Findings Citing § 200.318

Federal Agency: U.S. Department of Agriculture Federal Program Title: State Administrative Matching Grants for Supplemental Nutrition Assistance Program (SNAP Cluster) Assistance Listing Number: 10.561 Federal Award Identification and Year: 232MN101S2514, 2022 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 232MN101S2514 Compliance Requirement Affected: Procurement Award Period: Year Ended December 31, 2022 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or Specific Requirement: According to Uniform Guidance 2 CFR 180.300, the County must 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. Questioned Costs: None. Context: For one of one procurement transactions tested, support for the use of noncompetitive proposals method was not retained. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Cause: The County policy was not followed before entering into a new contract in 2022 with the vendor since it was done during the previous contract. Effect: The County could be overpaying for the transaction if not properly procured. Repeat Finding: No. Recommendation: We recommend the County ensure they follow their countywide policies regarding federal procurement and retain documentation. Views of responsible officials: There is no disagreement with the audit finding

Federal Agency: Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Listing Number: 21.027 Federal Award Identification Number and Year: Pass-Through Agency: Connecticut Bar Foundation Pass-Through Number: CT-RTC Award Period: 2022 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or Specific Requirement: The Organization must comply with procurement standards set out at 2 CFR sections 200.318 through 200.326 within Uniform Guidance. Condition: The procurement policy and conflict of interest policy of the Organization do not include the essential elements as outlined in 2 CFR sections 200.318 through 200.326. Questioned costs: None Context: We reviewed the procurement policy and conflict of interest policy of the Organization and noted that the policies do not include the essential compliance elements as outlined in 2 CFR sections 200.318 through 200.326. Cause: Management was unaware of the restrictive requirements of the new procurement standards. Effect: With the absence of a compliant policy, the Organization is at risk for noncompliance as it relates to federal procurement. Repeat Finding: No Recommendation: We recommend that the Organization review its procurement policy and conflict of interest policy and make necessary changes to comply with the criteria as set out in 2 CFR sections 200.318 and 200.326. Views of Responsible Officials: There is no disagreement with the audit finding.

Finding 2022-001: Procurement policy and related contract This finding is a repeat finding of 2021-001 Criteria: 2 CFR section 200.318 ? General Procurement Standards, requires non-Federal entity to 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: We reviewed the water utility's procurement policy and service contracts with costs reimbursed during 2022, noting they did not contain necessary federal language related to conflicts of interest and debarment and suspension. Cause: The water utility has not received federal funding in the past and did not update their procurement policy when they sought federal funding for the Great Lakes Water Supply project. Additionally, service contracts were entered into prior to receiving federal funds. Effect: Without adequate control of contract language the water utility could enter into contracts related to the Great Lakes Water Supply project that do not qualify for federal reimbursement. Questioned Costs: None noted. Recommendation: We recommend the water utility review its procurement policy and make necessary updates to be in compliance with federal standards. Additionally, we recommend the utility enter into contract addendums related to contracts previously executed without required federal language. Management Response: Waukesha Water utility management has worked closely with WIFIA to craft contracts that include all necessary language prior to releasing RFPs for construction contracts. WIFIA was presented all service contracts to review prior to reimbursements received in fiscal year 2022. The finance department is working to update the procurement policy to ensure necessary federal language is included. The finance department will also work with service contractors to execute contract addendums.

2022-002 Department of Treasury, State of South Dakota Governor?s Office of Economic Development Federal Financial Assistance Listing 21.027, ConnectSD 2021-03, 2021-05 and 2021-07 Coronavirus State and Local Fiscal Recovery Funds 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 the federal award that 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 that follow the procurement standards in 2 CFR sections 200.318 through 200.327 ensuring that the procurement method used for the contracts are appropriate based on the dollar amount and conditions specified in sections therein. 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 Company has not documented their internal controls for compliance with the procurement, suspension and debarment compliance requirement of Uniform Guidance as outlined above. The Company does not have a written policy related to procurement or written standards of conduct for employees involved in contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurement, as well as, established procedures in place related to suspension and debarment. The Company did not follow the procurement method required based on the dollar amount and conditions specified in 2 CFR 200.320. For contracted vendors with expenditures in excess of $25,000, the Company did not verify vendors were not suspended or debarred prior to entering into transaction with the vendor. Cause: The Company relied on the previous work history with vendors frequently used and did not have a process in place to monitor compliance with suspension and debarment requirements. Effect: Inadequate controls over this area of compliance result in a reasonable possibility that the Company would not have the required documentation in place and would not be able to detect and correct noncompliance in a timely manner. Questioned Costs: We were unable to determine known questioned costs. There were three vendor transactions above the $4,000 micro purchase threshold without adequate procurement documentation which had cumulative draws in 2022 of $1,993,222. Context/Sampling: Procurement requirements were applicable to three vendors. Two vendors had expenditures in excess of $250,000. Suspension and debarment requirements were applicable to 3 vendors. Repeat Finding from Prior Year: No Recommendation: We recommend management implement formal procedures over procurement, suspension and debarment in accordance with requirements noted above. Views of Responsible Officials: Management agrees with the finding.

2022-002 Department of Treasury, State of South Dakota Governor?s Office of Economic Development Federal Financial Assistance Listing 21.027, ConnectSD 2021-03, 2021-05 and 2021-07 Coronavirus State and Local Fiscal Recovery Funds 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 the federal award that 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 that follow the procurement standards in 2 CFR sections 200.318 through 200.327 ensuring that the procurement method used for the contracts are appropriate based on the dollar amount and conditions specified in sections therein. 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 Company has not documented their internal controls for compliance with the procurement, suspension and debarment compliance requirement of Uniform Guidance as outlined above. The Company does not have a written policy related to procurement or written standards of conduct for employees involved in contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurement, as well as, established procedures in place related to suspension and debarment. The Company did not follow the procurement method required based on the dollar amount and conditions specified in 2 CFR 200.320. For contracted vendors with expenditures in excess of $25,000, the Company did not verify vendors were not suspended or debarred prior to entering into transaction with the vendor. Cause: The Company relied on the previous work history with vendors frequently used and did not have a process in place to monitor compliance with suspension and debarment requirements. Effect: Inadequate controls over this area of compliance result in a reasonable possibility that the Company would not have the required documentation in place and would not be able to detect and correct noncompliance in a timely manner. Questioned Costs: We were unable to determine known questioned costs. There were three vendor transactions above the $4,000 micro purchase threshold without adequate procurement documentation which had cumulative draws in 2022 of $1,993,222. Context/Sampling: Procurement requirements were applicable to three vendors. Two vendors had expenditures in excess of $250,000. Suspension and debarment requirements were applicable to 3 vendors. Repeat Finding from Prior Year: No Recommendation: We recommend management implement formal procedures over procurement, suspension and debarment in accordance with requirements noted above. Views of Responsible Officials: Management agrees with the finding.

2022-002 Department of Treasury, State of South Dakota Governor?s Office of Economic Development Federal Financial Assistance Listing 21.027, ConnectSD 2021-03, 2021-05 and 2021-07 Coronavirus State and Local Fiscal Recovery Funds 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 the federal award that 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 that follow the procurement standards in 2 CFR sections 200.318 through 200.327 ensuring that the procurement method used for the contracts are appropriate based on the dollar amount and conditions specified in sections therein. 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 Company has not documented their internal controls for compliance with the procurement, suspension and debarment compliance requirement of Uniform Guidance as outlined above. The Company does not have a written policy related to procurement or written standards of conduct for employees involved in contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurement, as well as, established procedures in place related to suspension and debarment. The Company did not follow the procurement method required based on the dollar amount and conditions specified in 2 CFR 200.320. For contracted vendors with expenditures in excess of $25,000, the Company did not verify vendors were not suspended or debarred prior to entering into transaction with the vendor. Cause: The Company relied on the previous work history with vendors frequently used and did not have a process in place to monitor compliance with suspension and debarment requirements. Effect: Inadequate controls over this area of compliance result in a reasonable possibility that the Company would not have the required documentation in place and would not be able to detect and correct noncompliance in a timely manner. Questioned Costs: We were unable to determine known questioned costs. There were three vendor transactions above the $4,000 micro purchase threshold without adequate procurement documentation which had cumulative draws in 2022 of $1,993,222. Context/Sampling: Procurement requirements were applicable to three vendors. Two vendors had expenditures in excess of $250,000. Suspension and debarment requirements were applicable to 3 vendors. Repeat Finding from Prior Year: No Recommendation: We recommend management implement formal procedures over procurement, suspension and debarment in accordance with requirements noted above. Views of Responsible Officials: Management agrees with the finding.

2022-005 Assistance Listing Number 21.027 Coronavirus State and Local Fiscal Recovery Funds Department of Treasury North Dakota State Water Commission Procurement Suspension & Debarment 2 CFR Part 200.318 Criteria 2 CFR Part 200.318 states that a non-Federal entity must have and use documented procedures, consistent with state, local, and tribal laws and regulations and the standards of 2 CFR part 200.317 through 200.327. Condition District does not have a written procurement policy in place. Cause The District has not approved a written procurement policy. Effect Non-compliance with Procurement Suspension & Debarment compliance requirements. Questioned Costs Not Applicable Repeat Finding This is not a repeat finding. Recommendation We recommend for the board of the District to create and implement a procurement policy that adheres to state and local regulations as well as 2 CFR Part 200.317 through 200.327. Views of Responsible Officials and Planned Corrective Actions The District will create and approve a procurement policy that adheres to state and local regulations as well as 2 CFR Part 200.317 through 200.327.

Finding 2022-001 Assistance Listing Number: 93.870 Federal Program: Maternal, Infant, and Early Childhood Home Visiting Grant Name of Federal Agency: Department of Health and Human Services Name of Pass-Through Entity: Wisconsin Department of Children and Families Criteria or Specific Requirement: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at Title 2 U.S. Code of Federal Regulations (CFR) SECTIONS 200.318 THROUGH 200.236. 2 CFR section 200.318(a) indicates the non-federal entity's documented procurement procedures must conform to the procurement standards identified in these sections. Condition: The Organization's documented procurement policies and procedures do not include certain procedures required by the procurement standards. Cause: The Organization does not have a process for reviewing its accounting policies and procedures manual on a regular basis to ensure documented procedures conform to the procurement standards. Effect or potential effect: Costs for purchases subject to the procurement standards could be disallowed if appropriate procedures are not followed. Repeat finding: No Recommendation: The Organization's procurement procedures should be reviewed and updated as needed to confirm to the procurement standards. The Organization's policies and procedures should also be reviewed and approved annually by the board of directors and management to incorporate changes to laws and regulations and internal procedures. Views of responsible officials: Easterseals Southeast Wisconsin has a policy which clearly outlines approval authorities. While we follow that policy properly, we understand that the policy lacks some elements required by the Uniform Guidance. None of our purchases made during the year under audit would have violated Uniform Guidance, but we are committed to compliance and therefore have already started to draft policies which will adhere to Uniform Guidance. We will finalize, communicate, and follow our updated Policies and Procedures to ensure that Uniform Guidance is followed and to resolve the finding from this audit.

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS City of Clarkston January 1, 2022 through December 31, 2022 2022-002 The City did not have adequate internal controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 20.205 – Highway Planning and Construction Federal Grantor Name: U.S. Department of Transportation, Federal Highway Administration Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Transportation Pass-through Award/Contract Number: LA-10124, LA-10129, LA-9593 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2020-001 Description of Condition During fiscal year 2022, the City spent $1,725,908 in federal Highway Planning and Construction program funds awarded from the Federal Highway Administration and passed through the Washington State Department of Transportation. During 2022, the City used program funding on three projects. 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 require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance federal procurement standards found in 2 CFR 200.318-327. The procedures must reflect the most restrictive of federal, state or local procurement thresholds and methods when using federal funds. Additionally, federal regulations require recipients to maintain written standards of conduct that cover conflicts of interest and govern the actions of employees involved in selecting, awarding or administrating contracts procured with federal funds. Although the City has a written procurement policy, it does not conform to federal procurement standards and does not include all methods for procurement, such as architectural and engineering services and specific steps to follow for formally bidding public works projects. Additionally, the City’s policy does not include other required procedures for procuring transactions, such as contract cost or price analysis, bonding requirements, domestic preferences for procurement, contracting provisions, and more. Additionally, the City’s written conflict of interest policy does not conform to federal regulations because it does not include the following elements: • Officers, employees, and agents may not participate in selecting, awarding, or administrating a contract supported by a federal award if they have a real or apparent conflict of interest. • Officers, employees, and agents may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. We consider this internal control deficiency to be a significant deficiency. Cause of Condition Management did not dedicate the time and resources necessary to update the City’s procurement and standards of conduct procedures to ensure they conformed to Uniform Guidance before procuring transactions that it charged to the program. Effect of Condition Although the City’s policies did not conform to Uniform Guidance, our testing found the City complied with federal requirements for competitive solicitation of a public works contractor and architectural and engineering services. However, without updated written procurement and standards of conduct procedures, the City is at greater risk of noncompliance with the most restrictive procurement procedures and standards of conduct requirements when procuring contractors paid all or in part with federal funds.   Recommendation We recommend the City strengthen internal controls by updating and maintaining its written procurement and standards of conduct policies to conform to Uniform Guidance for all procurement transactions. City’s Response The City updated the policy regarding federal procurement to ensure compliance with usage of federal funds in November 2022. This audit determined that additional levels of internal control needed to be implemented to comply with Uniform Guidance and federal regulations. The City plans to update the procurement policy and standards of conduct policy to ensure that federal standards are being maintained. The City will strengthen internal controls to ensure that procurement of goods and services will comply with Uniform Guidance, the federal regulations and the City’s procurement policy. Auditor’s Remarks We appreciate the City’s commitment to resolving this finding and thank the City for its cooperation and assistance during the audit. 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 Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures.

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS City of Clarkston January 1, 2022 through December 31, 2022 2022-002 The City did not have adequate internal controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 20.205 – Highway Planning and Construction Federal Grantor Name: U.S. Department of Transportation, Federal Highway Administration Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Transportation Pass-through Award/Contract Number: LA-10124, LA-10129, LA-9593 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2020-001 Description of Condition During fiscal year 2022, the City spent $1,725,908 in federal Highway Planning and Construction program funds awarded from the Federal Highway Administration and passed through the Washington State Department of Transportation. During 2022, the City used program funding on three projects. 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 require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance federal procurement standards found in 2 CFR 200.318-327. The procedures must reflect the most restrictive of federal, state or local procurement thresholds and methods when using federal funds. Additionally, federal regulations require recipients to maintain written standards of conduct that cover conflicts of interest and govern the actions of employees involved in selecting, awarding or administrating contracts procured with federal funds. Although the City has a written procurement policy, it does not conform to federal procurement standards and does not include all methods for procurement, such as architectural and engineering services and specific steps to follow for formally bidding public works projects. Additionally, the City’s policy does not include other required procedures for procuring transactions, such as contract cost or price analysis, bonding requirements, domestic preferences for procurement, contracting provisions, and more. Additionally, the City’s written conflict of interest policy does not conform to federal regulations because it does not include the following elements: • Officers, employees, and agents may not participate in selecting, awarding, or administrating a contract supported by a federal award if they have a real or apparent conflict of interest. • Officers, employees, and agents may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. We consider this internal control deficiency to be a significant deficiency. Cause of Condition Management did not dedicate the time and resources necessary to update the City’s procurement and standards of conduct procedures to ensure they conformed to Uniform Guidance before procuring transactions that it charged to the program. Effect of Condition Although the City’s policies did not conform to Uniform Guidance, our testing found the City complied with federal requirements for competitive solicitation of a public works contractor and architectural and engineering services. However, without updated written procurement and standards of conduct procedures, the City is at greater risk of noncompliance with the most restrictive procurement procedures and standards of conduct requirements when procuring contractors paid all or in part with federal funds.   Recommendation We recommend the City strengthen internal controls by updating and maintaining its written procurement and standards of conduct policies to conform to Uniform Guidance for all procurement transactions. City’s Response The City updated the policy regarding federal procurement to ensure compliance with usage of federal funds in November 2022. This audit determined that additional levels of internal control needed to be implemented to comply with Uniform Guidance and federal regulations. The City plans to update the procurement policy and standards of conduct policy to ensure that federal standards are being maintained. The City will strengthen internal controls to ensure that procurement of goods and services will comply with Uniform Guidance, the federal regulations and the City’s procurement policy. Auditor’s Remarks We appreciate the City’s commitment to resolving this finding and thank the City for its cooperation and assistance during the audit. 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 Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures.

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS City of Clarkston January 1, 2022 through December 31, 2022 2022-002 The City did not have adequate internal controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 20.205 – Highway Planning and Construction Federal Grantor Name: U.S. Department of Transportation, Federal Highway Administration Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Transportation Pass-through Award/Contract Number: LA-10124, LA-10129, LA-9593 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2020-001 Description of Condition During fiscal year 2022, the City spent $1,725,908 in federal Highway Planning and Construction program funds awarded from the Federal Highway Administration and passed through the Washington State Department of Transportation. During 2022, the City used program funding on three projects. 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 require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance federal procurement standards found in 2 CFR 200.318-327. The procedures must reflect the most restrictive of federal, state or local procurement thresholds and methods when using federal funds. Additionally, federal regulations require recipients to maintain written standards of conduct that cover conflicts of interest and govern the actions of employees involved in selecting, awarding or administrating contracts procured with federal funds. Although the City has a written procurement policy, it does not conform to federal procurement standards and does not include all methods for procurement, such as architectural and engineering services and specific steps to follow for formally bidding public works projects. Additionally, the City’s policy does not include other required procedures for procuring transactions, such as contract cost or price analysis, bonding requirements, domestic preferences for procurement, contracting provisions, and more. Additionally, the City’s written conflict of interest policy does not conform to federal regulations because it does not include the following elements: • Officers, employees, and agents may not participate in selecting, awarding, or administrating a contract supported by a federal award if they have a real or apparent conflict of interest. • Officers, employees, and agents may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. We consider this internal control deficiency to be a significant deficiency. Cause of Condition Management did not dedicate the time and resources necessary to update the City’s procurement and standards of conduct procedures to ensure they conformed to Uniform Guidance before procuring transactions that it charged to the program. Effect of Condition Although the City’s policies did not conform to Uniform Guidance, our testing found the City complied with federal requirements for competitive solicitation of a public works contractor and architectural and engineering services. However, without updated written procurement and standards of conduct procedures, the City is at greater risk of noncompliance with the most restrictive procurement procedures and standards of conduct requirements when procuring contractors paid all or in part with federal funds.   Recommendation We recommend the City strengthen internal controls by updating and maintaining its written procurement and standards of conduct policies to conform to Uniform Guidance for all procurement transactions. City’s Response The City updated the policy regarding federal procurement to ensure compliance with usage of federal funds in November 2022. This audit determined that additional levels of internal control needed to be implemented to comply with Uniform Guidance and federal regulations. The City plans to update the procurement policy and standards of conduct policy to ensure that federal standards are being maintained. The City will strengthen internal controls to ensure that procurement of goods and services will comply with Uniform Guidance, the federal regulations and the City’s procurement policy. Auditor’s Remarks We appreciate the City’s commitment to resolving this finding and thank the City for its cooperation and assistance during the audit. 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 Part 200, Uniform Guidance, section 318, General procurement standards, establishes requirements for written procedures.

Finding 2022-006 Procurement, Suspension, and Debarment – Material Weakness. Criteria: In accordance with §200.318, the non-federal entity must use its own documented procurement procedures which reflect applicable laws and regulations, provided that the procurements conform to applicable federal law and the standards identified. Additionally, the nonfederal entity must maintain records sufficient to detail the history of the procurement. These records are required to include but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. All procurement transactions must be conducted in in accordance with §200.317 through §200.327. In accordance with §200.214 non-federal entities cannot enter into awards, subawards, or contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in federal assistance programs or activities. Non-federal entities must either check for exclusions in the System for Award Management (SAM); collect a certification from the entity or add a clause or condition to the covered transaction with the entity prior to entering into a covered transaction with a non-federal entity. Condition: The Organization also has standard procurement procedures in place guiding purchasing decisions. However, due to need for expediency in choosing a contract that is partially funded by the federal award, the board of directors approved waiving the normal bidding process. The Organization also did not perform or document suspension and debarment checks on prospective vendors and subrecipients. Cause: The Organization’s personnel did not ensure to follow documented policies and procedures for selecting a contractor that were in compliance with the CFR 200. Additionally, the Organization did not have adequate internal controls in place to identify the need to ensure a check for suspended or debarred vendors on contractors occurred and was documented prior to entering into those agreements. Effect: Failure to maintain policies for vendor selection process and failure to obtain vendor solicitation for procurements is noncompliance with federal regulations. This leads to the possibility that resources were purchased from vendors who were suspended and/or debarred. Questioned Costs: Unknown Repeat Finding: Not applicable as the Organization is a first time auditee. Recommendation: Standard forms should be updated to incorporate procurement and suspension and debarment criteria for both vendors and subrecipients. Controls should be implemented to ensure that the procurement decisions and suspension and debarment checks are reviewed by an appropriate member of management and are properly stored for future reference. Views of Responsible Official: See Corrective Action Plan.

The City did not have adequate controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 20.205 Highway Planning and Construction Federal Grantor Name: Federal Highway Administration, U.S. Department of Transportation Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Transportation Pass-through Award/Contract Number: STPUS-5924(005) / SRTS 5906(001) / SRTS 9909(004) / NHPP-5908(010) / NHPP- 5908(011) / NHFP-5908(013) Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-001 Description of Condition During fiscal year 2022, the City spent $1,601,328 in Highway Planning and Construction program funds. The program’s objective is to provide funds for the planning, design, construction, and rehabilitation of highways and bridge transportation systems. 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 also require recipients to establish and 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, state or local procurement thresholds and methods when using federal funds to procure goods and services. Governments must apply the more restrictive requirements by obtaining quotes or following a competitive procurement process, depending on the estimated cost of the procurement activity. Our audit found the City’s internal controls were ineffective for ensuring compliance with federal procurement requirements. Specifically, the City did not establish its own written procurement procedures, as federal regulations require. We consider this deficiency in internal controls to be a significant deficiency. This issue was reported as a finding in the prior audit. Cause of Condition During the 2021 audit, management and staff said they did not know the City was required to have and use its own written procurement procedures. Our prior year audit report was released on December 22, 2022, so the City was unable to implement changes before or during the current audit period. Effect of Condition Although the City did not establish its own written policy before procuring with program funds, it did comply with federal requirements for soliciting and awarding public works contracts. However, without written policies and procedures, the City is at greater risk of noncompliance with the most restrictive of federal, state, or local procurement methods and requirements when using federal funds to procure contractors. Recommendation We recommend the City establish written procurement procedures that conform to federal procurement requirements. City’s Response This is a repeat finding from our 2021 federal audit that was completed in December 2022. The City adopted a robust procurement policy in early 2023 as quickly as we possibly could after receiving the 2021 audit finding. It was impossible for the City to establish the procurement policy in 2022 as the audit finished so late in the year. While the City did not have an internal policy, the City strictly follows the procurement policies outlined by the federal and/or state funding agencies partnered on our projects. Outside of the specific funding agency guidelines, the City follows the Washington State Department of Transportation Local Agency Guidelines. The City is not recognized in WSDOTs Certification Acceptance program, meaning all FHWA funded project development and construction administration activities must have WSDOT Local Program oversight. This stewardship ensures all money spent follows FHWA standards. Auditor’s Remarks We appreciate the City’s commitment to resolving 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 200, Section 318, General procurement standards, establishes requirements for written procedures.

The City did not have adequate controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 20.205 Highway Planning and Construction Federal Grantor Name: Federal Highway Administration, U.S. Department of Transportation Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Transportation Pass-through Award/Contract Number: STPUS-5924(005) / SRTS 5906(001) / SRTS 9909(004) / NHPP-5908(010) / NHPP- 5908(011) / NHFP-5908(013) Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-001 Description of Condition During fiscal year 2022, the City spent $1,601,328 in Highway Planning and Construction program funds. The program’s objective is to provide funds for the planning, design, construction, and rehabilitation of highways and bridge transportation systems. 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 also require recipients to establish and 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, state or local procurement thresholds and methods when using federal funds to procure goods and services. Governments must apply the more restrictive requirements by obtaining quotes or following a competitive procurement process, depending on the estimated cost of the procurement activity. Our audit found the City’s internal controls were ineffective for ensuring compliance with federal procurement requirements. Specifically, the City did not establish its own written procurement procedures, as federal regulations require. We consider this deficiency in internal controls to be a significant deficiency. This issue was reported as a finding in the prior audit. Cause of Condition During the 2021 audit, management and staff said they did not know the City was required to have and use its own written procurement procedures. Our prior year audit report was released on December 22, 2022, so the City was unable to implement changes before or during the current audit period. Effect of Condition Although the City did not establish its own written policy before procuring with program funds, it did comply with federal requirements for soliciting and awarding public works contracts. However, without written policies and procedures, the City is at greater risk of noncompliance with the most restrictive of federal, state, or local procurement methods and requirements when using federal funds to procure contractors. Recommendation We recommend the City establish written procurement procedures that conform to federal procurement requirements. City’s Response This is a repeat finding from our 2021 federal audit that was completed in December 2022. The City adopted a robust procurement policy in early 2023 as quickly as we possibly could after receiving the 2021 audit finding. It was impossible for the City to establish the procurement policy in 2022 as the audit finished so late in the year. While the City did not have an internal policy, the City strictly follows the procurement policies outlined by the federal and/or state funding agencies partnered on our projects. Outside of the specific funding agency guidelines, the City follows the Washington State Department of Transportation Local Agency Guidelines. The City is not recognized in WSDOTs Certification Acceptance program, meaning all FHWA funded project development and construction administration activities must have WSDOT Local Program oversight. This stewardship ensures all money spent follows FHWA standards. Auditor’s Remarks We appreciate the City’s commitment to resolving 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 200, Section 318, General procurement standards, establishes requirements for written procedures.

The City did not have adequate controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 20.205 Highway Planning and Construction Federal Grantor Name: Federal Highway Administration, U.S. Department of Transportation Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Transportation Pass-through Award/Contract Number: STPUS-5924(005) / SRTS 5906(001) / SRTS 9909(004) / NHPP-5908(010) / NHPP- 5908(011) / NHFP-5908(013) Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-001 Description of Condition During fiscal year 2022, the City spent $1,601,328 in Highway Planning and Construction program funds. The program’s objective is to provide funds for the planning, design, construction, and rehabilitation of highways and bridge transportation systems. 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 also require recipients to establish and 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, state or local procurement thresholds and methods when using federal funds to procure goods and services. Governments must apply the more restrictive requirements by obtaining quotes or following a competitive procurement process, depending on the estimated cost of the procurement activity. Our audit found the City’s internal controls were ineffective for ensuring compliance with federal procurement requirements. Specifically, the City did not establish its own written procurement procedures, as federal regulations require. We consider this deficiency in internal controls to be a significant deficiency. This issue was reported as a finding in the prior audit. Cause of Condition During the 2021 audit, management and staff said they did not know the City was required to have and use its own written procurement procedures. Our prior year audit report was released on December 22, 2022, so the City was unable to implement changes before or during the current audit period. Effect of Condition Although the City did not establish its own written policy before procuring with program funds, it did comply with federal requirements for soliciting and awarding public works contracts. However, without written policies and procedures, the City is at greater risk of noncompliance with the most restrictive of federal, state, or local procurement methods and requirements when using federal funds to procure contractors. Recommendation We recommend the City establish written procurement procedures that conform to federal procurement requirements. City’s Response This is a repeat finding from our 2021 federal audit that was completed in December 2022. The City adopted a robust procurement policy in early 2023 as quickly as we possibly could after receiving the 2021 audit finding. It was impossible for the City to establish the procurement policy in 2022 as the audit finished so late in the year. While the City did not have an internal policy, the City strictly follows the procurement policies outlined by the federal and/or state funding agencies partnered on our projects. Outside of the specific funding agency guidelines, the City follows the Washington State Department of Transportation Local Agency Guidelines. The City is not recognized in WSDOTs Certification Acceptance program, meaning all FHWA funded project development and construction administration activities must have WSDOT Local Program oversight. This stewardship ensures all money spent follows FHWA standards. Auditor’s Remarks We appreciate the City’s commitment to resolving 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 200, Section 318, General procurement standards, establishes requirements for written procedures.

The City did not have adequate controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 20.205 Highway Planning and Construction Federal Grantor Name: Federal Highway Administration, U.S. Department of Transportation Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Transportation Pass-through Award/Contract Number: STPUS-5924(005) / SRTS 5906(001) / SRTS 9909(004) / NHPP-5908(010) / NHPP- 5908(011) / NHFP-5908(013) Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-001 Description of Condition During fiscal year 2022, the City spent $1,601,328 in Highway Planning and Construction program funds. The program’s objective is to provide funds for the planning, design, construction, and rehabilitation of highways and bridge transportation systems. 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 also require recipients to establish and 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, state or local procurement thresholds and methods when using federal funds to procure goods and services. Governments must apply the more restrictive requirements by obtaining quotes or following a competitive procurement process, depending on the estimated cost of the procurement activity. Our audit found the City’s internal controls were ineffective for ensuring compliance with federal procurement requirements. Specifically, the City did not establish its own written procurement procedures, as federal regulations require. We consider this deficiency in internal controls to be a significant deficiency. This issue was reported as a finding in the prior audit. Cause of Condition During the 2021 audit, management and staff said they did not know the City was required to have and use its own written procurement procedures. Our prior year audit report was released on December 22, 2022, so the City was unable to implement changes before or during the current audit period. Effect of Condition Although the City did not establish its own written policy before procuring with program funds, it did comply with federal requirements for soliciting and awarding public works contracts. However, without written policies and procedures, the City is at greater risk of noncompliance with the most restrictive of federal, state, or local procurement methods and requirements when using federal funds to procure contractors. Recommendation We recommend the City establish written procurement procedures that conform to federal procurement requirements. City’s Response This is a repeat finding from our 2021 federal audit that was completed in December 2022. The City adopted a robust procurement policy in early 2023 as quickly as we possibly could after receiving the 2021 audit finding. It was impossible for the City to establish the procurement policy in 2022 as the audit finished so late in the year. While the City did not have an internal policy, the City strictly follows the procurement policies outlined by the federal and/or state funding agencies partnered on our projects. Outside of the specific funding agency guidelines, the City follows the Washington State Department of Transportation Local Agency Guidelines. The City is not recognized in WSDOTs Certification Acceptance program, meaning all FHWA funded project development and construction administration activities must have WSDOT Local Program oversight. This stewardship ensures all money spent follows FHWA standards. Auditor’s Remarks We appreciate the City’s commitment to resolving 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 200, Section 318, General procurement standards, establishes requirements for written procedures.

The City did not have adequate controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 20.205 Highway Planning and Construction Federal Grantor Name: Federal Highway Administration, U.S. Department of Transportation Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Transportation Pass-through Award/Contract Number: STPUS-5924(005) / SRTS 5906(001) / SRTS 9909(004) / NHPP-5908(010) / NHPP- 5908(011) / NHFP-5908(013) Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-001 Description of Condition During fiscal year 2022, the City spent $1,601,328 in Highway Planning and Construction program funds. The program’s objective is to provide funds for the planning, design, construction, and rehabilitation of highways and bridge transportation systems. 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 also require recipients to establish and 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, state or local procurement thresholds and methods when using federal funds to procure goods and services. Governments must apply the more restrictive requirements by obtaining quotes or following a competitive procurement process, depending on the estimated cost of the procurement activity. Our audit found the City’s internal controls were ineffective for ensuring compliance with federal procurement requirements. Specifically, the City did not establish its own written procurement procedures, as federal regulations require. We consider this deficiency in internal controls to be a significant deficiency. This issue was reported as a finding in the prior audit. Cause of Condition During the 2021 audit, management and staff said they did not know the City was required to have and use its own written procurement procedures. Our prior year audit report was released on December 22, 2022, so the City was unable to implement changes before or during the current audit period. Effect of Condition Although the City did not establish its own written policy before procuring with program funds, it did comply with federal requirements for soliciting and awarding public works contracts. However, without written policies and procedures, the City is at greater risk of noncompliance with the most restrictive of federal, state, or local procurement methods and requirements when using federal funds to procure contractors. Recommendation We recommend the City establish written procurement procedures that conform to federal procurement requirements. City’s Response This is a repeat finding from our 2021 federal audit that was completed in December 2022. The City adopted a robust procurement policy in early 2023 as quickly as we possibly could after receiving the 2021 audit finding. It was impossible for the City to establish the procurement policy in 2022 as the audit finished so late in the year. While the City did not have an internal policy, the City strictly follows the procurement policies outlined by the federal and/or state funding agencies partnered on our projects. Outside of the specific funding agency guidelines, the City follows the Washington State Department of Transportation Local Agency Guidelines. The City is not recognized in WSDOTs Certification Acceptance program, meaning all FHWA funded project development and construction administration activities must have WSDOT Local Program oversight. This stewardship ensures all money spent follows FHWA standards. Auditor’s Remarks We appreciate the City’s commitment to resolving 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 200, Section 318, General procurement standards, establishes requirements for written procedures.

The City did not have adequate controls for ensuring compliance with federal procurement requirements. Assistance Listing Number and Title: 20.205 Highway Planning and Construction Federal Grantor Name: Federal Highway Administration, U.S. Department of Transportation Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Transportation Pass-through Award/Contract Number: STPUS-5924(005) / SRTS 5906(001) / SRTS 9909(004) / NHPP-5908(010) / NHPP- 5908(011) / NHFP-5908(013) Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-001 Description of Condition During fiscal year 2022, the City spent $1,601,328 in Highway Planning and Construction program funds. The program’s objective is to provide funds for the planning, design, construction, and rehabilitation of highways and bridge transportation systems. 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 also require recipients to establish and 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, state or local procurement thresholds and methods when using federal funds to procure goods and services. Governments must apply the more restrictive requirements by obtaining quotes or following a competitive procurement process, depending on the estimated cost of the procurement activity. Our audit found the City’s internal controls were ineffective for ensuring compliance with federal procurement requirements. Specifically, the City did not establish its own written procurement procedures, as federal regulations require. We consider this deficiency in internal controls to be a significant deficiency. This issue was reported as a finding in the prior audit. Cause of Condition During the 2021 audit, management and staff said they did not know the City was required to have and use its own written procurement procedures. Our prior year audit report was released on December 22, 2022, so the City was unable to implement changes before or during the current audit period. Effect of Condition Although the City did not establish its own written policy before procuring with program funds, it did comply with federal requirements for soliciting and awarding public works contracts. However, without written policies and procedures, the City is at greater risk of noncompliance with the most restrictive of federal, state, or local procurement methods and requirements when using federal funds to procure contractors. Recommendation We recommend the City establish written procurement procedures that conform to federal procurement requirements. City’s Response This is a repeat finding from our 2021 federal audit that was completed in December 2022. The City adopted a robust procurement policy in early 2023 as quickly as we possibly could after receiving the 2021 audit finding. It was impossible for the City to establish the procurement policy in 2022 as the audit finished so late in the year. While the City did not have an internal policy, the City strictly follows the procurement policies outlined by the federal and/or state funding agencies partnered on our projects. Outside of the specific funding agency guidelines, the City follows the Washington State Department of Transportation Local Agency Guidelines. The City is not recognized in WSDOTs Certification Acceptance program, meaning all FHWA funded project development and construction administration activities must have WSDOT Local Program oversight. This stewardship ensures all money spent follows FHWA standards. Auditor’s Remarks We appreciate the City’s commitment to resolving 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 200, Section 318, General procurement standards, establishes requirements for written procedures.

Condition: The Organization does not have a documented procurement policy that conforms to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. Context: During the year, the Organization made a purchase of property that was greater than the Simple Acquisition Threshold of $250,000. As part of the audit procedures, we requested the Organization’s documented procurement policy. The Organization did not have a documented procurement policy. Prior to making purchases in excess of the simplified acquisition threshold, the Organization performed a price analysis in a manner consistent with 2 CFR Part 200. Cause: The Organization was not aware that a documented procurement policy was required. Criteria: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. Effect: Without documented procurement policies, the Organization could procure assets in a manner that is not consistent with 2 CFR Part 200. Recommendation: We recommend that the Organization familiarize themselves with the requirements of 2 CFR sections 200.318 through 200.326 and develop a documented procurement policy that conforms to applicable federal statutes and procurement requirements. Management’s Response: Management agrees.

Type of Finding: Material Weakness in Internal Control over Compliance Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Substance Abuse and Mental Health Services Projects of Regional and National Significance Assistance Listing Number: 93.243 Federal Award Identification Number and Year: H79TI081935 – 2022, H79TI080298 – 2022, H79TI085517 – 2022 Pass-Through Agency: Pierce County Pass-Through Number(s): SC-107323, SC-105454, SC-110121 Award Period: May 31, 2022 through May 30, 2023, September 30, 2017 through September 29, 2022, September 30, 2022 through September 29, 2027. Criteria or specific requirement: 2 CFR 200.320 requires non-federal entities to have and use documented procurement procedures. 2 CFR 200.318(i) states that "the non-Federal entity must maintain record 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 addition, 2 CFR 200.320(a)(2)(i) states that "... If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity". 2 CFR 180.300 states that before entering into a covered transaction with another person at the next lower tier, an entity must verify that the person with whom they intend to do business with is not excluded or disqualified. This can be done 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”. Condition: The Alliance does not have a written procurement, suspension and debarment policy nor procedures in place at the time of the audit in compliance with Uniform Guidance. For procurement, CLA tested all purchases exceeding $3,500 (the minimum micropurchase threshold before it was increased by the FAR to $10,000 for those with an established policy). For the 5 sampled procurement selections, documentation was not retained for the adequate number of price comparisons prior to exercising the procurement, as required by 2 CFR 200.320. For suspension and debarment, CLA tested all payments to vendors exceeding $25,000 as established by Uniform Guidance. Of the 3 tested, there was no documentary evidence that procedures were performed prior to entering into the covered transaction using the allowable methods as described at 2 CFR 180.300. Questioned costs: Undeterminable. Context: Procurement: A sample of 5 was made from a population of 16 procurement transactions charged to the major program that exceeded $3,500 (the minimum micropurchase threshold before it was increased by the FAR to $10,000 for those with an established policy), amounting to $48,099. Of the 5 sampled costs, all were found to be out of compliance with the Procurement requirements, as a written procurement policy was not in place and documentation was not retained for the adequate number of price comparisons. Suspension and Debarment: A sample of 3 (entire population) was made from a population of 3 vendors who received payments exceeding $25,000. Of the 3 sampled vendors, there was no documentary evidence that procedures were performed prior to entering into the covered transaction using the allowable methods as described at 2 CFR 180.300. Cause: Management believes procurement, suspension and debarment standards apply only to the awarding agency, and not to the Alliance. Effect: Purchases may occur that do not follow the procurement, suspension and debarment standards as required by Uniform Guidance, and contracts to vendors that had been suspended or debarred could be awarded and not detected. Repeat Finding: No. Recommendation: We recommended that the Alliance design controls to ensure an adequate review process is in place to review potential contractors to determine they are not suspended or debarred. These procedures should include documenting the date that suspension and debarment verifications are made. In addition, we recommended the Alliance to formally adopt a Procurement, Suspension and Debarment policy in accordance with Uniform Guidance. The Alliance followed this recommendation, pairing prior (non-federally implicated) procurement processes and expenditures. Views of responsible officials: Management has provided a response to the finding in their Corrective Action Plan.

Type of Finding: Material Weakness in Internal Control over Compliance Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Substance Abuse and Mental Health Services Projects of Regional and National Significance Assistance Listing Number: 93.243 Federal Award Identification Number and Year: H79TI081935 – 2022, H79TI080298 – 2022, H79TI085517 – 2022 Pass-Through Agency: Pierce County Pass-Through Number(s): SC-107323, SC-105454, SC-110121 Award Period: May 31, 2022 through May 30, 2023, September 30, 2017 through September 29, 2022, September 30, 2022 through September 29, 2027. Criteria or specific requirement: 2 CFR 200.320 requires non-federal entities to have and use documented procurement procedures. 2 CFR 200.318(i) states that "the non-Federal entity must maintain record 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 addition, 2 CFR 200.320(a)(2)(i) states that "... If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity". 2 CFR 180.300 states that before entering into a covered transaction with another person at the next lower tier, an entity must verify that the person with whom they intend to do business with is not excluded or disqualified. This can be done 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”. Condition: The Alliance does not have a written procurement, suspension and debarment policy nor procedures in place at the time of the audit in compliance with Uniform Guidance. For procurement, CLA tested all purchases exceeding $3,500 (the minimum micropurchase threshold before it was increased by the FAR to $10,000 for those with an established policy). For the 5 sampled procurement selections, documentation was not retained for the adequate number of price comparisons prior to exercising the procurement, as required by 2 CFR 200.320. For suspension and debarment, CLA tested all payments to vendors exceeding $25,000 as established by Uniform Guidance. Of the 3 tested, there was no documentary evidence that procedures were performed prior to entering into the covered transaction using the allowable methods as described at 2 CFR 180.300. Questioned costs: Undeterminable. Context: Procurement: A sample of 5 was made from a population of 16 procurement transactions charged to the major program that exceeded $3,500 (the minimum micropurchase threshold before it was increased by the FAR to $10,000 for those with an established policy), amounting to $48,099. Of the 5 sampled costs, all were found to be out of compliance with the Procurement requirements, as a written procurement policy was not in place and documentation was not retained for the adequate number of price comparisons. Suspension and Debarment: A sample of 3 (entire population) was made from a population of 3 vendors who received payments exceeding $25,000. Of the 3 sampled vendors, there was no documentary evidence that procedures were performed prior to entering into the covered transaction using the allowable methods as described at 2 CFR 180.300. Cause: Management believes procurement, suspension and debarment standards apply only to the awarding agency, and not to the Alliance. Effect: Purchases may occur that do not follow the procurement, suspension and debarment standards as required by Uniform Guidance, and contracts to vendors that had been suspended or debarred could be awarded and not detected. Repeat Finding: No. Recommendation: We recommended that the Alliance design controls to ensure an adequate review process is in place to review potential contractors to determine they are not suspended or debarred. These procedures should include documenting the date that suspension and debarment verifications are made. In addition, we recommended the Alliance to formally adopt a Procurement, Suspension and Debarment policy in accordance with Uniform Guidance. The Alliance followed this recommendation, pairing prior (non-federally implicated) procurement processes and expenditures. Views of responsible officials: Management has provided a response to the finding in their Corrective Action Plan.

Type of Finding: Material Weakness in Internal Control over Compliance Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Substance Abuse and Mental Health Services Projects of Regional and National Significance Assistance Listing Number: 93.243 Federal Award Identification Number and Year: H79TI081935 – 2022, H79TI080298 – 2022, H79TI085517 – 2022 Pass-Through Agency: Pierce County Pass-Through Number(s): SC-107323, SC-105454, SC-110121 Award Period: May 31, 2022 through May 30, 2023, September 30, 2017 through September 29, 2022, September 30, 2022 through September 29, 2027. Criteria or specific requirement: 2 CFR 200.320 requires non-federal entities to have and use documented procurement procedures. 2 CFR 200.318(i) states that "the non-Federal entity must maintain record 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 addition, 2 CFR 200.320(a)(2)(i) states that "... If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity". 2 CFR 180.300 states that before entering into a covered transaction with another person at the next lower tier, an entity must verify that the person with whom they intend to do business with is not excluded or disqualified. This can be done 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”. Condition: The Alliance does not have a written procurement, suspension and debarment policy nor procedures in place at the time of the audit in compliance with Uniform Guidance. For procurement, CLA tested all purchases exceeding $3,500 (the minimum micropurchase threshold before it was increased by the FAR to $10,000 for those with an established policy). For the 5 sampled procurement selections, documentation was not retained for the adequate number of price comparisons prior to exercising the procurement, as required by 2 CFR 200.320. For suspension and debarment, CLA tested all payments to vendors exceeding $25,000 as established by Uniform Guidance. Of the 3 tested, there was no documentary evidence that procedures were performed prior to entering into the covered transaction using the allowable methods as described at 2 CFR 180.300. Questioned costs: Undeterminable. Context: Procurement: A sample of 5 was made from a population of 16 procurement transactions charged to the major program that exceeded $3,500 (the minimum micropurchase threshold before it was increased by the FAR to $10,000 for those with an established policy), amounting to $48,099. Of the 5 sampled costs, all were found to be out of compliance with the Procurement requirements, as a written procurement policy was not in place and documentation was not retained for the adequate number of price comparisons. Suspension and Debarment: A sample of 3 (entire population) was made from a population of 3 vendors who received payments exceeding $25,000. Of the 3 sampled vendors, there was no documentary evidence that procedures were performed prior to entering into the covered transaction using the allowable methods as described at 2 CFR 180.300. Cause: Management believes procurement, suspension and debarment standards apply only to the awarding agency, and not to the Alliance. Effect: Purchases may occur that do not follow the procurement, suspension and debarment standards as required by Uniform Guidance, and contracts to vendors that had been suspended or debarred could be awarded and not detected. Repeat Finding: No. Recommendation: We recommended that the Alliance design controls to ensure an adequate review process is in place to review potential contractors to determine they are not suspended or debarred. These procedures should include documenting the date that suspension and debarment verifications are made. In addition, we recommended the Alliance to formally adopt a Procurement, Suspension and Debarment policy in accordance with Uniform Guidance. The Alliance followed this recommendation, pairing prior (non-federally implicated) procurement processes and expenditures. Views of responsible officials: Management has provided a response to the finding in their Corrective Action Plan.

Department of the Treasury, Passed through North Dakota Office of Management and Budget Federal Financial Assistance Listing 21.027 COVID‐19 – Coronavirus State and Local Fiscal Recovery Funds Procurement, Suspension, and Debarment Material Weakness in Internal Control Over Compliance Criteria – Uniform Guidance and 2 CFR 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. Condition – In our testing of procurement, suspension, and debarment it was identified that the City did not have a written policy on procurement that satisfied the requirements of 2 CFR sections 200.318 through 200.326. Cause – Lack of oversight, awareness, or understanding of all of the specific requirements under the Uniform Guidance and applicable CFR sections, and controls were not adequately designed to ensure compliance with all of these requirements. Effect – A lack of compliant policies increases the overall risk of non‐compliance. Questioned Costs – None reported. Context/Sampling – Overall procurement policy. Repeat Finding from Prior Years – Yes, prior year finding 2021‐003. Recommendation – We recommend that management establish a written policy that is in compliance with all of the procurement requirements for federal programs as identified in 2 CFR sections 200.318 through 200.326 and maintain adequate supporting documentation and records to document history and methods of procurement and the procedures performed to comply with these CFR sections. Views of Responsible Officials – There is no disagreement with the audit finding.

Federal Agency: U.S. Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: N/A Pass-Through Agency: State of Arizona, the Office of the Governor Pass-Through Number(s): GR-ARPA-AHCA-050122-01 Award Period: May 1, 2022 - June 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Condition/Context: The following compliance matters were noted over procurement: 1. The Association did not maintain a formalized and written procurement policy. 2. Twelve vendor purchases for workforce development training, with costs between $10,000 and $15,000 each, were selected for testing. However, the Association did not follow the required solicitation or bidding procedures for any of its workforce development training vendors or program. The Association awarded contracts to all vendors within the state that elected to participate in the program. 3. For three of three vendors tested, 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. Management awarded training contracts to all vendors who agreed to participate in the grant award program. 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 2022–003: Procurement Federal Department: U.S. Department of Treasury Pass-through Agencies: Cook County, Illinois and Women's Business Development Center COVID-19 - Coronavirus State and Local Fiscal Recovery Funds, Federal Assistance Listing Number 21.027 Criteria 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post-Federal Award Requirements Standards for Financial and Program Management Section 200.318, General procurement standards (a) states “the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in Section 200.317 through 200.327.” Section 200.318 (i) states “the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.” SDA’s Fiscal Policies and Procedures Manual updated July 21, 2022 (“the Manual”) states “Procurement shall be made using one of the following methods: 1) Micro and Small Purchase Threshold; 2) Competitive Sealed Bids and Competitive Negotiations and 3) Non-Competitive Negotiations. All methods of procurement, when funded by federal grants or contracts, must follow procurement requirements contained in the OMB, Uniform Administrative Requirements, Costs Principles, and Audit Requirements for federal awards. Any purchases over $10,000 must bid competitively if subject to a single federal audit.” In addition, the Manual states “purchases related to Federally funded grants over $10,000 will be bid through either a Request for Proposal (RFP) or Request for Qualifications (RFQ) process. In addition, Request for Information (RFI) process may be used to help inform the development of either RFP, RFQ or other forms of procurement. Awards will be awarded to responses that meet the outlined criteria and reflect the lowest responsible bid. Contractors will be excluded from conducting business with the SDA if the contractor has been debarred and/or suspended from conducting business with the federal government. On a regular basis, the SDA will check vendors for any debarment status change on the federal System for Award Management (SAM). All source documents supporting any given transaction (e.g., receipts, invoices, and RFP data) will be retained and filed with SDA contract files in a centralized location. At a minimum, source document data must be sufficient to establish the basis for selection, the basis for the cost (including the reasonableness of cost), the rationale for the method of procurement and selection of contract type, and the basis for payment.” Condition During the current audit period, SDA did not adequately ensure federally funded contract issued to vendors followed federal regulations and its internal policy, which includes maintaining documents to support its procurement decisions. Cause Based on our discussions with management, SDA completed the RFQ process for this vendor but did not maintain the documentation of the decision-making process and scoring as outlined in its procurement policy. The documentation was deleted by a staff member who left the organization. Effect The failure to maintain adequate documentation to support the procurement of federally funded contracts is a violation of federal regulations. Questioned Costs None. Context During the test of procurement, SDA management identified two contracts with expenditures over the $10,000 threshold requiring competitive bid per its internal policy. For one contract, management noted that procurement was completed in 2021, hence outside the audit period. For the second contract, we noted that while an RFQ was obtained from the contractor, there was no evidence to support the basis for contractor selection (based on evaluation criteria and scoring outlined in the RFQ), the basis for the contract price, and evidence that debarment/suspension verification checks were performed prior to awarding the contract. Identification of Repeated Findings None. Recommendation We recommend that SDA’s management adhere to its written policy and maintain documentation to support all management decisions related to federally funded procurements to comply with federal regulations. Also, SDA should consider creating a checklist/internal form to document its procurement decisions and related approvals, as required. We also recommend that SDA develop procedures to identify all federally funded contracts let/awarded during the fiscal year to ensure compliance with its internal policy. Views of Responsible Officials and Planned Corrective Action SDA agrees with the finding and recommendation. See SDA’s Corrective Action Plan on pages 40–44.

Finding 2022–003: Procurement Federal Department: U.S. Department of Treasury Pass-through Agencies: Cook County, Illinois and Women's Business Development Center COVID-19 - Coronavirus State and Local Fiscal Recovery Funds, Federal Assistance Listing Number 21.027 Criteria 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post-Federal Award Requirements Standards for Financial and Program Management Section 200.318, General procurement standards (a) states “the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in Section 200.317 through 200.327.” Section 200.318 (i) states “the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.” SDA’s Fiscal Policies and Procedures Manual updated July 21, 2022 (“the Manual”) states “Procurement shall be made using one of the following methods: 1) Micro and Small Purchase Threshold; 2) Competitive Sealed Bids and Competitive Negotiations and 3) Non-Competitive Negotiations. All methods of procurement, when funded by federal grants or contracts, must follow procurement requirements contained in the OMB, Uniform Administrative Requirements, Costs Principles, and Audit Requirements for federal awards. Any purchases over $10,000 must bid competitively if subject to a single federal audit.” In addition, the Manual states “purchases related to Federally funded grants over $10,000 will be bid through either a Request for Proposal (RFP) or Request for Qualifications (RFQ) process. In addition, Request for Information (RFI) process may be used to help inform the development of either RFP, RFQ or other forms of procurement. Awards will be awarded to responses that meet the outlined criteria and reflect the lowest responsible bid. Contractors will be excluded from conducting business with the SDA if the contractor has been debarred and/or suspended from conducting business with the federal government. On a regular basis, the SDA will check vendors for any debarment status change on the federal System for Award Management (SAM). All source documents supporting any given transaction (e.g., receipts, invoices, and RFP data) will be retained and filed with SDA contract files in a centralized location. At a minimum, source document data must be sufficient to establish the basis for selection, the basis for the cost (including the reasonableness of cost), the rationale for the method of procurement and selection of contract type, and the basis for payment.” Condition During the current audit period, SDA did not adequately ensure federally funded contract issued to vendors followed federal regulations and its internal policy, which includes maintaining documents to support its procurement decisions. Cause Based on our discussions with management, SDA completed the RFQ process for this vendor but did not maintain the documentation of the decision-making process and scoring as outlined in its procurement policy. The documentation was deleted by a staff member who left the organization. Effect The failure to maintain adequate documentation to support the procurement of federally funded contracts is a violation of federal regulations. Questioned Costs None. Context During the test of procurement, SDA management identified two contracts with expenditures over the $10,000 threshold requiring competitive bid per its internal policy. For one contract, management noted that procurement was completed in 2021, hence outside the audit period. For the second contract, we noted that while an RFQ was obtained from the contractor, there was no evidence to support the basis for contractor selection (based on evaluation criteria and scoring outlined in the RFQ), the basis for the contract price, and evidence that debarment/suspension verification checks were performed prior to awarding the contract. Identification of Repeated Findings None. Recommendation We recommend that SDA’s management adhere to its written policy and maintain documentation to support all management decisions related to federally funded procurements to comply with federal regulations. Also, SDA should consider creating a checklist/internal form to document its procurement decisions and related approvals, as required. We also recommend that SDA develop procedures to identify all federally funded contracts let/awarded during the fiscal year to ensure compliance with its internal policy. Views of Responsible Officials and Planned Corrective Action SDA agrees with the finding and recommendation. See SDA’s Corrective Action Plan on pages 40–44.

Finding 2022-003: Lack of Documented Procurement Procedures U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES Section 223 Demonstration Programs for Improving Community Mental Health Services – Assistance Listing No. 93.829 Compliance Findings: Procurement and Suspension and Debarment (I) Criteria: The Standard Terms and Conditons for all SAMHSA’s awards requires that grantees comply with Title 2 U.S. Code of Federal Regulation (CFR) section 200.318 through 200.321. In accordance with 2 CFR section 200.320, a non-federal entity must have and use documented procurement procedures, consistent with the standards of 2 CFR section 200.317 through 200.320 for any method of procurement used for the acquisition of property or services required under a federal award or sub-award. Condition: The Organization does not have documented procurement procedures that incorporate all the requirements of 2 CFR section 200.317 through 200.320. Cause: Unknown. Questioned Costs: None. Effect: The Organization is not in compliance with 2 CFR section 200.320 or the terms of the grant agreement. Identification of Repeat Finding: Not a repeat finding. Recommendation: We recommend that the Organization adopt a written procurement policy which includes all requirements of 2 CFR section 200.317 through 200.320. Views of Responsible Officials: The Organization agrees with the finding and will adopt a documented procurement policy consistent with the standards of 2 CFR section 200.317 through 200.320 to use for procurement of the acquisition of property or services required under federal awards or sub-awards. Additional details can be found in the Organization’s Corrective Action Plan.

Type of Finding: Material Weakness in Internal Control over Compliance Federal Agency: U.S. Department of Defense Federal Program Name: Natural Resource Survey and Habitat Enhancement Assistance Listing Number: 12.005 Federal Award Identification Number and Year: H79TI083313 - 2020 Pass-Through Agency: U.S. Army Corps of Engineers, Seattle District Pass-Through Number(s): W912DW-20-2-0003 Award Period: September 28, 2020, through September 27, 2025 Criteria or specific requirement: 2 CFR 200.320 requires non-federal entities to have and use documented procurement procedures. 2 CFR 200.318(i) states that "the non-Federal entity must maintain record 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 addition, 2 CFR 200.320(a)(2)(i) states that "... 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". Condition: During our testing, it was noted that the Organization was not performing suspension and debarment checks prior to entering into vendor contracts to ensure the vendor was not listed in the suspended or debarred database maintained by the General Services Administration. In addition, The Organization does not have an established procurement policy nor procedures in place at the time of the audit in compliance with Uniform Guidance. CLA tested all purchases exceeding $3,500 (the minimum micropurchase threshold before it was increased by the FAR to $10,000 for those with an established policy). For the 8 sampled procurement selections, documentation was not retained for the adequate number of price comparisons prior to exercising the procurement, as required by 2 CFR 200.320. Questioned costs: None. Context: A sample of 8 was made from a population of 29 procurement transactions charged to the major program that exceeded $3,500 ((the minimum micropurchase threshold before it was increased by the FAR to $10,000 for those with an established policy), amounting to $69,944.43. Of the 8 sampled costs, all were found to be out of compliance with the Procurement requirements, as a written procurement policy was not in place and documentation was not retained for the adequate number of price comparisons. Cause: Staff were not aware of the specific compliance requirements and procedures for procurement, suspension and debarment status. Effect: Purchases may occur that do not follow the procurement, suspension and debarment standards as required by Uniform Guidance, and contracts to vendors that had been suspended or debarred could be awarded and not detected. Repeat Finding: No. Recommendation: We recommend the Organization design controls to ensure an adequate review process is in place to review potential contractors to determine they are not suspended or debarred. These procedures should include documenting the date that suspension and debarment verifications are made. In addition, we recommend The Organization formally adopt a Procurement, Suspension and Debarment policy in accordance with Uniform Guidance. Views of responsible officials: There is no disagreement with the audit finding.

Federal Program: 594 Environmental Infrastructure Assistance Program (AL 12.U01): Procurement, Suspension, and Debarment Criteria: Per Uniform Guidance, “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 section 200.318 through 200.326. They must use their own documented procurement procedures, which reflect appliable 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. Furthermore, “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. Condition: During testing, we noted that the City does not have a procurement policy in place that follows Uniform Guidance. Also, we noted that the City entered into two covered transactions with vendors who were not reviewed for suspension and debarment before entering into these transactions. Questioned Costs: None. Context: The City does not have a procurement policy that follows Uniform Guidance. Also, we tested two vendors who were not reviewed for suspension and debarment from a population of two. Cause: Management Oversight. Effect: The City is not in compliance with Uniform Guidance. Also, there is an increased risk of the City entering into a covered transaction with an entity that is suspended or debarred from receiving federal funds. Repeat Finding: No. Recommendation: The City should implement a written procurement policy that follows Uniform Guidance. Furthermore, vendors should be reviewed for suspension and debarment before entering into a covered transaction. View of Responsible Officials: The City agrees with the recommendation.

2022-002 - Procurement, Suspension & Debarment Federal Program Information: ALN - 20.205 - Highway Planning and Construction Cluster Criteria: The following CFR(s) apply to this finding: 2 CFR section 200.318(a) Condition: During audit procedures, it was identified that the Town did not have a procurement policy in place. Cause: The Town needs to adopt a procurement policy to comply with Uniform Guidance. Effect: Procurements might not conform to applicable Federal laws. Identification of Questioned Costs: None identified. Context: The entire population Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the Town adopt a procurement policy that follows the Uniform Guidance and that the Town implement internal control processes and procedures to ensure that the adopted policy is followed. Views of Responsible Officials and Corrective Action Plan: Client agrees with finding, and a version of their response can be found in the Corrective Action Plan. Please see the Corrective Action Plan issued by the Town of Brownington.

Finding 2022-002: Procurement and Suspension and Debarment  Assistance Listing Number: 19.510  Federal Program: U.S. Refugee Admissions Program  Federal Agency: U.S. Department of State  Pass-Through Entity: Church World Service  Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: Per guidance 2 CFR section 200.320, non-Federal entities must have and use documented procurement procedures, consistent with the standards of 2 CFR sections 200.320, 200.317, 200.318, and 200.319. Condition: We noted Team Rubicon’s procurement policy was missing key detail, including procurement procedures related to conflicts of interest, the search for suspended and debarred parties, and approved methods of procurement, including the specific situations where noncompetitive procurement is appropriate. Cause: The error was primarily due to a misunderstanding of certain federal compliance requirements. Effect or Potential Effect: A failure to identify federal compliance requirements could result in Team Rubicon not being in compliance with federal statutes, regulations and the terms and conditions of federal awards. Questioned Costs: None noted Context: During the year ended December 31, 2022, Team Rubicon was a recipient of a federal award, making Team Rubicon a subrecipient of the award and subject to certain federal compliance requirements including Procurement and Suspension and Debarment. Repeat Finding: Not applicable Recommendation: Management is responsible for establishing controls and procedures to ensure compliance with federal statutes, regulations and the terms and conditions of the federal awards. Views of Responsible Official: Management agrees and acknowledges the finding.

Finding 2022-007 – Procurement US Department of the Treasury – COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (ARPA) (ALN 21.027) Condition: The City could not provide evidence that the stormwater project totaling $1,783,033 for the year ended December 31, 2022 followed formal procurement procedures. The stormwater contract exceeds the Uniform Guidance formal procurement methods. In addition, in accordance with the Uniform Guidance, a purchase price from the Commonwealth of Pennsylvania COSTARS cooperative purchasing program is considered to be only one competitive price proposal and it cannot replace a full procurement process. Criteria: In accordance with Uniform Guidance procurement requirements found in 2 CFR Part 200.318 through 200.327, the City is required to ensure that procurement methods used for purchases are appropriate based on the dollar amount of the purchase. Cause: Procedures in place to ensure that the proper procurement process is followed were not adequate. Effect: The City was not in compliance with the procurement requirements of the Uniform Guidance. Repeat Finding: Yes Questioned costs: Unknown Recommendation: We recommend that the City establish procedures to ensure that their purchasing policy follows Uniform Guidance procurement standards. View of Responsible Official: The City agrees. See the corrective action plan.

Finding 2022-007 – Procurement US Department of the Treasury – COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (ARPA) (ALN 21.027) Condition: The City could not provide evidence that the stormwater project totaling $1,783,033 for the year ended December 31, 2022 followed formal procurement procedures. The stormwater contract exceeds the Uniform Guidance formal procurement methods. In addition, in accordance with the Uniform Guidance, a purchase price from the Commonwealth of Pennsylvania COSTARS cooperative purchasing program is considered to be only one competitive price proposal and it cannot replace a full procurement process. Criteria: In accordance with Uniform Guidance procurement requirements found in 2 CFR Part 200.318 through 200.327, the City is required to ensure that procurement methods used for purchases are appropriate based on the dollar amount of the purchase. Cause: Procedures in place to ensure that the proper procurement process is followed were not adequate. Effect: The City was not in compliance with the procurement requirements of the Uniform Guidance. Repeat Finding: Yes Questioned costs: Unknown Recommendation: We recommend that the City establish procedures to ensure that their purchasing policy follows Uniform Guidance procurement standards. View of Responsible Official: The City agrees. See the corrective action plan.

2022-001 – Procurement and Suspension and Debarment Finding Type: Material Noncompliance; Material Weakness in Internal Control over Compliance Program: Rural Communities Opioid Response – Planning/Rural Health Outreach and Rural Network Development Program (AL# 93.912); U.S. Department of Health and Human Services; Direct award; all grant numbers. Criteria: Non-federal entities must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. Condition: The Organization's procurement policies were not complete and the Organization did not follow the federal procurement standards which provides specific guidance including process and documentation requirements necessary to be in compliance as required by the 2 CFR sections 200.318 through 200.326. Cause: The Organization’s procurement policies do not include the federal procurement requirements noted at 2 CFR section 200.318 through 200.326. Additionally, the Organization did not maintain the required procurement documentation, provide for full and open competition, or provide support for limitation of such competition. Effect: Future procurement arrangements may not meet the federal guidelines necessary for projects funded by federal sources. The Organization may have to pay back funds received for a project where federal funds were used for the procurement of products or services, but the required federal process was not met. Questioned Costs: No costs were questioned as a result of this finding. Recommendation: The Organization should update their procurement policy to include all requirements as noted in 2 CFR sections 200.318-200.326 and ensure that all future agreements follow the required processes. View of Responsible Officials: Management agrees with the finding and plans to update their procurement policy.

2022-001 – Procurement and Suspension and Debarment Finding Type: Material Noncompliance; Material Weakness in Internal Control over Compliance Program: Rural Communities Opioid Response – Planning/Rural Health Outreach and Rural Network Development Program (AL# 93.912); U.S. Department of Health and Human Services; Direct award; all grant numbers. Criteria: Non-federal entities must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. Condition: The Organization's procurement policies were not complete and the Organization did not follow the federal procurement standards which provides specific guidance including process and documentation requirements necessary to be in compliance as required by the 2 CFR sections 200.318 through 200.326. Cause: The Organization’s procurement policies do not include the federal procurement requirements noted at 2 CFR section 200.318 through 200.326. Additionally, the Organization did not maintain the required procurement documentation, provide for full and open competition, or provide support for limitation of such competition. Effect: Future procurement arrangements may not meet the federal guidelines necessary for projects funded by federal sources. The Organization may have to pay back funds received for a project where federal funds were used for the procurement of products or services, but the required federal process was not met. Questioned Costs: No costs were questioned as a result of this finding. Recommendation: The Organization should update their procurement policy to include all requirements as noted in 2 CFR sections 200.318-200.326 and ensure that all future agreements follow the required processes. View of Responsible Officials: Management agrees with the finding and plans to update their procurement policy.

2022-001 – Procurement and Suspension and Debarment Finding Type: Material Noncompliance; Material Weakness in Internal Control over Compliance Program: Rural Communities Opioid Response – Planning/Rural Health Outreach and Rural Network Development Program (AL# 93.912); U.S. Department of Health and Human Services; Direct award; all grant numbers. Criteria: Non-federal entities must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. Condition: The Organization's procurement policies were not complete and the Organization did not follow the federal procurement standards which provides specific guidance including process and documentation requirements necessary to be in compliance as required by the 2 CFR sections 200.318 through 200.326. Cause: The Organization’s procurement policies do not include the federal procurement requirements noted at 2 CFR section 200.318 through 200.326. Additionally, the Organization did not maintain the required procurement documentation, provide for full and open competition, or provide support for limitation of such competition. Effect: Future procurement arrangements may not meet the federal guidelines necessary for projects funded by federal sources. The Organization may have to pay back funds received for a project where federal funds were used for the procurement of products or services, but the required federal process was not met. Questioned Costs: No costs were questioned as a result of this finding. Recommendation: The Organization should update their procurement policy to include all requirements as noted in 2 CFR sections 200.318-200.326 and ensure that all future agreements follow the required processes. View of Responsible Officials: Management agrees with the finding and plans to update their procurement policy.

2022-001 – Procurement and Suspension and Debarment Finding Type: Material Noncompliance; Material Weakness in Internal Control over Compliance Program: Rural Communities Opioid Response – Planning/Rural Health Outreach and Rural Network Development Program (AL# 93.912); U.S. Department of Health and Human Services; Direct award; all grant numbers. Criteria: Non-federal entities must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. Condition: The Organization's procurement policies were not complete and the Organization did not follow the federal procurement standards which provides specific guidance including process and documentation requirements necessary to be in compliance as required by the 2 CFR sections 200.318 through 200.326. Cause: The Organization’s procurement policies do not include the federal procurement requirements noted at 2 CFR section 200.318 through 200.326. Additionally, the Organization did not maintain the required procurement documentation, provide for full and open competition, or provide support for limitation of such competition. Effect: Future procurement arrangements may not meet the federal guidelines necessary for projects funded by federal sources. The Organization may have to pay back funds received for a project where federal funds were used for the procurement of products or services, but the required federal process was not met. Questioned Costs: No costs were questioned as a result of this finding. Recommendation: The Organization should update their procurement policy to include all requirements as noted in 2 CFR sections 200.318-200.326 and ensure that all future agreements follow the required processes. View of Responsible Officials: Management agrees with the finding and plans to update their procurement policy.

U.S. Department of Treasury Program Name: Coronavirus State and Local Fiscal Recovery Fund Assistance Listing Number 21.027 Internal Control Over Procurement Criteria: 2 CFR Part 200.318, requires grant recipients to follow the procurement standards established by their state and their own policies as long as those standards meet federal requirements. The County’s procurement standards meet federal and state requirements. Condition: During our testing of the Coronavirus State and Local Fiscal Recovery Fund (“ARPA”), it was discovered that the County did not adhere to its established Procurement Policy as multiple contractors were engaged without any formal quote or a bid. Possible Effects: The County could unintentionally enter into a contract that the County’s governance would deem unsuitable were the proper policy followed. Questioned Costs: $633,457. Context/Effect: We tested four contractors paid with ARPA funds who were engaged without a formal approval, quote or competitive bid. Cause: The County did not adhere to its established Procurement Policy, and did not adhere to the Uniform Guidance requirements to ensure free and open competition. Recommendation: We recommend the County review its process for awarding all contracts paid with federal funding to ensure free and open competition in accordance with federal guidelines. Management's Response: We agree and have taken proactive measures within the Purchasing Department to enhance training and awareness among our staff. Additionally, the Grant division has been reinforcing the importance of adhering to Federal grant guidelines regarding procurement. We will continue to monitor and improve our processes to ensure compliance with established guidelines.

Criteria: Uniform Guidance [(CFR 2, §200.318(c)(1)] requires a non-federal entity must maintain written standards of conduct covering conflicts of interest and governing the action of its employees engaged in the selection, award and administration of contracts. Condition: The District does not have a written conflict of interest policy. Context: During our consideration of compliance requirements of Uniform Guidance, we noted the District had not adopted a conflict of interest policy. Effect: The District is not in compliance with requirements of Uniform Guidance. Cause of Condition: The District has not finalized its evaluation of existing policies for compliance with Uniform Guidance requirements. Recommendation: We recommend the District finalize its evaluation of existing policies and formally adopt a written conflict of interest policy. Views of Responsible Officials and Planned Corrective Actions: The District concurs with the recommendation to adopt a written conflict of interest policy and the District has implemented a written conflict of interest policy for the next fiscal year.

Criteria: Uniform Guidance [(CFR 2, §200.318] requires that any entity expending over $750,000 in federal funds to adopt a procurement policy that aligns with the requirements of Uniform Guidance. Condition: The District does not have a procurement policy. Context: During our consideration of compliance requirements, we noted that the District does not have a written procurement policy. Effect: The District is not in compliance with the requirements of Uniform Guidance. Cause of Condition: The District has not finalized its evaluation of existing policies and formally adopt a written procurement policy. Recommendation: The District should finalize its evaluation of existing policies and formally adopt a written procurement policy that is in compliance with the Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: The District concurs with the recommendation to adopt a written procurement policy and will adopt one for the next fiscal year.

2022-006 Procurement and Suspension and Debarment Prior Year Finding Number: 2021-006 Repeat Finding Since: 2020 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Transportation and U.S. Department of the Treasury Program: 20.205 Highway Planning and Construction, 21.027 COVID-19 — Coronavirus State and Local Fiscal Recovery Funds Award Number and Year: Assistance Listing Number Award Number Year 20.205 1052136 2022 21.027 Federal Direct 2022 Pass-Through Agency: Assistance Listing Number Pass-Through Agency 20.205 Minnesota Department of Transportation 21.027 Not applicable Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. In addition, Title 2 U.S. Code of Federal Regulations § 200.318 states that 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 with applicable federal law and the standards identified in this regulation. Lastly, 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 Title 2 U.S. Code of Federal Regulations § 180.220. Condition: The County has written procurement policies; however, these policies do not include the required components in accordance with Title 2 U.S. Code of Federal Regulations § 200.318. In addition, in the sample of two covered transactions tested, the verification for suspension and debarment was not performed before entering into the covered transactions. Questioned Costs: None. Context: This issue was discovered during the audit of the major federal programs; however, it impacts federal programs county-wide. Written policies that reflect the specific components of federal regulations improve controls to help ensure compliance with federal award requirements. The vendors were determined in the audit to not be suspended or debarred for the two covered transactions sampled. The County has drafted updated procurement policies to include components of the federal procurement requirements; these are pending review and approval by the Board of County Commissioners. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Written policies and procedures that are not updated to reflect the federal procurement requirements increase the risk of noncompliance with federal program requirements. Failure to verify vendors are not suspended or debarred may result in the County entering into a transaction with a vendor that is not authorized to provide goods and services. Cause: The County has not prioritized updating its Procurement Policy for changes arising from federal procurement requirements due to the County not entering into many procurement contracts in its federal programs outside of highway contracts. In addition, Coronavirus State and Local Fiscal Recovery Funds were spent prior to the County determining they would be funded with federal funds and subject to suspension and debarment requirements. Recommendation: We recommend the County include the specific components of the federal procurement requirements in its written procurement policies and procedures. We also recommend the County establish policies and procedures to ensure it does not enter into covered transactions with parties that are suspended or debarred. View of Responsible Official: Acknowledge

2022-006 Procurement and Suspension and Debarment Prior Year Finding Number: 2021-006 Repeat Finding Since: 2020 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Transportation and U.S. Department of the Treasury Program: 20.205 Highway Planning and Construction, 21.027 COVID-19 — Coronavirus State and Local Fiscal Recovery Funds Award Number and Year: Assistance Listing Number Award Number Year 20.205 1052136 2022 21.027 Federal Direct 2022 Pass-Through Agency: Assistance Listing Number Pass-Through Agency 20.205 Minnesota Department of Transportation 21.027 Not applicable Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. In addition, Title 2 U.S. Code of Federal Regulations § 200.318 states that 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 with applicable federal law and the standards identified in this regulation. Lastly, 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 Title 2 U.S. Code of Federal Regulations § 180.220. Condition: The County has written procurement policies; however, these policies do not include the required components in accordance with Title 2 U.S. Code of Federal Regulations § 200.318. In addition, in the sample of two covered transactions tested, the verification for suspension and debarment was not performed before entering into the covered transactions. Questioned Costs: None. Context: This issue was discovered during the audit of the major federal programs; however, it impacts federal programs county-wide. Written policies that reflect the specific components of federal regulations improve controls to help ensure compliance with federal award requirements. The vendors were determined in the audit to not be suspended or debarred for the two covered transactions sampled. The County has drafted updated procurement policies to include components of the federal procurement requirements; these are pending review and approval by the Board of County Commissioners. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Written policies and procedures that are not updated to reflect the federal procurement requirements increase the risk of noncompliance with federal program requirements. Failure to verify vendors are not suspended or debarred may result in the County entering into a transaction with a vendor that is not authorized to provide goods and services. Cause: The County has not prioritized updating its Procurement Policy for changes arising from federal procurement requirements due to the County not entering into many procurement contracts in its federal programs outside of highway contracts. In addition, Coronavirus State and Local Fiscal Recovery Funds were spent prior to the County determining they would be funded with federal funds and subject to suspension and debarment requirements. Recommendation: We recommend the County include the specific components of the federal procurement requirements in its written procurement policies and procedures. We also recommend the County establish policies and procedures to ensure it does not enter into covered transactions with parties that are suspended or debarred. View of Responsible Official: Acknowledge

#2022-007 – Significant Deficiency – Special Tests Criteria Uniform Guidance (UG) requires non-Federal entities that receive grant funding to have written policies in the following areas: Internal Controls (2 CFR 200.303) Travel (2 CFR 200.474) Financial Management and Accounting which includes Cash Management and Allowability (2CFR 200.302) Personnel Compensation – Time and Effort Reporting (2CFR 200.430(i)) Conflict of Interest/Disclosures (2CFR 200.318) Procurement (2CFR 200.319) Condition During the audit we noted that the Organization does not have written policies in place over these areas in accordance with UG. Cause The Organization was not aware of the requirement to have these written policies in place. Effect The potential effect of not having these policies in place is that the Organization’s expenses are not in accordance with UG. Questioned Costs None Perspective Information No policies or procedures were noted that are in accordance with UG. As a response to the prior year finding, the Organization noted that they will add policies to the fiscal manual for future compliance. Identification as a repeat finding A similar issue was noted in prior year finding #2021-007. Recommendation We recommend that the Organization update the fiscal manual to include policies that are compliant with UG.

#2022-007 – Significant Deficiency – Special Tests Criteria Uniform Guidance (UG) requires non-Federal entities that receive grant funding to have written policies in the following areas: Internal Controls (2 CFR 200.303) Travel (2 CFR 200.474) Financial Management and Accounting which includes Cash Management and Allowability (2CFR 200.302) Personnel Compensation – Time and Effort Reporting (2CFR 200.430(i)) Conflict of Interest/Disclosures (2CFR 200.318) Procurement (2CFR 200.319) Condition During the audit we noted that the Organization does not have written policies in place over these areas in accordance with UG. Cause The Organization was not aware of the requirement to have these written policies in place. Effect The potential effect of not having these policies in place is that the Organization’s expenses are not in accordance with UG. Questioned Costs None Perspective Information No policies or procedures were noted that are in accordance with UG. As a response to the prior year finding, the Organization noted that they will add policies to the fiscal manual for future compliance. Identification as a repeat finding A similar issue was noted in prior year finding #2021-007. Recommendation We recommend that the Organization update the fiscal manual to include policies that are compliant with UG.

FINDING 2022-003Subject: COVID-19 - Coronavirus State and Local Fiscal RecoveryFunds - Procurement and Suspension and DebarmentFederal Agency: Department of the TreasuryFederal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery FundsAssistance Listings Number: 21.027Federal Award Numbers and Years (or Other Identifying Numbers): FY 2021, SWIF222533Pass-Through Entities: Direct, Indiana Finance AuthorityCompliance Requirement: Procurement and Suspension and DebarmentAudit Findings: Material Weakness, Modified OpinionCondition and ContextProcurementThe Indiana General Assembly allocated $100 million of federal State and Local FiscalRecovery Funds (SLFRF) to the Indiana Finance Authority (IFA) to provide grants for drinkingwater, stormwater, and wastewater projects that protect and improve public health throughoutthe State. As such, the IFA created the Water Infrastructure Grant Program which consists oftwo grants, the State Water Infrastructure Fund (SWIF) and Transportation and Stormwater(TRSW). The City applied for and was awarded a SWIF grant in the amount of $5,500,000.Federal regulations allow for informal procurement methods when the value of the procurementfor property or services does not exceed the simplified acquisition threshold, which is customarilyset at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of$150,000 or less for when small purchase procedures may be used. Indiana Code providesthat the proper purchasing method would be the bidding process, unless the purchase meetscertain other qualifications.Two vendors fell within the simplified acquisition threshold. The total dollar value of the twocovered transactions was $8,825,455. Of that amount, $1,880,565 was paid to the vendors in2022. For one vendor, paid $365,512, the City did not have contract files to document thehistory of the procurement, including the rationale for the method of procurement, nor selectionof the contract. In addition, there was no documentation that a cost or price analysis wasperformed.The lack of internal controls and noncompliance were systemic throughout the audit period.Suspension and DebarmentThe City elected to receive the standard revenue loss allowance, allowing them to claim theirtotal SLFRF allocation from the U.S. Department of the Treasury (Treasury) of $3,863,645 asrevenue loss to use for government services. As such, all SLFRF program funds wereexpended under the revenue loss eligible use category. The Treasury determined that thereare no subawards under this eligible use category, and that recipients' use of revenue lossfunds would not give rise to subrecipient relationships given that there is no federal program orpurpose to carry out in the case of the revenue loss portion of the award. In addition, the City'sSWIF award funded with SLFRF program funds, in the amount of $5,500,000, is subject tosuspension and debarment requirements.Prior to entering into subawards and covered transactions with SLFRF award funds, recipientsare required to verify that such contractors and subrecipients are not suspended, debarred, orotherwise excluded. "Covered transactions" include, but are not limited to, contracts for goodsand services awarded under a non-procurement transaction (i.e., grant agreement) that areexpected to equal or exceed $25,000. The verification is to be done by checking the ExcludedParties List System (EPLS), collecting a certification from that person, or adding a clause orcondition to the covered transaction with that person. Due to the Treasury's determination thatthe revenue loss eligible use category does not give rise to subawards and the fact the City didsubgrant any of its SWIF award, the City was only required to comply with suspension anddebarment requirements related to covered transactions.Upon inquiry of the City in order to review the procedures in place for verifying that an entitywith which it plans to enter into a covered transaction is not suspended, debarred, or otherwiseexcluded, the City divulged that they were unaware of the suspension and debarment requirementsrelated to the SLFRF awards. Nine covered transactions that equaled or exceeded$25,000 were identified. All nine transactions, totaling $2,339,050, were selected for testing.The City did not verify the vendors' suspension and debarment status prior to payment on anyof the covered transactions due to the City not having any policies or procedures in place toverify that contractors were neither suspended nor debarred, or otherwise excluded or disqualifiedfrom participating in federal assistance programs or activities.The lack of internal controls and noncompliance were systemic issues throughout the audit period.Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."2 CFR 200.318 states in part:"(a) The non-Federal entity must have and use documented procurement procedures,consistent with State, local, and tribal laws and regulations and the standards of this section,for the acquisition of property or services required under a Federal award or subaward. Thenon-Federal entity's documented procurement procedures must conform to the procurementstandards identified in this part. . . .(i) The non-Federal entity must maintain records sufficient to detail the history of procurement.These records will include, but are not necessarily limited to, the following: Rationalefor the method of procurement, selection of contract type, contractor selection or rejection, andthe basis for the contract price. . . ."CauseA proper system of internal controls was not designed by management of the City. Embeddedwithin a properly designed and implemented internal control system should be internal controls consistingof policies and procedures. Policies reflect the City's management statements of what should be done toeffect internal controls, and procedures should consist of actions that would implement these policies.EffectWithout the proper implementation of an effectively designed system of internal controls, theinternal control system cannot be capable of effectively preventing, or detecting and correcting, materialnoncompliance. As a result, proper procurement procedures were not adhered to for all vendors andvendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended,debarred, or otherwise excluded.Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions ofthe federal award could result in the loss of future federal funding to the City.Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that management of the City establish a proper system of internal controls anddevelop policies and procedures to ensure proper procurement methods are adhered to for all purchasesof good and services and that contractors and subrecipients, as appropriate are not suspended, debarred,or otherwise excluded prior to entering into any contracts or subawards.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2022-003Subject: COVID-19 - Coronavirus State and Local Fiscal RecoveryFunds - Procurement and Suspension and DebarmentFederal Agency: Department of the TreasuryFederal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery FundsAssistance Listings Number: 21.027Federal Award Numbers and Years (or Other Identifying Numbers): FY 2021, SWIF222533Pass-Through Entities: Direct, Indiana Finance AuthorityCompliance Requirement: Procurement and Suspension and DebarmentAudit Findings: Material Weakness, Modified OpinionCondition and ContextProcurementThe Indiana General Assembly allocated $100 million of federal State and Local FiscalRecovery Funds (SLFRF) to the Indiana Finance Authority (IFA) to provide grants for drinkingwater, stormwater, and wastewater projects that protect and improve public health throughoutthe State. As such, the IFA created the Water Infrastructure Grant Program which consists oftwo grants, the State Water Infrastructure Fund (SWIF) and Transportation and Stormwater(TRSW). The City applied for and was awarded a SWIF grant in the amount of $5,500,000.Federal regulations allow for informal procurement methods when the value of the procurementfor property or services does not exceed the simplified acquisition threshold, which is customarilyset at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of$150,000 or less for when small purchase procedures may be used. Indiana Code providesthat the proper purchasing method would be the bidding process, unless the purchase meetscertain other qualifications.Two vendors fell within the simplified acquisition threshold. The total dollar value of the twocovered transactions was $8,825,455. Of that amount, $1,880,565 was paid to the vendors in2022. For one vendor, paid $365,512, the City did not have contract files to document thehistory of the procurement, including the rationale for the method of procurement, nor selectionof the contract. In addition, there was no documentation that a cost or price analysis wasperformed.The lack of internal controls and noncompliance were systemic throughout the audit period.Suspension and DebarmentThe City elected to receive the standard revenue loss allowance, allowing them to claim theirtotal SLFRF allocation from the U.S. Department of the Treasury (Treasury) of $3,863,645 asrevenue loss to use for government services. As such, all SLFRF program funds wereexpended under the revenue loss eligible use category. The Treasury determined that thereare no subawards under this eligible use category, and that recipients' use of revenue lossfunds would not give rise to subrecipient relationships given that there is no federal program orpurpose to carry out in the case of the revenue loss portion of the award. In addition, the City'sSWIF award funded with SLFRF program funds, in the amount of $5,500,000, is subject tosuspension and debarment requirements.Prior to entering into subawards and covered transactions with SLFRF award funds, recipientsare required to verify that such contractors and subrecipients are not suspended, debarred, orotherwise excluded. "Covered transactions" include, but are not limited to, contracts for goodsand services awarded under a non-procurement transaction (i.e., grant agreement) that areexpected to equal or exceed $25,000. The verification is to be done by checking the ExcludedParties List System (EPLS), collecting a certification from that person, or adding a clause orcondition to the covered transaction with that person. Due to the Treasury's determination thatthe revenue loss eligible use category does not give rise to subawards and the fact the City didsubgrant any of its SWIF award, the City was only required to comply with suspension anddebarment requirements related to covered transactions.Upon inquiry of the City in order to review the procedures in place for verifying that an entitywith which it plans to enter into a covered transaction is not suspended, debarred, or otherwiseexcluded, the City divulged that they were unaware of the suspension and debarment requirementsrelated to the SLFRF awards. Nine covered transactions that equaled or exceeded$25,000 were identified. All nine transactions, totaling $2,339,050, were selected for testing.The City did not verify the vendors' suspension and debarment status prior to payment on anyof the covered transactions due to the City not having any policies or procedures in place toverify that contractors were neither suspended nor debarred, or otherwise excluded or disqualifiedfrom participating in federal assistance programs or activities.The lack of internal controls and noncompliance were systemic issues throughout the audit period.Criteria2 CFR 200.303 states in part:"The non-Federal entity must:(a) Establish and maintain effective internal control over the Federal award that providesreasonable assurance that the non-Federal entity is managing the Federal award incompliance with Federal statutes, regulations, and the terms and conditions of the Federalaward. These internal controls should be in compliance with guidance in 'Standards forInternal Control in the Federal Government' issued by the Comptroller General of theUnited States or the 'Internal Control Integrated Framework', issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO). . . ."2 CFR 200.318 states in part:"(a) The non-Federal entity must have and use documented procurement procedures,consistent with State, local, and tribal laws and regulations and the standards of this section,for the acquisition of property or services required under a Federal award or subaward. Thenon-Federal entity's documented procurement procedures must conform to the procurementstandards identified in this part. . . .(i) The non-Federal entity must maintain records sufficient to detail the history of procurement.These records will include, but are not necessarily limited to, the following: Rationalefor the method of procurement, selection of contract type, contractor selection or rejection, andthe basis for the contract price. . . ."CauseA proper system of internal controls was not designed by management of the City. Embeddedwithin a properly designed and implemented internal control system should be internal controls consistingof policies and procedures. Policies reflect the City's management statements of what should be done toeffect internal controls, and procedures should consist of actions that would implement these policies.EffectWithout the proper implementation of an effectively designed system of internal controls, theinternal control system cannot be capable of effectively preventing, or detecting and correcting, materialnoncompliance. As a result, proper procurement procedures were not adhered to for all vendors andvendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended,debarred, or otherwise excluded.Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions ofthe federal award could result in the loss of future federal funding to the City.Questioned CostsThere were no questioned costs identified.RecommendationWe recommended that management of the City establish a proper system of internal controls anddevelop policies and procedures to ensure proper procurement methods are adhered to for all purchasesof good and services and that contractors and subrecipients, as appropriate are not suspended, debarred,or otherwise excluded prior to entering into any contracts or subawards.Views of Responsible OfficialsFor the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2022-001 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Numbers and Years (or Other Identifying Numbers): IN0429, SWIF221472 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 13CITY OF SCOTTSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Procurement - Policy Non-federal entities must follow procurement standards set out in the Code of Federal Regulations (CFR) in addition to its 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 idented in 2 CFR Part 200. The City did not have its own documented procurement procedures or policies that reflected applicable state laws and regulations or federal statutes for procuring goods and services paid with federal funds. Procurement Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Two vendors were identified with total purchases that fell within the small purchase threshold. Price or rate quotes were not obtained, nor was full and open competition provided for either vendor. Additionally, there was no documentation available to support the rationale to limit competition. Simplified Acquisition Threshold When the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a non-federal entity, formal procurement methods are required. The SAT is typically set at $250,000; however, Indiana Code 5-22-8 has a more restrictive threshold, and, therefore, the SAT is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. Under the formal proposal method, the non-federal entity may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated, and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where prices are not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. INDIANA STATE BOARD OF ACCOUNTS 14CITY OF SCOTTSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Five vendors were identified with total purchases that fell within the SAT. One of the five vendors tested, which was for A/E professional services, did not have contract files, including sealed bids or proposals, to document the history of procurement, selection of contract type, or the basis for the contract. Additionally, there was no documentation available to support the rationale to limit competition nor was a cost or price analysis performed in connection with procurement. Conflict of Interest Policy Although conflicts of interest were addressed in the City's Employee Policy and Procedure Manual (manual), the manual did not include standards of conduct covering conflicts of interest nor govern the actions of its employees engaged in selection, award, and administration of contracts supported by federal awards. Suspension and Debarment Prior to entering into subawards and covered transactions with the State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The City did not have any policies or procedures in place related to the SLFRF suspension and debarment requirements. A population of four covered transactions, totaling $1,507,088, that equaled or exceeded $25,000 paid from the SLFRF funds were identified. All four covered transactions were selected for testing. For each of the four transactions, the City did not verify the vendors' suspension or debarment status prior to payment due to the City not having any policies or procedures in place to verify that contractors were neither suspended nor debarred, or otherwise excluded or disqualified, from participating in federal assistance programs or activities. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 15CITY OF SCOTTSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in ?? 200.317 through 200.327. . . . (c) (1) 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. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases ? (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with ? 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the nonFederal entity determines to be appropriate: INDIANA STATE BOARD OF ACCOUNTS 16CITY OF SCOTTSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or costreimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; INDIANA STATE BOARD OF ACCOUNTS 17CITY OF SCOTTSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and (iv) The non-Federal entity may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls over procurement and suspension and debarment was not implemented by the management of the City to ensure that goods and services were properly procured and that vendors to whom payment equaled or exceeded $25,000 were not suspended or debarred. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management statements of what should be done to effect internal controls and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, property and services were not properly procured and vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned cost identified. Recommendations We recommended that management of the City establish a proper system of internal controls and develop procedures to ensure that property and services are properly procured and that contractors are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. INDIANA STATE BOARD OF ACCOUNTS 18CITY OF SCOTTSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the view of the responsible officials, refer to the Corrective Action plan that is part of this report.

FINDING 2022-001 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Numbers and Years (or Other Identifying Numbers): IN0429, SWIF221472 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 13CITY OF SCOTTSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Procurement - Policy Non-federal entities must follow procurement standards set out in the Code of Federal Regulations (CFR) in addition to its 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 idented in 2 CFR Part 200. The City did not have its own documented procurement procedures or policies that reflected applicable state laws and regulations or federal statutes for procuring goods and services paid with federal funds. Procurement Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Two vendors were identified with total purchases that fell within the small purchase threshold. Price or rate quotes were not obtained, nor was full and open competition provided for either vendor. Additionally, there was no documentation available to support the rationale to limit competition. Simplified Acquisition Threshold When the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a non-federal entity, formal procurement methods are required. The SAT is typically set at $250,000; however, Indiana Code 5-22-8 has a more restrictive threshold, and, therefore, the SAT is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. Under the formal proposal method, the non-federal entity may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated, and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where prices are not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. INDIANA STATE BOARD OF ACCOUNTS 14CITY OF SCOTTSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Five vendors were identified with total purchases that fell within the SAT. One of the five vendors tested, which was for A/E professional services, did not have contract files, including sealed bids or proposals, to document the history of procurement, selection of contract type, or the basis for the contract. Additionally, there was no documentation available to support the rationale to limit competition nor was a cost or price analysis performed in connection with procurement. Conflict of Interest Policy Although conflicts of interest were addressed in the City's Employee Policy and Procedure Manual (manual), the manual did not include standards of conduct covering conflicts of interest nor govern the actions of its employees engaged in selection, award, and administration of contracts supported by federal awards. Suspension and Debarment Prior to entering into subawards and covered transactions with the State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The City did not have any policies or procedures in place related to the SLFRF suspension and debarment requirements. A population of four covered transactions, totaling $1,507,088, that equaled or exceeded $25,000 paid from the SLFRF funds were identified. All four covered transactions were selected for testing. For each of the four transactions, the City did not verify the vendors' suspension or debarment status prior to payment due to the City not having any policies or procedures in place to verify that contractors were neither suspended nor debarred, or otherwise excluded or disqualified, from participating in federal assistance programs or activities. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 15CITY OF SCOTTSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in ?? 200.317 through 200.327. . . . (c) (1) 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. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases ? (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with ? 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the nonFederal entity determines to be appropriate: INDIANA STATE BOARD OF ACCOUNTS 16CITY OF SCOTTSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or costreimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; INDIANA STATE BOARD OF ACCOUNTS 17CITY OF SCOTTSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and (iv) The non-Federal entity may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls over procurement and suspension and debarment was not implemented by the management of the City to ensure that goods and services were properly procured and that vendors to whom payment equaled or exceeded $25,000 were not suspended or debarred. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management statements of what should be done to effect internal controls and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, property and services were not properly procured and vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned cost identified. Recommendations We recommended that management of the City establish a proper system of internal controls and develop procedures to ensure that property and services are properly procured and that contractors are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. INDIANA STATE BOARD OF ACCOUNTS 18CITY OF SCOTTSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the view of the responsible officials, refer to the Corrective Action plan that is part of this report.

Condition: The Land Bank has not adopted a written procurement policy. The Land Bank did not retain supporting documentation for procurements actions related to demolition contracts entered during the year ended December 31, 2022, with four demolition contractors totaling $196,698 that were selected for testing. Context: The Land Bank represented contractors were evaluated by analyzing City of Wilmington demolition permit information. The Land Bank did not retain documentation of this analysis to support its procurement actions. Criteria: CFR § 200.318, General Procurement Standards and § 200.320 Methods of Procurement to be Followed,of the Uniform Guidance apply to the State and Local Fiscal Recovery Funds Program and require the following: i. The Land Bank must adopt documented procurement procedures that are consistent with the applicable State, local and federal regulations. ii. The Land Bank’s documented procurement procedures must include the following elements at a minimum: a. Micro-purposes - purchases up to $50,000 may be made without soliciting competitive price or rate quotations if the price is considered reasonable. b. Small Purchases - purchases between $50,000 and $250,000 may be made with soliciting competitive price or rate quotations from an adequate number of qualified sources. c. Formal Procedures - purchases over $250,000 must be made by seal bid or competitive proposal. Cause: The Land Bank does not have a written procurement policy. Question Costs: None Effect: The Land Bank did comply with the Uniform Guidance requirement to adopt a procurement policy and did not fully document its procurements. Recommendation: We recommend Land Bank establish a procurement policy and prepare documentation for each procurement action.

SCHEDULE OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Stevens County January 1, 2022 through December 31, 2022 2022-001 The County’s internal controls were inadequate for ensuring compliance with federal procurement, suspension and debarment requirements. Assistance Listing Number and Title: 20.205 – Highway Planning and Construction; 21.027 – COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of Transportation, Federal Highway Administration; U.S. Department of the Treasury Federal Award/Contract Number: BRS-F334 (002), STRP-E331 (005), BHS-Z933 (003), BHOS-10BA (001), HSIP-000S (577), STRP-G333 (004), STRP-C331 (002), BROS-33GC (001), BROS-2033 (027), HSIP0000S (646) Pass-through Entity Name: Washington State Department of Transportation (WSDOT) Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-001 Background Highway Planning and Construction Cluster The objectives of the Highway Planning and Construction Cluster are to: (1) assist states in the planning and development of an integrated, interconnected transportation system important to interstate commerce and travel by constructing and rehabilitating the National Highway System, including interstate highways and most other public roads; (2) provide aid for the repair of federal-aid highways following disasters; (3) foster safe highway design and replace or rehabilitate structurally deficient or functionally obsolete bridges; and (4) to provide for other special purposes. In 2022, the County spent $879,956 in federal funding for road improvement projects. Coronavirus State and Local Fiscal Recovery Funds (SLFRF) 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 the COVID-19 pandemic caused a reduction in revenues collected, and make necessary investments in water, sewer or broadband infrastructure. In 2022, the County spent $2,458,654 in program funds. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Procurement Federal regulations require recipients to follow their own documented procurement procedures, which must conform to the Uniform Guidance procurement standards found in 2 CFR § 200.318-327. These procedures must reflect the most restrictive of applicable federal, state or local laws. When using federal funds to procure goods and services, governments must apply the more restrictive requirements of federal, state or local laws by either obtaining quotes or following a competitive procurement process, depending on the estimated cost of the procurement activity. Competitive bidding may be waived in certain circumstances, including via a “sole source exemption” when purchasing used vehicles. Governments must document the process and ensure they comply with applicable laws for waiving competitive bidding. Suspension and Debarment Federal requirements prohibit grant recipients from contracting with or purchasing from contractors who are suspended or debarred from doing business with the federal government. Whenever the County 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 that the contractors have not been suspended, debarred or otherwise excluded. The County may verify this by obtaining a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at sam.gov. The County must perform this verification before entering into the contract, and it must maintain documentation demonstrating compliance with this federal requirement. Description of Condition Procurement Although the County had a written procurement policy at the time of procurement for both federal programs, the policy did not conform to the most restrictive methods and thresholds for procuring public works projects, competitive proposals and small purchases. Additionally, the County’s policy did not include procedures for procuring transactions, such as micro-purchases, piggybacking, requesting proposals for architecture and engineering services, contract cost and price analysis, bonding requirements and more. Additionally, our audit of the SLFRF program found the County did not have effective internal controls for ensuring it complied with federal and state procurement requirements for sole source exemptions and small purchase procedures. The County did not properly declare a used ambulance purchase as a sole source exemption, but instead used a blanket emergency declaration for COVID-19, which was approved over two years prior to the procurement taking place. Also, the County does not have documentation that they declared this specific purchase as part of the COVID-19 emergency. The County also could not provide documentation demonstrating it obtained and retained more than one quote for an equipment purchase subject to small purchase procedures. Suspension and Debarment Our audit of the SLFRF program found the County’s controls were ineffective for ensuring it verified all contractors receiving $25,000 or more in federal funds were not suspended or debarred. Specifically, the County did not obtain a written certification, include a clause in the contract or search for exclusion records on sam.gov to verify that two contractors subject to this requirement were not suspended or debarred before entering into the contract with or purchasing from them. The County paid these contractors $269,160 in fiscal year 2022. We consider the deficiencies in internal controls for procurement for the Highway Planning and Construction Cluster to be a significant deficiency. We consider the deficiencies in internal controls for procurement and suspension and debarment for the SLFRF program to be material weaknesses that led to material noncompliance. Cause of Condition Procurement County employees and officials misunderstood the federal procurement standards. They thought that the County’s current procurement policy met the standards required under Uniform Guidance, as the policy states that “all employees shall follow the most restrictive, local, state or federal procurement policy when using Federal Grant Funds to be in compliance with the Code of Federal Requirements (2 CFR part 200).” For the Highway Planning and Construction Cluster program, County employees thought that following the Washington State Department of Transportation’s Local Agency Guidelines Manual and guidance from the Municipal Research and Services Center were sufficient for complying with federal procurement standards. Additionally, County staff responsible for procurement procedures for the SLFRF program misunderstood exemption requirements and did not specifically declare the ambulance purchase as either sole source or an emergency purchase. Additionally, staff were unaware that they should obtain and retain more than one quote to comply with small purchase procedures. Suspension and Debarment County staff responsible for reviewing purchases under SLFRF were aware of suspension and debarment verification requirements. However, they did not recognize the need to document and retain evidence of the sam.gov checks before the purchases. Effect of Condition Procurement Although the County’s policy did not conform to Uniform Guidance, our testing of the Highway Planning and Construction program found the County complied with federal requirements for competitive solicitation of public works contractors and purchases of goods and services. However, without updated written procurement procedures, the County is at greater risk of noncompliance with the most restrictive procedures when using federal funds to procure contractors and goods and services. Additionally, our audit of the SLFRF program found the County did not have documentation to support compliance with exemption requirements for a used ambulance purchase of $241,820 and small purchase requirements for an equipment purchase of $27,340. 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. Suspension and Debarment Our audit of the SLFRF program found the County paid two contractors more than $25,000 and did not verify their suspension and debarment statuses using one of the three allowable methods. Without this verification, the County increases its risk of awarding federal funds to contractors that are excluded from participating in federal programs. Any payments made to an ineligible party would be unallowable and the granting federal agency could potentially recover them. We subsequently verified the contractors were not suspended or debarred, so we are not questioning costs. Recommendation We recommend the County: • Review and update its written procurement policy to conform to Uniform Guidance requirements (2 CFR § 200.318-327) for all procurement activities • Strengthen internal controls to ensure it procures goods and services in accordance with federal regulations, state law and the County’s own procurement policies and procedures • Establish internal controls to verify all contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs and retain documentation demonstrating this compliance County’s Response The County will respond to each Audit Recommendation separately. SAO Recommendations: 1) Review and update its written procurement policy to conform to Uniform Guidance requirements (2 CFR 200.318-327) for all procurement activities. 2) Strengthen internal controls to ensure it procures goods and services in accordance with federal regulations, state law and the County's own procurement policies and procedures. 3) Establish internal controls to verify all contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs and retain documentation demonstrating this compliance. Response to 1) - On April 22, 2019, the County adopted Resolution #39-2019 to include language requiring that all of 2 CFR 200 be followed when using federal funds for procurement in response to the State Auditor's recommendations. The County has a single source audit every year and no further recommendations from the State Auditor were given and the corrective action was noted. The Audits for 2019 and 2020 found no further action on this subject. The 2021 federal audit was performed, and the exit interview resulted in a finding the same as in number 1 above. The exit interview was given on September 23, 2022. This is the start of budget season and a high and busy time of activity. The County lacks the resources to have dedicated staff to draft specific policies and relies of current staffing levels to address these issues. In drafting this policy, considerable research was conducted, a draft for review by all affected staff was circulated for comment, legal review was conducted and a new policy emphasizing subparts 318-327 was adopted on July 17, 2023. Further, an update of the County's Capital Asset and Inventory Policy adopted November 21, 2022, to include federal procurement rules was adopted as policy 2-2023 on July 25, 2023. Therefore, the County has taken corrective action to address this issue but lacked the resources to do so between the end of September and the end of the calendar year to cover 2022. Response to 2) - The State Auditor states the County did not follow the most restrictive applicable federal, state, or local laws and the federal procurement standards found in 2 CFR 200.318-327. The State Auditor further states that "the County did not properly declare a used ambulance purchase as a sole source exemption, but instead used an emergency declaration for COVID-19." While it is true that the County did rely on the emergency declaration and not note in the purchase authorization that the ambulance purchase was a sole source purchase, the County maintains this is supported by all applicable laws. The COVID-19 emergency was still in effect and the purchase was made solely to respond to a communicable disease that was thought to further spread. Ambulances that lacked proper equipment for transporting communicable disease patients put healthcare workers and first responders at high risk of human health issues. Resolution 30 2020 Declaring an emergency and Governor Proclamation 20-05 declaring a COVID-19 emergency was still in effect, as was a Presidential emergency declaration at the time of the purchase. RCW 38.52.070(2) specifically allows waiving oftime consuming procedures for purchases directly related to the emergency. Also, federal procurement standards as quoted below 2 CFR 320(c)(3) allow for noncompetitive procurement. People were dying and time was of the essence in obtaining proper transport equipment. We will also note that all Coronavirus State and Local Fiscal Recovery Fund purchases were reviewed and approved by County legal counsel. The County notes that more than one standard was met in 2 CFR 200.320(c) as this purchase meets both subparts 2 and 3 below, the County feels that this purchase did not require more internal controls. That being said, the County has trained personnel to document all conditions that apply in the future and has updated its federal procurement procedures per the September 23, 2022, recommendations. § 200.320 Methods of procurement to be followed. (c) 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)(l) 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. Response to 3) - The State Auditor noted that the County had failed to verify two contractors for suspension and disbarment using one of the three allowable methods. The County refutes this and an affidavit from the employee who verified this was submitted. However, despite having this legal document the State Auditor finds the county did not retain a screenshot of this process for its records. The County is unable to find anywhere in federal law having reviewed 2 CFR 200 including sections 318- 327 as well as 2 CFR 180, as quoted below, where documentation of this is required. Further, several staff members have been trained in federal procurement standards and this documentation requirement was not mentioned as a requirement. This being said, the County has trained all staff members dealing with federal dollars to take screen shots of the suspension and disbarment check on potential contractors. § 180.320 Must I verify that principals of my covered transactions are eligible to participate? Yes, you as a participant are responsible for determining whether any of your principals of your covered transactions is excluded or disqualified from participating in the transaction. You may decide the method and frequency by which you do so. You may, but you are not required to, check SAM Exclusions. In summary, the County has corrected all the State Auditor recommendations made in this audit findings as of this written response. Auditor’s Remarks As the County did not maintain documentation and declare a specific exemption for the ambulance purchase we could not verify that it complied with procurement requirements. In order to determine whether the County verified the contractors were not suspended or debarred, our office is required to review evidence that shows this verification was completed by the County prior to entering into a contract. An after-the-fact representation is not sufficient to meet this standard. We reaffirm our finding and 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 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. Title 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), establishes non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.