition to the covered transaction with that entity. Management Response: The Tribe will amend its Financial Management System to increase the micro-purchase procurement threshold from $2,000 to $10,000, set by the Federal Acquisition Regulation. When processing purchase orders, the purchasing clerk will verify that a minimum of three bids or quotes have been submitted with the purchase order request, for those items costing $10,000 or more. This requirement will help ensure that goods and services are being obtained at a fair price. The Tribe will also amend its Financial Management System to include a policy on suspension and debarment. For purchases exceeding $25,000, the Finance Manager will perform a search of the vendor on the Systems for Award Management (SAM) website, to verify that the vendor receiving payment has not been suspended or debarred.
2022-003 ? Procurement, Suspension and Debarment Federal program information: Funding Agency: U.S. Departments of the Treasury and Health and Human Services Title: Coronavirus State and Local Fiscal Recovery Funds and Indian Health Services Self-Governance Assistance Listing Number: 21.027 and 93.210 Award Periods: March 3, 2021 ? December 31, 2024 Criteria: Uniform Guidance regulations section CFR 200.318(a) and CFR 200.320(a) state, the non-Federal entity must use its own documented procurement procedures which reflect applicable state, local, and tribal laws and regulations, provided that the procurement conform to applicable federal law and the standards identified. Procurement by micro-purchase is the acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold. During 2022, the Tribe?s procurement policy has a micro purchase threshold of $2,000. The Tribe?s policy states ?Duckwater will conduct procurement in a manner that prohibits the use of statutorily or administratively imposed data, local, or tribal geographical preferences in the evaluation of bids or proposals?. Recipients of federal awards must not contract with or make sub-awards to parties that are suspended or debarred. Contractors receiving individual awards for $25,000 or more and all sub-recipients must certify that the organization and its principals are not suspended or debarred. This verification may be accomplished by checking the Systems for Award Management (SAM) website, collecting a certification from the entity, or adding a clause or condition to the covered transaction with that entity. Condition: The Tribe does not have a policy in place to ensure vendors are not suspended or disbarred. In addition, we found the following: ? Coronavirus State and Local Fiscal Recovery Funds: We reviewed five vendors that were paid in excess of $2,000; however, we were not provided with bids or quotes for these purchases. In addition, for two vendors that were paid over $25,000, there was no documentation verifying that the vendors were checked for suspension and debarment. ? Indian Health Services Self-Governance: We reviewed six vendors that were paid in excess of $2,000; however, we were not provided with bids or quotes. In addition, for one vendor that was paid over $25,000, there was no documentation verifying that the vendor was checked for suspension and debarment. Context: For Coronavirus State and Local Fiscal Recovery Funds, nine of forty-four expenditures tested. For Indian Health Services Self-Governance, ten of forty-four expenditures tested. Some of the expenditures mentioned above were paid to the same vendor. Questioned Costs: None. Cause: The Tribe?s procurement policies and procedures were not enforced during the year. In addition, the Tribe did not have suspension and debarment policies and procedures established during the year. Effect: The Tribe is not always ensuring that all goods and services are obtained at a fair price and the Tribe is not in compliance with their procurement policy. Lastly, the Tribe is not ensuring that vendors doing business under federal awards are properly reviewed for suspension and debarment. Auditors? Recommendation: Enforce procurement policies and procedures at all times. In addition, Tribe should consider increasing the procurement threshold to match the micro-purchase threshold of $10,000 set by the Federal Acquisition Regulation (FAR) as well as adding a number of bids or quotes to be obtained. Lastly, the Tribe should add a suspension and debarment policy to their policies and procedures. This verification may be accomplished by checking the Systems for Award Management (SAM) website, collecting a certification from the entity, or adding a clause or condition to the covered transaction with that entity. Management Response: The Tribe will amend its Financial Management System to increase the micro-purchase procurement threshold from $2,000 to $10,000, set by the Federal Acquisition Regulation. When processing purchase orders, the purchasing clerk will verify that a minimum of three bids or quotes have been submitted with the purchase order request, for those items costing $10,000 or more. This requirement will help ensure that goods and services are being obtained at a fair price. The Tribe will also amend its Financial Management System to include a policy on suspension and debarment. For purchases exceeding $25,000, the Finance Manager will perform a search of the vendor on the Systems for Award Management (SAM) website, to verify that the vendor receiving payment has not been suspended or debarred.
2022-001 The City did not have adequate internal controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 10.760 ? Waste and Water Disposal Systems for Rural Communities Federal Grantor Name: U.S. Department of Agriculture Federal Award/Contract Number: N/A Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background During fiscal year 2022, the City spent $904,897 in grant funds from the Waste and Water Disposal Systems for Rural Communities program. The objective of this program is to assist rural communities in obtaining safe drinking water and adequate waste disposal facilities. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established program controls. Federal regulations require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR 200.318-327. The procedures must reflect the most restrictive of applicable federal requirements, state laws or local policies. The entity must also have written standards of conduct that cover conflicts of interest and expectations for its employees who are involved in selecting, awarding, and administrating contracts and purchases. Description of Condition Our audit found the City did not have adequate internal controls for ensuring compliance with federal procurement requirements. Specifically, the City did not have procurement policies or procedures to ensure compliance with federal requirements. Further, the City did not have a conflict of interest policy. We consider this deficiency in internal controls to be a material weakness, which led to material noncompliance. Cause of Condition This is the City?s first federal program audit since 2014. Since the City does not regularly manage federal funds, staff did not know about the requirement to have written conflict of interest and procurement policies and procedures. Effect of Condition Without written policies and procedures, the City is at a greater risk of noncompliance with the most restrictive of federal, state or local procurement methods and standards of conduct requirements when using federal funds to procure contractors. Although the City did not have policies in place, we verified that it properly procured the contractor for the project we reviewed. Recommendation We recommend the City develop written policies and procedures that conform with Uniform Guidance (2 CFR 200.318-327) for procurement activity and conflict of interest requirements. City?s Response The City will develop and adopt written policies and procedures that conform with Uniform Guidance (2 CFR 200.318-327) for procurement activity and conflict of interest requirements. Auditor?s Remarks We appreciate the steps the City is taking to resolve this issue. We will review the corrective action taken during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, sections 317 through 327, Procurement Standards, establishes requirements for procurement and conflict of interest policies related to federal program expenditures.
2022-001 The City did not have adequate internal controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 10.760 ? Waste and Water Disposal Systems for Rural Communities Federal Grantor Name: U.S. Department of Agriculture Federal Award/Contract Number: N/A Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background During fiscal year 2022, the City spent $904,897 in grant funds from the Waste and Water Disposal Systems for Rural Communities program. The objective of this program is to assist rural communities in obtaining safe drinking water and adequate waste disposal facilities. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established program controls. Federal regulations require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR 200.318-327. The procedures must reflect the most restrictive of applicable federal requirements, state laws or local policies. The entity must also have written standards of conduct that cover conflicts of interest and expectations for its employees who are involved in selecting, awarding, and administrating contracts and purchases. Description of Condition Our audit found the City did not have adequate internal controls for ensuring compliance with federal procurement requirements. Specifically, the City did not have procurement policies or procedures to ensure compliance with federal requirements. Further, the City did not have a conflict of interest policy. We consider this deficiency in internal controls to be a material weakness, which led to material noncompliance. Cause of Condition This is the City?s first federal program audit since 2014. Since the City does not regularly manage federal funds, staff did not know about the requirement to have written conflict of interest and procurement policies and procedures. Effect of Condition Without written policies and procedures, the City is at a greater risk of noncompliance with the most restrictive of federal, state or local procurement methods and standards of conduct requirements when using federal funds to procure contractors. Although the City did not have policies in place, we verified that it properly procured the contractor for the project we reviewed. Recommendation We recommend the City develop written policies and procedures that conform with Uniform Guidance (2 CFR 200.318-327) for procurement activity and conflict of interest requirements. City?s Response The City will develop and adopt written policies and procedures that conform with Uniform Guidance (2 CFR 200.318-327) for procurement activity and conflict of interest requirements. Auditor?s Remarks We appreciate the steps the City is taking to resolve this issue. We will review the corrective action taken during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, sections 317 through 327, Procurement Standards, establishes requirements for procurement and conflict of interest policies related to federal program expenditures.
FINDING 2022-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): CY 2022 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Significant Deficiency, Noncompliance Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2021-003. Condition and Context Nonfederal entities are required to maintain written standards of conduct covering conflicts of interest and governing actions of its employees engaged in the selection, award, and administration of contracts. As part of accepting the State and Local Fiscal Recovery Funds (SLFRF) the County agreed to maintain a conflict-of-interest policy, which is applicable to all activities funded with the SLFRF award. The County addressed conflicts of interest in the County's Personnel Policies Handbook. However, it did not include standards of conduct covering conflicts of interest or how to govern the actions of its employees engaged in selection, award, and administration of contracts supported by federal awards. The lack of controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(c)(1) states: "The non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. No employee, officer, or agent may participate in the selection, award, or administration of a contract supported by a Federal award if he or she has a real or apparent conflict of interest. Such a conflict of interest would arise when the employee, officer, or agent, any member of his or her immediate family, his or her partner, or an organization which employs or is about to employ any of the parties indicated herein, has a financial or other interest in or a tangible personal benefit from a firm considered for a contract. The officers, employees, and agents of the non-Federal entity may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. However, non-Federal entities may set standards for situations in which the financial interest is not substantial or the gift is an unsolicited item of nominal value. The standards of conduct must provide for disciplinary actions to be applied for violations of such standards by officers, employees, or agents of the non-Federal entity." Federal Register, Vol. 87, No.18, page 4400, states in part: ". . . as part of accepting the Award Terms and Conditions for SLFRF, each recipient agreed to maintain a conflict-of-interest policy consistent with 2 CFR 200.318(c) that is applicable to all activities funded with the SLFRF award. This award term requires recipients and subrecipients to report to Treasury or the pass-through agency, as appropriate, any potential conflict of interest related to the award funds per 2 CFR 200.112. . . ." Cause The system of internal controls as established by management of the County was not properly implemented to ensure that policies adequately addressed all required elements related to procurement. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County establish a proper system of internal controls, including strengthening its policies and procedures to ensure its compliance with requirements related to procurement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2022-002: Procurement Policy (Material Weakness) Information on the Federal Program: U.S. Department of State ALN 19.040 Criteria or Specific Requirement: 2 CFR Section 200.318 requires that the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in ?? 200.317 through 200.327. Condition: FCE does not have a formal written procurement policy that conforms to the requirements of the Uniform Guidance. As a result, no procurement files were maintained to document FCE's procurement actions. Questioned Costs: None Cause: FCE has no accounting policies and procedures in place to provide guidance to management on the documentary evidence requirements in accordance with proper internal controls and the Uniform Guidance. Effect or Potential Effect: Without either a procurement policy or procurement documentation, there is a risk that FCE did not perform a proper evaluation of each potential vendor whose costs were charged to federal programs. Recommendation: FCE should develop accounting policies and procedures to provide guidance to management regarding the proper internal controls over both financial reporting and compliance with federal awards. Included in those policies and procedures should be a procurement policy that conforms to the requirements of the Uniform Guidance. Furthermore, FCE should maintain documentation in its files to provide evidence to support that it followed the procurement policy.
Criteria or specific requirement: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. This procurement process must be documented with proper supporting documentation. Condition: The County did not have proper procurement documentation available for the contracts tested in the audit. Questioned costs: None Context: Five of the five contracts tested did not have the proper supporting documentation to demonstrate that procurement procedures were followed in accordance with the County?s procurement policy. Cause: The contracts were in process before the funding was assigned to the projects and there was turnover at the County. Effect: Failure to document the procurement process exposes the County to the risk that the County?s procurement policy was not followed before the contracts were awarded. Repeat Finding: No. Recommendation: CLA recommends the County follow their internal procurement policy procedures and keep documentation of such procedures to ensure compliance with the federal procurement requirements. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. This procurement process must be documented with proper supporting documentation. Condition: The County did not have proper procurement documentation available for the contracts tested in the audit. Questioned costs: None Context: Five of the five contracts tested did not have the proper supporting documentation to demonstrate that procurement procedures were followed in accordance with the County?s procurement policy. Cause: The contracts were in process before the funding was assigned to the projects and there was turnover at the County. Effect: Failure to document the procurement process exposes the County to the risk that the County?s procurement policy was not followed before the contracts were awarded. Repeat Finding: No. Recommendation: CLA recommends the County follow their internal procurement policy procedures and keep documentation of such procedures to ensure compliance with the federal procurement requirements. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. This procurement process must be documented with proper supporting documentation. Condition: The County did not have proper procurement documentation available for the contracts tested in the audit. Questioned costs: None Context: Five of the five contracts tested did not have the proper supporting documentation to demonstrate that procurement procedures were followed in accordance with the County?s procurement policy. Cause: The contracts were in process before the funding was assigned to the projects and there was turnover at the County. Effect: Failure to document the procurement process exposes the County to the risk that the County?s procurement policy was not followed before the contracts were awarded. Repeat Finding: No. Recommendation: CLA recommends the County follow their internal procurement policy procedures and keep documentation of such procedures to ensure compliance with the federal procurement requirements. Views of responsible officials: There is no disagreement with the audit finding.
Criteria: 2 CFR 200.318(i) establishes the need to maintain records sufficient to detail the history of procurement. 2 CFR 180.300 establishes the responsibilities of participants entering into covered transactions. Condition and Context: We noted one new procured vendor in the current year, which was selected for testing, totaling $29,205 for printing and copying services. We noted the entity lacked sufficient documentation to support the rationale of the procurement method, selection of contract type, contractor selection or rejection, and basis for the contract price. We also noted suspension and debarments requirements were not given consideration prior to entering into these transactions. However, we noted there were adequate invoices to support the purchases. Known Questioned Costs: $29,205 Cause and Effect: As described in item 2022-001, the Organization has not established formal written policies related to procurement and does not have a system in place to adequately document all compliance decisions made during the administration of the program. As a result, the Organization did not comply with the requirement for proper procurement and suspension and debarment. Recommendation: We recommend the Organization develop a system of internal controls aligned with the applicable compliance requirements to sufficiently document procurements and to ensure suspension and debarment is considered prior to entering into future covered transactions. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the recommendation and has implemented their corrective actions as of the date the financial statements were available for issuance
2022-005 Department of Health and Human Services Federal Financial Assistance Listing #93.697 COVID-19 Testing and Mitigation for Rural Health Clinics Procurement, Suspension, and Debarment Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over federal awards that provides reasonable assurance that the Facility 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 Facility did not obtain quotes from multiple vendors as it relates to the procurement and purchasing of flooring which was over the micro-purchase threshold. In addition, the vendor was not verified against the central contractor registry prior to transaction inception or on a periodic basis to ensure the vendor was not suspended or debarred. Cause: The Facility did not follow their procurement policies currently in place. Effect: Without obtaining multiple quotes and performing a vendor check for suspension and debarment, demonstrating that the Facility complies with laws, regulations, and other compliance requirements is difficult. Questioned Costs: Covered transactions entered into by the Facility over the micro-purchase threshold totaled $73,531. Questioned costs are unable to be identified as multiple quotes were not received by the Facility to ensure the price paid was reasonable. Context: Sampling was not used as only one vendor was utilized by the Facility for flooring purchases. Repeat Finding from Prior Years: No Recommendation: We recommend the Facility review their procurement policies in place, implement internal control processes to ensure compliance with their procurement policies, and retain documentation to support procurement, suspension and debarment procedures performed. Views of Responsible Officials: Management agrees with the finding.
Finding 2022-01: 15.631 Partners for Fish and Wildlife Criteria: 2 CFR 200.318 requires entities to comply with procurement procedures within the section. Condition and Context: For the year ended December 31, 2022, Klamath Watershed Partnership?s procurement policy didn?t align with the requirements described in 2 CFR 200.318 through 2 CFR 200.327. Cause: Klamath Watershed Partnership incidentally thought the procurements for the federal funds were being performed by the oversight agency awarding the funds and their own internal procurement procedures would apply to the other purchase of goods and services. Effect or Potential Effect: The procurement procedures were not performed by Klamath Watershed Partnership. This could have resulted in paying more than ideal or resulted in contracts provided to favored vendors without an opportunity for proposals of other vendors. Questioned Costs: None Context: The procurement policy implemented did not align with the requirement of 2 CFR 200.318. This created a systemic failure to comply with 2 CFR 200.318 for all purchases that would be subject to the procurement policy. Recommendation: Klamath Watershed Partnership should update their procurement policy to align with 2 CFR 200.318 through 2 CFR 200.327. This policy should be implemented immediately after the update is approved. Views of responsible officials and planned corrective actions: Management agrees with the finding and have updated their procurement policy to align with the requirements of 2 CFR 200.318.
2022-003 FINDING Federal Program Coronavirus State and Local Fiscal Recovery Funds (AL 21.027) Procurement, Suspension, Debarment Criteria Organizations must follow federal procurement standards as set out in 2 CFR section 200.318 through 200.326. For purchases that exceed $10,000, small purchase procedures must be followed including obtaining multiple quotes. Condition For an equipment purchase contract that exceeded $10,000, the County failed to obtain multiple quotes. Questioned Costs None Context The County was not in compliance with federal procurement standards. Cause Oversight by County staff. Effect County failed to obtain multiple quotes and was not in compliance with federal procurement requirements. Repeat Finding No Recommendation The County should implement procedures to ensure that federal procurement standards are followed for federal grant purchases. Views of Responsible Officials and Planned Corrective Actions The County agrees with the recommendation and will review its procedures.
2022-004 - PROCUREMENT Criteria: In accordance with 2 CFR Section 200.319(d), non-federal entities must have their own documented procedures for procurement transactions. The policy should incorporate all requirements within 2 CFR section 200.318 through 200.326 of the Uniform Guidance. Condition: As of December 31, 2022, the Township did not have their own written procurement policy to properly implement all the requirements of 2 CFR section 200.318 through 200.326 of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Cause: The Township was unaware of the requirement. Effect: The Charter Township of Portage is not in compliance with the procurement policy requirements identified in 2 CFR section 200.318 through 200.326 which could jeopardize federal funding. Questioned Costs: This finding does not result in questioned costs. Recommendation: The Charter Township of Portage should create a procurement policy that meets all the requirements of 2 CFR section 200.318 through 200.326. View of Responsible Officials: Management is in agreement and has drafted a procurement policy that meets all the requirements of 2 CFR section 200.318 through 200.326 that has been approved by the Township board on June 12, 2023. The policy has been submitted to the Township attorney for review, and will be finalized pending any modifications or recommendations by their attorney.
CRITERIA Per 2 CFR 200.318(a), the auditee must establish and maintain effective internal control over the federal award the provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations and conditions of the federal award. 2 CFR 200.318(c)(1) provides that the auditee 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. 2 CFR 200.319(c) establishes that the auditee must have written procedures for procurement transactions. According to ? 180.300 of Subpart C ? Responsibilities of Participants Regarding Transactions Doing Business, 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 System for Award Management (SAM.gov) Exclusions; (b)Collecting a certification from that person; (c) Adding a clause or condition to the covered transaction with that person. CONDITION During our control and compliance test work over procurement we noted the following: 1- In testing three of the consultants used, all three had contracts that exceeded $25,000 but were not tested for suspension and debarment. 2- In testing three of the consultants, used, all three had contracts that exceed the Simplified Acquisition Threshold (SAT) of $250,000, but no sealed bids, proposals, or documentation of sole source was performed. (a) Through further inquiry, the written micropurchase policy of $50,000 was not self-certified. (b) Through further inquiry, small purchases that exceed micropurchase policy but are less than SAT ($250,000) did not obtain quotations. CAUSE Proper internal control procedures are not maintained to ensure federal procurement requirements are met. EFFECT The Organization is not in compliance with federal requirements when entering into procurement contracts as well as not meeting suspension and debarment requirements by potentially contracting with a suspended or debarred vendor. QUESTIONED COSTS None CONTEXT The Organization?s written procurement policy does not address suspension and debarment. In addition, the Organization did not perform a self-certification to lower its micropurchase threshold. The Organization did not maintain proper documentation for selected vendors that were over thresholds. RECOMMENDATION We recommend that the Organization update its procurement policy and adhere to the following: 1 For all vendors with purchases of $25,000 or more, check SAM.gov website for suspension and debarment. 2. Perform an annual self-certification that includes a justification, clear identification of the threshold, and supporting documentation to allow for $50,000 as the micropurchase limit 3. For all vendors/contractors with procurements for goods or services over the micropurchase limit, but under the SAT limit, obtain a number of reasonable quotations. 4. For all vendors/contractors with procurements for goods or services over the SAT limit provide: o Sealed bids o Proposals o Documentation of single source o Express authorization from grantor MANAGEMENT VIEW AND CORRECTIVE ACTION PLAN 1. FHI will search SAM.gov for suspension and debarment of contractors and keep those records on file. FHI will perform this search annually as the contractors registration expires and is renewed. 2. FHI will perform an annual self-certification that includes a justification, clear identification of the threshold, and supporting documentation to allow for $50,000 as the micropurchase limit.
2022-001 The County did not have adequate internal controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 21.027 ? COVID-19 ? Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Commerce Pass-through Award/Contract Number: 21-4619C-113 Known Questioned Cost Amount: $0 Prior Year Audit Finding: No Background The purpose of the Coronavirus State and Local Fiscal Recovery Funds program is to respond to the COVID-19 pandemic?s negative effects on public health and the economy, provide premium pay to essential workers during the pandemic, provide government services to the extent COVID-19 caused a reduction in revenues collected, and make necessary investments in water, sewer, or broadband infrastructure. In 2022, the County spent $3,718,657 in program funds to provide health services and address the negative economic effects caused by the public health emergency. 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. 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 requirements by obtaining quotes or following a competitive procurement process, depending on the estimated cost of the procurement activity. In addition, federal regulations allow local governments to award contracts for public works projects through a noncompetitive process for emergency or exigent circumstances. When using such a process, the documented procurement procedures must include the requirements that allow for using this process. Federal regulations require recipients to obtain price or rate quotations for purchased services that have an estimated cost of less than $250,000. County policy is more restrictive than federal regulations, and it requires price or rate quotations for services that have an estimated cost of $25,000 or less. It also requires a competitive process for public works projects more than $25,000. Description of Condition The County?s internal controls were insufficient for ensuring it retained documentation showing it obtained price or rate quotations for security services that it charged to the program. Additionally, in 2020, the County adopted a resolution allowing departments to enter into contracts to combat the COVID-19 emergency without regard for the procurement procedures required in federal law. During the audit period, County employees relied on this resolution and waived competitive procedures for a public works contract paid with federal funds. However, the County?s internal controls were insufficient for ensuring it documented its evaluation and rationale for waiving competitive procedures for each individual procurement action. We consider these deficiencies in internal controls to be a material weakness that led to material noncompliance. Cause of Condition Staff responsible for procuring the security services did not know that price or rate quotations obtained needed to be documented and retained. In addition, County staff did not fully understand emergency procurement requirements. Staff said they did not know they must document a written justification for each emergency procurement action and could not simply rely on the blanket emergency resolution to waive procurement requirements. Effect of Condition While the County paid $271,065 for security services using federal program funds during the audit period, it had originally estimated the cost to be less than $25,000, necessitating only price or rate quotations. The County demonstrated its original estimate was reasonable and the cost increases were outside of its control, but it did not retain written documentation of the price or rate quotations obtained. Therefore, the County cannot demonstrate it received the best price for the services provided. In addition, the County paid $123,956 for a public works project using federal program funds without competitively procuring it or documenting its evaluation and rationale for using a noncompetitive process. Without effective internal controls, the County cannot ensure it allowed for full and open competition, received the best price, and complied with federal procurement requirements. Recommendation We recommend the County strengthen internal controls to ensure it procures goods and services in accordance with federal regulations, state law, and its own procurement policies and procedures. County?s Response We thank the State Auditor?s Office for their comments and recommendations. The director responsible for authorizing purchases for the Emergency Management Department during the review period is no longer with the County. The function of Emergency Management is being restructured to provide for direct County oversight and supervision. Rather than reporting to a board of officials across multiple government agencies, the Department will be solely a County function with services provided to other agencies through interlocal agreements. A new director will be required to follow the forthcoming structure, including compliance and monitoring with County internal controls. The declaration of emergency resolution for Covid response under which the previous director made purchases has been repealed, and any subsequent emergency declarations will be closely managed regarding procurement. Additionally, employee training will be enhanced during emergency responses going forward regarding County purchasing and internal controls. Auditor?s Remarks We thank the County for its cooperation and assistance throughout the audit and appreciate the steps it is taking to resolve this issue. We will review the corrective action taken during our next regular 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 200, Uniform Guidance, section 318 General procurement standards, establishes requirements for documented procurement procedures which reflect applicable state, local and federal laws and regulations. Title 2 CFR 200, Uniform Guidance, section 319, Competition, establishes all procurement transactions are to be conducted in a manner providing full and open competition. Title 2 CFR 200, Uniform Guidance, section 320, Methods of procurement to be followed, describes each allowable procurement method.
2022-001 The County did not have adequate internal controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 21.027 ? COVID-19 ? Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Commerce Pass-through Award/Contract Number: 21-4619C-113 Known Questioned Cost Amount: $0 Prior Year Audit Finding: No Background The purpose of the Coronavirus State and Local Fiscal Recovery Funds program is to respond to the COVID-19 pandemic?s negative effects on public health and the economy, provide premium pay to essential workers during the pandemic, provide government services to the extent COVID-19 caused a reduction in revenues collected, and make necessary investments in water, sewer, or broadband infrastructure. In 2022, the County spent $3,718,657 in program funds to provide health services and address the negative economic effects caused by the public health emergency. 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. 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 requirements by obtaining quotes or following a competitive procurement process, depending on the estimated cost of the procurement activity. In addition, federal regulations allow local governments to award contracts for public works projects through a noncompetitive process for emergency or exigent circumstances. When using such a process, the documented procurement procedures must include the requirements that allow for using this process. Federal regulations require recipients to obtain price or rate quotations for purchased services that have an estimated cost of less than $250,000. County policy is more restrictive than federal regulations, and it requires price or rate quotations for services that have an estimated cost of $25,000 or less. It also requires a competitive process for public works projects more than $25,000. Description of Condition The County?s internal controls were insufficient for ensuring it retained documentation showing it obtained price or rate quotations for security services that it charged to the program. Additionally, in 2020, the County adopted a resolution allowing departments to enter into contracts to combat the COVID-19 emergency without regard for the procurement procedures required in federal law. During the audit period, County employees relied on this resolution and waived competitive procedures for a public works contract paid with federal funds. However, the County?s internal controls were insufficient for ensuring it documented its evaluation and rationale for waiving competitive procedures for each individual procurement action. We consider these deficiencies in internal controls to be a material weakness that led to material noncompliance. Cause of Condition Staff responsible for procuring the security services did not know that price or rate quotations obtained needed to be documented and retained. In addition, County staff did not fully understand emergency procurement requirements. Staff said they did not know they must document a written justification for each emergency procurement action and could not simply rely on the blanket emergency resolution to waive procurement requirements. Effect of Condition While the County paid $271,065 for security services using federal program funds during the audit period, it had originally estimated the cost to be less than $25,000, necessitating only price or rate quotations. The County demonstrated its original estimate was reasonable and the cost increases were outside of its control, but it did not retain written documentation of the price or rate quotations obtained. Therefore, the County cannot demonstrate it received the best price for the services provided. In addition, the County paid $123,956 for a public works project using federal program funds without competitively procuring it or documenting its evaluation and rationale for using a noncompetitive process. Without effective internal controls, the County cannot ensure it allowed for full and open competition, received the best price, and complied with federal procurement requirements. Recommendation We recommend the County strengthen internal controls to ensure it procures goods and services in accordance with federal regulations, state law, and its own procurement policies and procedures. County?s Response We thank the State Auditor?s Office for their comments and recommendations. The director responsible for authorizing purchases for the Emergency Management Department during the review period is no longer with the County. The function of Emergency Management is being restructured to provide for direct County oversight and supervision. Rather than reporting to a board of officials across multiple government agencies, the Department will be solely a County function with services provided to other agencies through interlocal agreements. A new director will be required to follow the forthcoming structure, including compliance and monitoring with County internal controls. The declaration of emergency resolution for Covid response under which the previous director made purchases has been repealed, and any subsequent emergency declarations will be closely managed regarding procurement. Additionally, employee training will be enhanced during emergency responses going forward regarding County purchasing and internal controls. Auditor?s Remarks We thank the County for its cooperation and assistance throughout the audit and appreciate the steps it is taking to resolve this issue. We will review the corrective action taken during our next regular 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 200, Uniform Guidance, section 318 General procurement standards, establishes requirements for documented procurement procedures which reflect applicable state, local and federal laws and regulations. Title 2 CFR 200, Uniform Guidance, section 319, Competition, establishes all procurement transactions are to be conducted in a manner providing full and open competition. Title 2 CFR 200, Uniform Guidance, section 320, Methods of procurement to be followed, describes each allowable procurement method.
FINDING 2022-001 Procurement, Suspension and Debarment (Repeat Finding 2021-001) Federal Agency: Department of the Treasury Federal Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Criteria: The Department of the Treasury?s Interim Final Rule (Effective May 17, 2021 through March 31, 2022) and the Final Rule (Effective April 1, 2022) encouraged the use of internal Procurement Policies and Procedures when procuring products and/or services. The Department of the Treasury?s Compliance and Reporting Guidance report (Effective June 24, 2021 through April 30, 2025) required recipients (i.e., City of Evanston) to ensure any procurement using CSLFRF funds to be consistent with the procurement standards set forth in the Uniform Guidance at 2 CFR 200.317 through 2 CFR 200.327 as applicable. Procurement Standards of Title 2 of the Code of Federal Regulations (CFR) Part 200 Uniform Administrative Requirements, Costs Principles, and Audit Requirements for Federal Awards (Uniform Guidance) state that all non-federal entities will follow Section 200.318 through Section 200.327. A. Section 200.320 identifies four methods of procurement to be followed, among the methods of procurement the below are three identified thresholds: (a) Informal ? micro purchases (any amount up to $10,000) (b) Informal ? small purchases ($10,000.01 to $249,999.99) (c) Formal ? sealed bids ($250,000 and above) (d) Noncompetitive procurement B. The City of Evanston Purchasing Manual requires the collection of three written quotes for any purchase between $2,500 and $25,000 purchased with federal grant funds, a formal bid process (Bid, RFP, RFQ) for any purchase $25,000 or above purchased with federal grant funds, and a justification memo for a sole source purchase for any amount above $2,500 purchased with federal grant funds. C. The City of Evanston Purchasing Manual requires that for purchases above $2,500 but less than $10,000, approval signature must be obtained from the Department Director. All purchases above $10,000 require approval signature from the City Manager. Purchases above $25,000 must also be approved by the City Council. D. Per Title 2 CFR section 180.300, participant entering into a covered transaction must verify that the person with whom it intends to do business is not excluded or disqualified by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. E. Title 2 CFR section 200.303 states the following regarding internal control: ?The auditee shall maintain internal control over Federal programs that provides reasonable assurance that the auditee is managing Federal awards in compliance with law, regulations, and the provisions of contracts or grant agreements that could have a material effect on each of its Federal programs.? Condition/Context: 1. We tested nine purchase orders totaling $2,408,526. Our procedures revealed the following: a. Two (2) purchase orders in the amount of $27,739 and $150,525 respectively, were purchases greater than $25,000 each, and for which the City of Evanston did not complete a formal procurement process (competitively bid) following its own Purchasing Manual and/or obtain the required three quotations following Section 200.320 of Title 2 of the Code of Federal Regulations (CFR). b. For seven (7) purchase orders totaling $2,391,116, documentation demonstrating that suspension and debarment searches were performed could not be provided by the City of Evanston. c. For one (1) purchase order totaling $700,405, procurement documentation was not provided nor retained by the City of Evanston from third party procurement service provider. Cause: 1. The City of Evanston?s procurement policies do not include processes pertaining to monitoring and review procedures of procurement processes conducted by external procurement service providers to ensure compliance with all applicable procurement policies. 2. The City of Evanston?s procurement policies do not include processes pertaining to entity-wide suspension and debarment checks. 3. Where policies are in place for internal procurement they are not being followed. Effect: City of Evanston is not in compliance with Title 2 of the Code of Federal Regulations (CFR) Part 200 and the requirements outlined in the City of Evanston Purchasing Manual as it relates to purchases above $25,000. Additionally, the effect of noncompliance can result in questioned costs. Recommendation: We recommend that City of Evanston: a. Implement structures to monitor external procurement service providers to ensure their procurement methods comply with applicable federal compliance requirements. b. Further expand Purchasing Manual to include policies and procedures for suspension and debarment searches and retaining support for suspension and debarment check. c. Communicate and re-enforce its procurement policies and procedures to ensure compliance with applicable requirements. d. Centralize the procurement process to ensure all departments are following applicable procedures in a uniform manner. Views of Responsible Officials: The City of Evanston implemented a revised Purchasing Manual as of March 2023. We agree with the auditor?s recommendations and will further review and revise the Purchasing Manual and communicate and reinforce policies and procedures to all departments to ensure compliance with applicable requirements.
FINDING 2022-001 Procurement, Suspension and Debarment (Repeat Finding 2021-001) Federal Agency: Department of the Treasury Federal Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Criteria: The Department of the Treasury?s Interim Final Rule (Effective May 17, 2021 through March 31, 2022) and the Final Rule (Effective April 1, 2022) encouraged the use of internal Procurement Policies and Procedures when procuring products and/or services. The Department of the Treasury?s Compliance and Reporting Guidance report (Effective June 24, 2021 through April 30, 2025) required recipients (i.e., City of Evanston) to ensure any procurement using CSLFRF funds to be consistent with the procurement standards set forth in the Uniform Guidance at 2 CFR 200.317 through 2 CFR 200.327 as applicable. Procurement Standards of Title 2 of the Code of Federal Regulations (CFR) Part 200 Uniform Administrative Requirements, Costs Principles, and Audit Requirements for Federal Awards (Uniform Guidance) state that all non-federal entities will follow Section 200.318 through Section 200.327. A. Section 200.320 identifies four methods of procurement to be followed, among the methods of procurement the below are three identified thresholds: (a) Informal ? micro purchases (any amount up to $10,000) (b) Informal ? small purchases ($10,000.01 to $249,999.99) (c) Formal ? sealed bids ($250,000 and above) (d) Noncompetitive procurement B. The City of Evanston Purchasing Manual requires the collection of three written quotes for any purchase between $2,500 and $25,000 purchased with federal grant funds, a formal bid process (Bid, RFP, RFQ) for any purchase $25,000 or above purchased with federal grant funds, and a justification memo for a sole source purchase for any amount above $2,500 purchased with federal grant funds. C. The City of Evanston Purchasing Manual requires that for purchases above $2,500 but less than $10,000, approval signature must be obtained from the Department Director. All purchases above $10,000 require approval signature from the City Manager. Purchases above $25,000 must also be approved by the City Council. D. Per Title 2 CFR section 180.300, participant entering into a covered transaction must verify that the person with whom it intends to do business is not excluded or disqualified by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. E. Title 2 CFR section 200.303 states the following regarding internal control: ?The auditee shall maintain internal control over Federal programs that provides reasonable assurance that the auditee is managing Federal awards in compliance with law, regulations, and the provisions of contracts or grant agreements that could have a material effect on each of its Federal programs.? Condition/Context: 1. We tested nine purchase orders totaling $2,408,526. Our procedures revealed the following: a. Two (2) purchase orders in the amount of $27,739 and $150,525 respectively, were purchases greater than $25,000 each, and for which the City of Evanston did not complete a formal procurement process (competitively bid) following its own Purchasing Manual and/or obtain the required three quotations following Section 200.320 of Title 2 of the Code of Federal Regulations (CFR). b. For seven (7) purchase orders totaling $2,391,116, documentation demonstrating that suspension and debarment searches were performed could not be provided by the City of Evanston. c. For one (1) purchase order totaling $700,405, procurement documentation was not provided nor retained by the City of Evanston from third party procurement service provider. Cause: 1. The City of Evanston?s procurement policies do not include processes pertaining to monitoring and review procedures of procurement processes conducted by external procurement service providers to ensure compliance with all applicable procurement policies. 2. The City of Evanston?s procurement policies do not include processes pertaining to entity-wide suspension and debarment checks. 3. Where policies are in place for internal procurement they are not being followed. Effect: City of Evanston is not in compliance with Title 2 of the Code of Federal Regulations (CFR) Part 200 and the requirements outlined in the City of Evanston Purchasing Manual as it relates to purchases above $25,000. Additionally, the effect of noncompliance can result in questioned costs. Recommendation: We recommend that City of Evanston: a. Implement structures to monitor external procurement service providers to ensure their procurement methods comply with applicable federal compliance requirements. b. Further expand Purchasing Manual to include policies and procedures for suspension and debarment searches and retaining support for suspension and debarment check. c. Communicate and re-enforce its procurement policies and procedures to ensure compliance with applicable requirements. d. Centralize the procurement process to ensure all departments are following applicable procedures in a uniform manner. Views of Responsible Officials: The City of Evanston implemented a revised Purchasing Manual as of March 2023. We agree with the auditor?s recommendations and will further review and revise the Purchasing Manual and communicate and reinforce policies and procedures to all departments to ensure compliance with applicable requirements.
FINDING 2022-001 Procurement, Suspension and Debarment (Repeat Finding 2021-001) Federal Agency: Department of the Treasury Federal Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Criteria: The Department of the Treasury?s Interim Final Rule (Effective May 17, 2021 through March 31, 2022) and the Final Rule (Effective April 1, 2022) encouraged the use of internal Procurement Policies and Procedures when procuring products and/or services. The Department of the Treasury?s Compliance and Reporting Guidance report (Effective June 24, 2021 through April 30, 2025) required recipients (i.e., City of Evanston) to ensure any procurement using CSLFRF funds to be consistent with the procurement standards set forth in the Uniform Guidance at 2 CFR 200.317 through 2 CFR 200.327 as applicable. Procurement Standards of Title 2 of the Code of Federal Regulations (CFR) Part 200 Uniform Administrative Requirements, Costs Principles, and Audit Requirements for Federal Awards (Uniform Guidance) state that all non-federal entities will follow Section 200.318 through Section 200.327. A. Section 200.320 identifies four methods of procurement to be followed, among the methods of procurement the below are three identified thresholds: (a) Informal ? micro purchases (any amount up to $10,000) (b) Informal ? small purchases ($10,000.01 to $249,999.99) (c) Formal ? sealed bids ($250,000 and above) (d) Noncompetitive procurement B. The City of Evanston Purchasing Manual requires the collection of three written quotes for any purchase between $2,500 and $25,000 purchased with federal grant funds, a formal bid process (Bid, RFP, RFQ) for any purchase $25,000 or above purchased with federal grant funds, and a justification memo for a sole source purchase for any amount above $2,500 purchased with federal grant funds. C. The City of Evanston Purchasing Manual requires that for purchases above $2,500 but less than $10,000, approval signature must be obtained from the Department Director. All purchases above $10,000 require approval signature from the City Manager. Purchases above $25,000 must also be approved by the City Council. D. Per Title 2 CFR section 180.300, participant entering into a covered transaction must verify that the person with whom it intends to do business is not excluded or disqualified by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. E. Title 2 CFR section 200.303 states the following regarding internal control: ?The auditee shall maintain internal control over Federal programs that provides reasonable assurance that the auditee is managing Federal awards in compliance with law, regulations, and the provisions of contracts or grant agreements that could have a material effect on each of its Federal programs.? Condition/Context: 1. We tested nine purchase orders totaling $2,408,526. Our procedures revealed the following: a. Two (2) purchase orders in the amount of $27,739 and $150,525 respectively, were purchases greater than $25,000 each, and for which the City of Evanston did not complete a formal procurement process (competitively bid) following its own Purchasing Manual and/or obtain the required three quotations following Section 200.320 of Title 2 of the Code of Federal Regulations (CFR). b. For seven (7) purchase orders totaling $2,391,116, documentation demonstrating that suspension and debarment searches were performed could not be provided by the City of Evanston. c. For one (1) purchase order totaling $700,405, procurement documentation was not provided nor retained by the City of Evanston from third party procurement service provider. Cause: 1. The City of Evanston?s procurement policies do not include processes pertaining to monitoring and review procedures of procurement processes conducted by external procurement service providers to ensure compliance with all applicable procurement policies. 2. The City of Evanston?s procurement policies do not include processes pertaining to entity-wide suspension and debarment checks. 3. Where policies are in place for internal procurement they are not being followed. Effect: City of Evanston is not in compliance with Title 2 of the Code of Federal Regulations (CFR) Part 200 and the requirements outlined in the City of Evanston Purchasing Manual as it relates to purchases above $25,000. Additionally, the effect of noncompliance can result in questioned costs. Recommendation: We recommend that City of Evanston: a. Implement structures to monitor external procurement service providers to ensure their procurement methods comply with applicable federal compliance requirements. b. Further expand Purchasing Manual to include policies and procedures for suspension and debarment searches and retaining support for suspension and debarment check. c. Communicate and re-enforce its procurement policies and procedures to ensure compliance with applicable requirements. d. Centralize the procurement process to ensure all departments are following applicable procedures in a uniform manner. Views of Responsible Officials: The City of Evanston implemented a revised Purchasing Manual as of March 2023. We agree with the auditor?s recommendations and will further review and revise the Purchasing Manual and communicate and reinforce policies and procedures to all departments to ensure compliance with applicable requirements.
FINDING 2022-001 Procurement, Suspension and Debarment (Repeat Finding 2021-001) Federal Agency: Department of the Treasury Federal Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Criteria: The Department of the Treasury?s Interim Final Rule (Effective May 17, 2021 through March 31, 2022) and the Final Rule (Effective April 1, 2022) encouraged the use of internal Procurement Policies and Procedures when procuring products and/or services. The Department of the Treasury?s Compliance and Reporting Guidance report (Effective June 24, 2021 through April 30, 2025) required recipients (i.e., City of Evanston) to ensure any procurement using CSLFRF funds to be consistent with the procurement standards set forth in the Uniform Guidance at 2 CFR 200.317 through 2 CFR 200.327 as applicable. Procurement Standards of Title 2 of the Code of Federal Regulations (CFR) Part 200 Uniform Administrative Requirements, Costs Principles, and Audit Requirements for Federal Awards (Uniform Guidance) state that all non-federal entities will follow Section 200.318 through Section 200.327. A. Section 200.320 identifies four methods of procurement to be followed, among the methods of procurement the below are three identified thresholds: (a) Informal ? micro purchases (any amount up to $10,000) (b) Informal ? small purchases ($10,000.01 to $249,999.99) (c) Formal ? sealed bids ($250,000 and above) (d) Noncompetitive procurement B. The City of Evanston Purchasing Manual requires the collection of three written quotes for any purchase between $2,500 and $25,000 purchased with federal grant funds, a formal bid process (Bid, RFP, RFQ) for any purchase $25,000 or above purchased with federal grant funds, and a justification memo for a sole source purchase for any amount above $2,500 purchased with federal grant funds. C. The City of Evanston Purchasing Manual requires that for purchases above $2,500 but less than $10,000, approval signature must be obtained from the Department Director. All purchases above $10,000 require approval signature from the City Manager. Purchases above $25,000 must also be approved by the City Council. D. Per Title 2 CFR section 180.300, participant entering into a covered transaction must verify that the person with whom it intends to do business is not excluded or disqualified by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. E. Title 2 CFR section 200.303 states the following regarding internal control: ?The auditee shall maintain internal control over Federal programs that provides reasonable assurance that the auditee is managing Federal awards in compliance with law, regulations, and the provisions of contracts or grant agreements that could have a material effect on each of its Federal programs.? Condition/Context: 1. We tested nine purchase orders totaling $2,408,526. Our procedures revealed the following: a. Two (2) purchase orders in the amount of $27,739 and $150,525 respectively, were purchases greater than $25,000 each, and for which the City of Evanston did not complete a formal procurement process (competitively bid) following its own Purchasing Manual and/or obtain the required three quotations following Section 200.320 of Title 2 of the Code of Federal Regulations (CFR). b. For seven (7) purchase orders totaling $2,391,116, documentation demonstrating that suspension and debarment searches were performed could not be provided by the City of Evanston. c. For one (1) purchase order totaling $700,405, procurement documentation was not provided nor retained by the City of Evanston from third party procurement service provider. Cause: 1. The City of Evanston?s procurement policies do not include processes pertaining to monitoring and review procedures of procurement processes conducted by external procurement service providers to ensure compliance with all applicable procurement policies. 2. The City of Evanston?s procurement policies do not include processes pertaining to entity-wide suspension and debarment checks. 3. Where policies are in place for internal procurement they are not being followed. Effect: City of Evanston is not in compliance with Title 2 of the Code of Federal Regulations (CFR) Part 200 and the requirements outlined in the City of Evanston Purchasing Manual as it relates to purchases above $25,000. Additionally, the effect of noncompliance can result in questioned costs. Recommendation: We recommend that City of Evanston: a. Implement structures to monitor external procurement service providers to ensure their procurement methods comply with applicable federal compliance requirements. b. Further expand Purchasing Manual to include policies and procedures for suspension and debarment searches and retaining support for suspension and debarment check. c. Communicate and re-enforce its procurement policies and procedures to ensure compliance with applicable requirements. d. Centralize the procurement process to ensure all departments are following applicable procedures in a uniform manner. Views of Responsible Officials: The City of Evanston implemented a revised Purchasing Manual as of March 2023. We agree with the auditor?s recommendations and will further review and revise the Purchasing Manual and communicate and reinforce policies and procedures to all departments to ensure compliance with applicable requirements.
FINDING 2022-001 Procurement, Suspension and Debarment (Repeat Finding 2021-001) Federal Agency: Department of the Treasury Federal Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Criteria: The Department of the Treasury?s Interim Final Rule (Effective May 17, 2021 through March 31, 2022) and the Final Rule (Effective April 1, 2022) encouraged the use of internal Procurement Policies and Procedures when procuring products and/or services. The Department of the Treasury?s Compliance and Reporting Guidance report (Effective June 24, 2021 through April 30, 2025) required recipients (i.e., City of Evanston) to ensure any procurement using CSLFRF funds to be consistent with the procurement standards set forth in the Uniform Guidance at 2 CFR 200.317 through 2 CFR 200.327 as applicable. Procurement Standards of Title 2 of the Code of Federal Regulations (CFR) Part 200 Uniform Administrative Requirements, Costs Principles, and Audit Requirements for Federal Awards (Uniform Guidance) state that all non-federal entities will follow Section 200.318 through Section 200.327. A. Section 200.320 identifies four methods of procurement to be followed, among the methods of procurement the below are three identified thresholds: (a) Informal ? micro purchases (any amount up to $10,000) (b) Informal ? small purchases ($10,000.01 to $249,999.99) (c) Formal ? sealed bids ($250,000 and above) (d) Noncompetitive procurement B. The City of Evanston Purchasing Manual requires the collection of three written quotes for any purchase between $2,500 and $25,000 purchased with federal grant funds, a formal bid process (Bid, RFP, RFQ) for any purchase $25,000 or above purchased with federal grant funds, and a justification memo for a sole source purchase for any amount above $2,500 purchased with federal grant funds. C. The City of Evanston Purchasing Manual requires that for purchases above $2,500 but less than $10,000, approval signature must be obtained from the Department Director. All purchases above $10,000 require approval signature from the City Manager. Purchases above $25,000 must also be approved by the City Council. D. Per Title 2 CFR section 180.300, participant entering into a covered transaction must verify that the person with whom it intends to do business is not excluded or disqualified by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. E. Title 2 CFR section 200.303 states the following regarding internal control: ?The auditee shall maintain internal control over Federal programs that provides reasonable assurance that the auditee is managing Federal awards in compliance with law, regulations, and the provisions of contracts or grant agreements that could have a material effect on each of its Federal programs.? Condition/Context: 1. We tested nine purchase orders totaling $2,408,526. Our procedures revealed the following: a. Two (2) purchase orders in the amount of $27,739 and $150,525 respectively, were purchases greater than $25,000 each, and for which the City of Evanston did not complete a formal procurement process (competitively bid) following its own Purchasing Manual and/or obtain the required three quotations following Section 200.320 of Title 2 of the Code of Federal Regulations (CFR). b. For seven (7) purchase orders totaling $2,391,116, documentation demonstrating that suspension and debarment searches were performed could not be provided by the City of Evanston. c. For one (1) purchase order totaling $700,405, procurement documentation was not provided nor retained by the City of Evanston from third party procurement service provider. Cause: 1. The City of Evanston?s procurement policies do not include processes pertaining to monitoring and review procedures of procurement processes conducted by external procurement service providers to ensure compliance with all applicable procurement policies. 2. The City of Evanston?s procurement policies do not include processes pertaining to entity-wide suspension and debarment checks. 3. Where policies are in place for internal procurement they are not being followed. Effect: City of Evanston is not in compliance with Title 2 of the Code of Federal Regulations (CFR) Part 200 and the requirements outlined in the City of Evanston Purchasing Manual as it relates to purchases above $25,000. Additionally, the effect of noncompliance can result in questioned costs. Recommendation: We recommend that City of Evanston: a. Implement structures to monitor external procurement service providers to ensure their procurement methods comply with applicable federal compliance requirements. b. Further expand Purchasing Manual to include policies and procedures for suspension and debarment searches and retaining support for suspension and debarment check. c. Communicate and re-enforce its procurement policies and procedures to ensure compliance with applicable requirements. d. Centralize the procurement process to ensure all departments are following applicable procedures in a uniform manner. Views of Responsible Officials: The City of Evanston implemented a revised Purchasing Manual as of March 2023. We agree with the auditor?s recommendations and will further review and revise the Purchasing Manual and communicate and reinforce policies and procedures to all departments to ensure compliance with applicable requirements.
FINDING 2022-001 Procurement, Suspension and Debarment (Repeat Finding 2021-001) Federal Agency: Department of the Treasury Federal Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Criteria: The Department of the Treasury?s Interim Final Rule (Effective May 17, 2021 through March 31, 2022) and the Final Rule (Effective April 1, 2022) encouraged the use of internal Procurement Policies and Procedures when procuring products and/or services. The Department of the Treasury?s Compliance and Reporting Guidance report (Effective June 24, 2021 through April 30, 2025) required recipients (i.e., City of Evanston) to ensure any procurement using CSLFRF funds to be consistent with the procurement standards set forth in the Uniform Guidance at 2 CFR 200.317 through 2 CFR 200.327 as applicable. Procurement Standards of Title 2 of the Code of Federal Regulations (CFR) Part 200 Uniform Administrative Requirements, Costs Principles, and Audit Requirements for Federal Awards (Uniform Guidance) state that all non-federal entities will follow Section 200.318 through Section 200.327. A. Section 200.320 identifies four methods of procurement to be followed, among the methods of procurement the below are three identified thresholds: (a) Informal ? micro purchases (any amount up to $10,000) (b) Informal ? small purchases ($10,000.01 to $249,999.99) (c) Formal ? sealed bids ($250,000 and above) (d) Noncompetitive procurement B. The City of Evanston Purchasing Manual requires the collection of three written quotes for any purchase between $2,500 and $25,000 purchased with federal grant funds, a formal bid process (Bid, RFP, RFQ) for any purchase $25,000 or above purchased with federal grant funds, and a justification memo for a sole source purchase for any amount above $2,500 purchased with federal grant funds. C. The City of Evanston Purchasing Manual requires that for purchases above $2,500 but less than $10,000, approval signature must be obtained from the Department Director. All purchases above $10,000 require approval signature from the City Manager. Purchases above $25,000 must also be approved by the City Council. D. Per Title 2 CFR section 180.300, participant entering into a covered transaction must verify that the person with whom it intends to do business is not excluded or disqualified by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. E. Title 2 CFR section 200.303 states the following regarding internal control: ?The auditee shall maintain internal control over Federal programs that provides reasonable assurance that the auditee is managing Federal awards in compliance with law, regulations, and the provisions of contracts or grant agreements that could have a material effect on each of its Federal programs.? Condition/Context: 1. We tested nine purchase orders totaling $2,408,526. Our procedures revealed the following: a. Two (2) purchase orders in the amount of $27,739 and $150,525 respectively, were purchases greater than $25,000 each, and for which the City of Evanston did not complete a formal procurement process (competitively bid) following its own Purchasing Manual and/or obtain the required three quotations following Section 200.320 of Title 2 of the Code of Federal Regulations (CFR). b. For seven (7) purchase orders totaling $2,391,116, documentation demonstrating that suspension and debarment searches were performed could not be provided by the City of Evanston. c. For one (1) purchase order totaling $700,405, procurement documentation was not provided nor retained by the City of Evanston from third party procurement service provider. Cause: 1. The City of Evanston?s procurement policies do not include processes pertaining to monitoring and review procedures of procurement processes conducted by external procurement service providers to ensure compliance with all applicable procurement policies. 2. The City of Evanston?s procurement policies do not include processes pertaining to entity-wide suspension and debarment checks. 3. Where policies are in place for internal procurement they are not being followed. Effect: City of Evanston is not in compliance with Title 2 of the Code of Federal Regulations (CFR) Part 200 and the requirements outlined in the City of Evanston Purchasing Manual as it relates to purchases above $25,000. Additionally, the effect of noncompliance can result in questioned costs. Recommendation: We recommend that City of Evanston: a. Implement structures to monitor external procurement service providers to ensure their procurement methods comply with applicable federal compliance requirements. b. Further expand Purchasing Manual to include policies and procedures for suspension and debarment searches and retaining support for suspension and debarment check. c. Communicate and re-enforce its procurement policies and procedures to ensure compliance with applicable requirements. d. Centralize the procurement process to ensure all departments are following applicable procedures in a uniform manner. Views of Responsible Officials: The City of Evanston implemented a revised Purchasing Manual as of March 2023. We agree with the auditor?s recommendations and will further review and revise the Purchasing Manual and communicate and reinforce policies and procedures to all departments to ensure compliance with applicable requirements.
Condition: During our testing and review of the Organization?s procurement policy, we were unable to obtain documentation to support the Organization?s basis for sole source contracts. Additionally, documentation was not available to support the inquiries around suspension and disbarment. Criteria: The Uniform Guidance and 45 CF Part 75 require that non-Federal entities receiving Federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. The characteristics of internal controls are presented in the context of the components of internal controls discussed in the Internal Control-Integrated Framework (COSO Report), published by the Committee of Sponsoring Organizations of the Treadway Commission. The COSO Report provides a framework for organizations to design, implement, and evaluate controls that will facilitate compliance with the requirements of Federal laws, regulations, and program compliance requirements. Per 2 CFR 200.320 General procurement stands: (a) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (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. Per 2 CFR 200.318 General procurement stands: (b) The Non-Federal entity must use its own documented procurement procedures which reflect applicable state, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. Per Uniform Guidance, Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. ?Covered transactions? include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. When a non-federal entity enters into a covered transaction with an entity at a lower tier, the nonfederal 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. This verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA) and available at SAM.gov Home (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Cause: The Organization did not apply the required procurement policy relative to sole source contracts in accordance with Uniform Guidance. Management also did not complete a review of vendors/contractors to verify they are not suspended, debarred, or otherwise excluded before contracting. Effect: The Organization does not have adequate documentation to support its sole source procurement and is not in compliance with Federal guidelines. Questioned Costs: Unknown Recommendation: We recommend the Organization update and follow their controls to identify vendors that should go through the procurement process. We also recommend the Organization follow their process to verify that entities are not suspended, debarred, or otherwise excluded annually at time of award and to document those procedures.
Information on the Federal Program Federal Program Name: Health Center Program Cluster Federal Agency: U.S. Department of Health and Human Services Federal Assistance Listing Title and Number: Consolidated Health Centers (Community Health Centers), 93.224; Affordable Care Act (ACA) Grants for New and Expanded Services Under the Health Center Program, 93.527 Criteria or Specific Requirement: Under Uniform Guidance compliance requirements for Procurement (2 CFR 200.318(i)), contract files must be 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. In cases where competition was limited, such as scenarios where specific qualifications and competence are required, the files should provide evidence that the limitation on competition was justified. Also, the Uniform Guidance compliance requirements for Procurement (Appendix II to Part 200), require that Federal agency or non-Federal entity, all contracts made by the non-Federal entity under the Federal award must contain provisions enumerated in Appendix II to Part 200 (A) to (L). Condition: The Organization entered to a purchase contract with a vendor that is considered a sole source purchase agreement. The Organization did not maintain and retain appropriate documentation to justify the limitation on competition related to the vendor selection and why the purchase is a sole source purchase agreement. The sole source purchase agreement entered also did not include the contract provision required by Appendix II to Part 200. Questioned Costs: $0 Context: During our testing of procurement requirements, the sole vendor purchase charged to the grant did not have appropriate documentation to evidence the basis of vendor selection or documentation to justify the limitation on competition vendor selection and why the purchase is a sole source purchase agreement. Also, the sole source purchase agreement does not contain the provisions enumerated in Appendix II to Part 200 (A) to (L). Effect: Vendor purchase was made without appropriate documentation to comply with Uniform Guidance requirements. Also, contracts were entered into and approved without the require provision of Appendix II to Part 200 of the Uniform Guidance. Cause: Adequate supporting documentation on the procurement was not obtained or maintained within vendor files including the justification on the limitation on competition on vendor selection. The vendor contract does not contain the necessary contract provision and language required by the Uniform Guidance. Repeat Finding: No Recommendation: We recommend the Organization revisit controls over this compliance requirement to ensure that appropriate documentation is gathered and retained within its procurement files to support all Federally funded purchasing decisions including the justification on the limitation on competition on vendor selection for sole source contract arrangement. We also recommend the Organization to include the contract provision required by Appendix II to Part 200 CFR on all its contracts. Views of responsible officials and planned corrective actions: See corrective action plan prepared by management attached.
Information on the Federal Program Federal Program Name: Health Center Program Cluster Federal Agency: U.S. Department of Health and Human Services Federal Assistance Listing Title and Number: Consolidated Health Centers (Community Health Centers), 93.224; Affordable Care Act (ACA) Grants for New and Expanded Services Under the Health Center Program, 93.527 Criteria or Specific Requirement: Under Uniform Guidance compliance requirements for Procurement (2 CFR 200.318(i)), contract files must be 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. In cases where competition was limited, such as scenarios where specific qualifications and competence are required, the files should provide evidence that the limitation on competition was justified. Also, the Uniform Guidance compliance requirements for Procurement (Appendix II to Part 200), require that Federal agency or non-Federal entity, all contracts made by the non-Federal entity under the Federal award must contain provisions enumerated in Appendix II to Part 200 (A) to (L). Condition: The Organization entered to a purchase contract with a vendor that is considered a sole source purchase agreement. The Organization did not maintain and retain appropriate documentation to justify the limitation on competition related to the vendor selection and why the purchase is a sole source purchase agreement. The sole source purchase agreement entered also did not include the contract provision required by Appendix II to Part 200. Questioned Costs: $0 Context: During our testing of procurement requirements, the sole vendor purchase charged to the grant did not have appropriate documentation to evidence the basis of vendor selection or documentation to justify the limitation on competition vendor selection and why the purchase is a sole source purchase agreement. Also, the sole source purchase agreement does not contain the provisions enumerated in Appendix II to Part 200 (A) to (L). Effect: Vendor purchase was made without appropriate documentation to comply with Uniform Guidance requirements. Also, contracts were entered into and approved without the require provision of Appendix II to Part 200 of the Uniform Guidance. Cause: Adequate supporting documentation on the procurement was not obtained or maintained within vendor files including the justification on the limitation on competition on vendor selection. The vendor contract does not contain the necessary contract provision and language required by the Uniform Guidance. Repeat Finding: No Recommendation: We recommend the Organization revisit controls over this compliance requirement to ensure that appropriate documentation is gathered and retained within its procurement files to support all Federally funded purchasing decisions including the justification on the limitation on competition on vendor selection for sole source contract arrangement. We also recommend the Organization to include the contract provision required by Appendix II to Part 200 CFR on all its contracts. Views of responsible officials and planned corrective actions: See corrective action plan prepared by management attached.