Criteria: Code of Federal Regulations, CFR 200.318-322, requires the non-Federal entity to have and use documented procurement procedures consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for the acquisition of property or services required under a Federal award or sub-award. For “formal purchases,” those where the aggregate dollar amount is higher than the simplified acquisition threshold, sealed bids are publicly solicited through an invitation and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid conforms with all the material terms and conditions of the invitation and is the lowest in price. Condition: During our testing, we noted one contract that did not include documentation demonstrating that competitive bids were obtained. Additionally, there was no evidence that due diligence was performed to substantiate the vendor’s designation as a sole source, nor was there documentation indicating that no other vendors could meet the district’s needs. Context: The matter was found in one of the two samples we reviewed. Questioned Cost: There is no questioned cost associated with this non-compliance. Cause: District relied on a letter from the vendor, believing that this was a sole source. Effect: This resulted in one contract totaling $632,765 being awarded without competitive bidding documentation. Recommendation: We recommend that the District comply with 2 CFR, section 200.318-322, which requires that an LEA maintain the documented procedures for procurement transactions under a federal award. Views of Responsible Officials: We agree with the auditor’s comments, and the following actions have or will be taken to ensure the procurement of goods and services for the nutrition services department follows all applicable steps according to Title 2, Code of Federal Regulations (2 CFR) sections 200.317-200.327; Title7, Code of Federal Regulations (7 CFR), parts 210 and 220; and all applicable state and local rules: 1. During the school year 2024/2025, changes were made to staff to allow for additional oversight. A Procurement Specialist reporting directly to the Director of Purchasing was added to staff in lieu of a Buyer that had previously reported to the Director of Nutrition Services. This move allowed for an additional step to ensure proper procurement is happening. 2. All purchasing methods, including Micropurchase, Simplified Acquisition, and Formal, will be followed in accordance with all applicable regulations, in line with RUSD’s written procurement procedures. 3. Any noncompetitive procurement will only occur if the conditions outlined in applicable regulations are met and sufficient evidence and documentation is received and retained, including participating in performing due diligence to ascertain whether a single source document is accurate from any given vendor. 4. In addition, documented annual training will take place for all staff involved in the procurement process. This procedure includes a review and annual update of procurement procedures, if applicable, and an acknowledgement of the nutrition services code of conduct in regards to purchasing.
Finding 2025-002: Procurement (50000) Assistance Listing # 10.553, 10.555 U.S. Department of Agriculture Passed Through: California Department of Education (pass through numbers 13526, 13523, 13391, 15655) Child Nutrition Cluster Repeat Finding? No Criteria: Code of Federal Regulations, CFR 200.320, requires the non-Federal entity to have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for the acquisition of property or services required under a Federal award or sub-award. For “small purchases,” those where the aggregate dollar amount is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. For acquisitions exceeding the simplified acquisition threshold, the non-federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR section 200.320(b); the competitive proposals method under the conditions specified in 2 CFR section 200.320((b) (2); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR section 200.320(c)). Condition: During our testing of procurement, we sampled two contracts that would qualify as “small purchases.” The district could not provide evidence that multiple quotes had been obtained prior to selecting the vendors. Cause: Due to turnover at the District, there has been a lack of oversight to ensure all appropriate documentation is maintained to demonstrate that the District is in compliance with Public Contract Code and that purchases are awarded after a reasonable number of quotes have been obtained. Context: Deficiency was noted in two of two vendors tested. Questioned Cost/Effect: This resulted in roughly $138,594 dollars awarded in contracts, without following proper procedures. Recommendation: We recommend that the District train and implement the required federal procurement procedures to ensure that the District is in compliance. Views of Responsible Officials: The District corrected this procedure for fiscal year 2025-26 and has the process in place going forward for each fiscal year.
FINDING 2025-002 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023-2024, FY 2024-2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 17 PIKE COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, the informal procurement method is permitted when the value of the procurement does not exceed $150,000. 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. A total of six claims were determined to require small purchase procedures. Of the six claims, totaling $334,605, four were selected for testing. For two of the four claims selected, the School Corporation did not obtain an adequate number of price or rate quotations. Additionally, documentation detailing the history of procurement, which must include the reason for the procurement method used, was absent for these two vendors. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAM exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Upon inquiry, the School Corporation indicated that all service contracts contain a provision regarding suspension and debarment and that the contracts were reviewed and signed by a knowledgeable member of the School Corporation. A population of four covered transactions for goods or services totaling $306,482, all of which equaled or exceeded the $25,000 threshold paid from the Child Nutrition funds during the audit period, was identified and selected for testing. For two of the four selected transactions, the School Corporation did not verify that the vendor was not suspended, debarred, or otherwise excluded from or eligible for participation in federal assistance programs or activities prior to issuing payment. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 18 PIKE COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or INDIANA STATE BOARD OF ACCOUNTS 19 PIKE COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (c) Adding a clause or condition to the covered transaction with that person." Cause The School Corporation did not have adequate internal controls to ensure compliance with procurement and suspension and debarment requirements. The Food Service Director was unaware of specific federal requirements regarding procurement thresholds for small purchases and the mandatory verification of vendor suspension and debarment status for transactions exceeding $25,000. The Director relied solely on the Food Service Center to ensure compliance. In addition, the School Corporation utilized additional vendors outside of the center's management scope without independently verifying their compliance status. Effect The lack of an effective internal control system enabled material noncompliance to occur and remain undetected. Noncompliance with the Procurement and Suspension and Debarment compliance requirement could enable small purchases made by the School Corporation to be uncompetitive and could lead to contracting with vendors who are suspended or debarred from receiving federal grant funding. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are verified to not be suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Assistance Listing Number, Federal Agency, and Program Name Research and Development Cluster National Science Foundation, Department of Commerce, Department of Health and Human Services ALN 47.070, 11.024, , 93.113 Coronavirus State and Local Fiscal Recovery Funds Program ALN 21.027 Federal Award Identification Number and Year Various (R&D) and 21.027 Pass through Entity Various (R&D) and City of Southfield, Michigan; United Way for Southeastern Michigan; MEDC (21.027) Finding Type Significant deficiency Repeat Finding No Criteria A nonfederal entity must conduct all procurement transactions in a manner providing full and open competition in accordance with 2 CFR Section 200.319. Condition The University supported full and open competition when testing Research and Development procurement contracts but did not support rationale for utilizing the selected contractor for 12 of the 23 samples tested. The University supported full and open competition when testing Coronavirus State and Local Fiscal Recovery Funds procurement contracts but did not support rationale for utilizing the selected contractor for 5 of the 5 samples tested. Questioned Costs None If Questioned Costs are not Determinable, Description of Why Known Questioned Costs Were Undetermined or Otherwise Could not be Reported N/A Identification of How Questioned Costs Were Computed N/A Context While the University utilized full and open competition in its procurement process, it did not consistently retain documentation explaining the rationale for selecting specific contractors. Cause and Effect The absence of documented rationale for contractor selection may reflect a focus on meeting competition requirements without fully capturing decision making details. This can make it more difficult to demonstrate the basis for contractor choice and ensure clarity in the procurement process. Recommendation The University should enhance its procurement documentation practices by consistently recording the rationale for contractor selection. This will help ensure transparency, support future reviews, and demonstrate alignment with competitive procurement principles in accordance with 2 CFR Section 200.319. Views of Responsible Officials and Planned Corrective Actions Management will reinforce its existing procurement procedures to ensure that competitive selections are not only conducted appropriately but also consistently documented. Management will implement a standardized documentation protocol that captures the rationale, evaluation criteria, and selection process for each procurement decision. The Procurement Policy will be revised, training will be provided to relevant staff, and periodic reviews will be conducted to ensure compliance.
FINDING 2025-001 Subject: Special Education Cluster (IDEA) - Procurement Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States Assistance Listings Numbers: 84.027, 84.027X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-043-ARP, 23611-043-PN01, 24611-043-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 15 RIVER FOREST COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation is a member of the Northwest Indiana Special Education Cooperative (Cooperative). During fiscal year 2023-2024, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Procurement and Suspension and Debarment compliance requirement. When the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a nonfederal 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 threshold is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with procurement requirements. The Cooperative did not have procedures in place to ensure compliance with procurements in excess of the SAT threshold. During 2023-2024, the Cooperative had three vendors which exceeded the SAT and all three vendors were tested. The Cooperative did not obtain sealed bids or competitive proposals, nor was a circumstance met that would have allowed for a noncompetitive procurement for the purchases. The total dollar amount spent with all three vendors was $1,417,349. The lack of internal controls and noncompliance were systemic issues limited to 2023-2024. Criteria 2 CFR 200.303 states in part: "The recipient and subrecipient must: (a) Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control-Integrated Framework' issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.320 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: . . . INDIANA STATE BOARD OF ACCOUNTS 16 RIVER FOREST COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Formal Procurement Methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. . . . (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." Cause The Cooperative noted they were unaware of the procurement requirements of expenditures exceeding the SAT. They stated they have used the same vendors to provide professional services for several years but only recently started using federal grant award funds for the services. Effect Without the proper implementation of an effectively designed system of internal controls, the School Corporation cannot ensure the vendors paid with federal award funds by the Cooperative are procured using the required methods. Without following the required methods for procurement, the Cooperative could be overpaying for services. Questioned Costs There were no questioned costs identified. Recommendation Management of the School Corporation should develop written policies and procedures which would require that appropriate procurement methods are used by the Cooperative for vendors that exceed the SAT. Appropriate documentation should be maintained to ensure the procurement methods are being followed and compliance with procurement methods are being followed. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-001 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children, Fresh Fruit and Vegetable Program Assistance Listings Numbers: 10.553, 10.555, 10.559, 10.582 Federal Award Numbers and Years (or Other Identifying Numbers): FY 23/24, FY 24/25 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-002. Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement 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 set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. 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. During the audit period, a total of four vendors were determined to require small purchase procedures, and all four vendors were selected for testing. For two of the four vendors, the School Corporation could not provide the procurement history or the rationale for the method of procurement, selection of vendors, and basis for price. The total dollar amount spent with these two vendors was $165,131. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. INDIANA STATE BOARD OF ACCOUNTS 14 SOUTH SPENCER COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) During review of the School Corporation's procedures, officials stated that the Food Service Director verified that vendors were not suspended or debarred by including a clause in the vendor contract or by collecting a certification from the vendor prior to entering into a covered transaction. We identified ten transactions during the audit period that equaled or exceeded $25,000 and were therefore determined to be covered transactions. All ten transactions, totaling $767,259, were selected for testing. The School Corporation was unable to provide documentation that the vendor's suspension and debarment status was verified for four of these transactions, which comprised the same two vendors for both years of the audit period. The total dollar amount spent with these two vendors was $268,962. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. INDIANA STATE BOARD OF ACCOUNTS 15 SOUTH SPENCER COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases– (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The School Corporation's corrective action plan from the prior audit stated that the Food Service Director was the individual responsible for implementing the corrective action measures and that those measures would be implemented in June 2024. The Food Service Director resigned, however, in May 2024. Therefore, the new Food Service Director was unaware of the compliance issues and the need to implement the corrective action measures during the current audit period. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of preventing, or detecting and correcting, noncompliance. As a result, the School Corporation did not comply with the small purchase procurement requirements or the suspension and debarment requirements of the federal award. By not properly completing the procurement process, the School Corporation could have overpaid for the goods or services that were procured. Additionally, the School Corporation could have made payment to a vendor that was suspended or debarred. Payments to such vendors are unallowable. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. INDIANA STATE BOARD OF ACCOUNTS 16 SOUTH SPENCER COUNTY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure expenditures made from federal awards are in compliance with the procurement and suspension and debarment compliance requirements. The School Corporation's system of internal controls should be designed to ensure that the appropriate procurement method is utilized and that documentation is retained to support the procurement methods used in order to ensure compliance with the terms and conditions of the federal award. Additionally, the system should be designed to ensure that vendors are not suspended or debarred, or otherwise excluded, prior to the School Corporation entering into a covered transaction. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FEDERAL AWARD FINDINGS AND QUESTIONED COSTS 2025 – 002 Federal Agency: U.S. Department of Education Federal Program Name: Special Education Cluster (IDEA) Assistance Listing Number: 84.027/84.173 Federal Award Identification Number and Year: H027A240007, 2025 Pass-Through Agency: Arizona Department of Education Pass-Through Number(s): 25ICSGBA-511469-01A Award Period: July 1, 2024 to June 30, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Procurement and Suspension and Debarment under 2 CFR 200.318 through 200.327. Condition: For 1 of 4 vendor procurements tested we noted the transaction exceeded $10,000 and the district did not follow the competitive procurement guidelines per the district’s policy and uniform guidance 2 CFR 200.318 through 200.327. Questioned costs: Total of $13,360. Context: For 1 of 4 vendor procurements tested we identified the vendor transactions in the aggregate exceeded the district’s competitive bidding policy of $10,000, however the district did not follow the competitive bidding procedures and procure transactions in a manner providing full and open competition, in accordance with 2 CFR 200.319. Cause: The District did not have designated procedures in place to ensure vendor transactions were procured in accordance with competitive bidding policies and 2 CFR 200.319. Effect: The lack of adequate internal controls could result in noncompliance with uniform guidance. Repeat Finding: No. Recommendation: We recommend the district add internal controls over monitoring vendor purchases throughout the fiscal year and comparing to procurement policies to ensure proper procedures are followed. Views of responsible officials: There is no disagreement with the audit finding.
Assistance Listing Number(s): 21.027 Name of Federal Program or Cluster: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency: Department of the Treasury Name of Pass-Through Entity: Milwaukee County Department of Health and Human Services Criteria or Specific Requirement: Nonfederal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. Condition: The Agency did not document procurements consistent with the standards of 2 CFR sections 200.318, 200.319, and 200.320. Cause: The Agency did not establish written policies and procedures for procurement. Effect or Potential Effect: The cost of the procurements may be disallowed. Questioned Costs: $2,000,000 Context: The Agency contracted with multiple vendors in the course of constructing a building to be used for affordable housing. Funding from this project was derived from both federal and nonfederal sources. The questioned costs represent the amount charged to this program as the required Uniform Guidance procurement procedures were not applied. Under 2 CFR 200.516(a)(3), questioned costs are those greater than $25,000 for a type of compliance requirement for a major program. Repeat Finding: No Recommendation: The Agency should establish written policies and procedures for procurement required by 2 CFR sections 200.318 through 200.326. Views of Responsible Officials: Management has established written policies and procedures for procurement. Management confirmed policies and procedures were followed and monitored during the construction of the project with supporting documentation to meet procurement requirements, however written policies and procedures were completed after year-end.
Assistance Listing Number, Federal Agency, and Program Name - ALN 66.202, U.S. Environmental Protection Agency - Congressionally Mandated Projects Federal Award Identification Number and Year - CG-00E03697-0, 2024 Pass through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per 2 CFR 200.319(d), the recipient is required to maintain a written procurement policy that adheres to procurement standards and requirements specified in 2 CFR 200.317 through 2 CFR 200.327. Per 2 CFR 200.305, the recipient is required to maintain a written cash management policy that addresses the requirements of the aforementioned code section. Condition - The Village did not have written policies for cash management or procurement that adhered to the requirements of the Uniform Guidance. Questioned Costs - None If Questioned Costs are Not Determinable, Description of Why Known Questioned Costs Were Undetermined or Otherwise Could Not Be Reported - N/A Identification of How Questioned Costs Were Computed - N/A Context - While the Village has written policies in place to address procurement and cash management, the policies do not address the requirements of 2 CFR 200.317 through 2 CFR 200.327 and of 2 CFR 200.305, respectively. Cause and Effect - The Village was not in compliance with grant requirements related to procurement and cash management, nor did it have proper controls in place to ensure these policies had the required elements. The absence of these requirements in the Village's policies increases the potential for further noncompliance because the Village's procedures may not adequately address relevant compliance requirements. Recommendation - We recommend that the Village create and put in place a procurement policy that addresses the requirements of 2 CFR 200.317 through 2 CFR 200.327 and a cash management policy that addresses the requirements of 2 CFR 200.305. Views of Responsible Officials and Planned Corrective Actions - The Village is currently reviewing existing policies to determine the best course of action and updating them for compliance. Some updates may require voter approval, as certain provisions are in the village charter.
FINDING 2025-002 Subject: Teacher and School Leader Incentive Grants - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Teacher and School Leader Incentive Grants Assistance Listings Number: 84.374 Federal Award Numbers and Years (or Other Identifying Numbers): Year 2-3, Year 3-4 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Significant Deficiency, Other Matters Condition and Context An effective internal control system was not designed, nor implemented, at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 16 METROPOLITAN SCHOOL DISTRICT OF DECATUR TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Procurement When the value of procurement of property or services exceeds the simplified acquisition threshold, customarily set at $250,000, a formal bid process must take place and a contract must be awarded. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold of $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000. The School Corporation entered into two contracts which exceeded the $150,000 simplified acquisition threshold but did not implement a formal bid process that provided full and open competition. Accordingly, the School Corporation did not maintain documentation to support the rationale for the method of procurement, basis for contractor selection, or basis for the contract price. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAM exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The School Corporation did not have documentation to show that vendors were verified for suspension and debarment status prior to entering into the transaction. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(i) states: "The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. . . ." INDIANA STATE BOARD OF ACCOUNTS 17 METROPOLITAN SCHOOL DISTRICT OF DECATUR TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: ". . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance awards exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. . . . (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The School Corporation had not implemented its system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to the Procurement Suspension and Debarment compliance requirement. The School Corporation did not adhere to its procurement procedures for the two vendors awarded contracts that exceeded the $150,000 threshold. Additionally, the School Corporation did not document its process to ensure compliance with the suspension and debarment status of these two vendors. Effect Without the proper design or implementation of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. This could result in the School Corporation overpaying for goods or services or paying a contractor who has been suspended or debarred, which would be unallowable. INDIANA STATE BOARD OF ACCOUNTS 18 METROPOLITAN SCHOOL DISTRICT OF DECATUR TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation implement its system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and that contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded from receiving federal funding prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-002 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY2024, FY2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 15 CLOVERDALE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Procurement 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 set at $150,000 per Indiana Code. 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 of $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. The School Corporation had not designed or implemented adequate policies or procedures to ensure that proper procurement procedures for small purchases were followed. The School Corporation did not obtain price or rate quotes from multiple vendors for its audit period expenditures with each of the three vendors tested in the small purchases category. Documentation detailing the history of procurement, including rationale to limit competition at the time of the expenditure(s) was not provided for audit. Suspension and Debarment Nonfederal entities and contractors are subject to nonprocurement debarment and suspension regulations. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or are ineligible for participation in federal assistance programs or activities. This is done by checking SAM Exclusions, collecting a certification from that entity, or adding a clause or condition to the covered transaction with that entity. The School Corporation had not designed or implemented adequate policies or procedures to ensure that applicable vendors who received federal funds over certain thresholds were not suspended or debarred from participating in federal awards programs. There were three vendors subject to suspension and debarment requirements during the audit period that were not procured through the School Corporation's affiliated Educational Services Center for cooperative purchasing. The School Corporation did not perform procedures to ensure the vendors were not suspended, debarred, or otherwise excluded from or ineligible for participation in federal assistance programs or activities for one of these three vendors. The lack of internal controls was a systemic issue throughout the audit period. Noncompliance was isolated to small purchases for procurement and one vendor noted for suspension and debarment. 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 16 CLOVERDALE COMMUNITY SCHOOL CORPORATION 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. . . . (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. . . ." 2 CFR 200.214 states: "Non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or INDIANA STATE BOARD OF ACCOUNTS 17 CLOVERDALE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not developed nor implemented an effective system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. The Food Service Director indicated that some of these purchases may have been emergency situations but was unaware of the need to document the rationale at the time of the transaction if competition was limited for small purchases procurements. Effect The lack of an internal control system enabled material noncompliance to occur and remain undetected. Noncompliance with the Procurement and Suspension and Debarment compliance requirement could enable small purchases made by the School Corporation to be uncompetitive and could lead to contracting with vendors who are suspended or debarred from receiving federal grant funding. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended the School Corporation's management strengthen its system of internal controls over small purchase requirements to ensure that an adequate number of price or rate quotes are obtained before purchase. Additionally, if procurements are made in emergency or extenuating circumstances, documentation at the time of the transaction must be retained for audit to justify limiting competition. We also recommended that vendors with a single or aggregate transaction amounts of $25,000 per fiscal year are verified for suspension and debarment prior to entering into the transaction and/or contract. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding Reference Number: 2025-001 Procurement Title and CFDA Number of Federal Program: Child Nutrition Cluster - School Breakfast Program [10.553] and National School Lunch Program [10.555] Federal Agency: U.S. Department of Agriculture (USDA) Pass-through Entity: Illinois State Board of Education. Criteria: Under 2 CFR 200.318(a), non-Federal entities must maintain and use documented procurement procedures that are consistent with applicable laws and regulations. Additionally, 2 CFR 200.319(a) requires that all procurement transactions be conducted to provide full and open competition. Statement of Condition: During our audit, we noted that the organization did not follow its documented procurement policies for a vendor. Specifically, procurements were made without proper competitive bidding or justification for sole-source selection, and documentation supporting contractor selection and price reasonableness was missing. Cause: Although the Organization has a formal procurement policy outlining requirements for competitive quotes and single-source justifications in accordance with 2 CFR §200.320, these procedures were not followed for the transactions tested. Effect or Potential Effect: Failure to obtain competitive quotes or document single-source justifications increases the risk of noncompliance with federal procurement requirements and may result in unallowable costs being charged to the federal program. Questioned costs - None identified. Reportable Views of Responsible Officials: See Corrective Action Plan Context: One out of two (100% of population) procurements tested (50%) were noncompliant. This issue appears to be systemic, not isolated. Identification of Repeat Findings - This is not a repeat finding. Recommendation: We recommend the Organization ensure that its procurement policy is fully implemented. Staff should be trained and held accountable for obtaining competitive price or rate quotations for all purchases exceeding the micro-purchase threshold, or for documenting appropriate single-source justifications when applicable.
Finding Reference Number: 2025-001 Procurement. Title and CFDA Number of Federal Program: Child Nutrition Cluster [10.553/10.555/10.559/10.582] Award Number: 25N1199/24L1603 Type of Finding: Federal Award Finding Finding Resolution Status: In Process. Criteria: Under 2 CFR 200.318(a), non-Federal entities must maintain and use documented procurement procedures that are consistent with applicable laws and regulations. Additionally, 2 CFR 200.319(a) requires that all procurement transactions be conducted to provide full and open competition. Statement of Condition: During our audit, we noted that the organization did not follow its documented procurement policies for a vendor. Specifically, procurements were made without proper competitive price quotes or justification for sole-source selection, and documentation supporting contractor selection and price reasonableness was missing. Cause: Although the Organization has a formal procurement policy outlining requirements for competitive quotes and single-source justifications in accordance with 2 CFR §200.320, these procedures were not followed for the transactions tested. Effect or Potential Effect: Failure to obtain competitive quotes or document single-source justifications increases the risk of noncompliance with federal procurement requirements and may result in unallowable costs being charged to the federal program. Questioned costs - None identified. Reportable Views of Responsible Officials: See Corrective Action Plan Identification of Repeat Findings - This is not a repeat finding. Recommendation: We recommend the Organization ensure that its procurement policy is fully implemented. Staff should be trained and held accountable for obtaining competitive price or rate quotations for all purchases exceeding the micro-purchase threshold, or for documenting appropriate single-source justifications when applicable.
FINDING 2025-003 Subject: Special Education Cluster (IDEA) - Procurement Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States Assistance Listings Numbers: 84.027, 84.027x Federal Award Numbers and Years (or Other Identifying Numbers): 22611-043-ARP, 23611-043-PN01, 24611-043-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation was a member of the Northwest Indiana Special Education Cooperative (Cooperative). During fiscal year 2023-2024, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. INDIANA STATE BOARD OF ACCOUNTS 19 MERRILLVILLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) When the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a nonfederal 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 threshold is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. During 2023-2024, the Cooperative had three vendors which exceeded the SAT, and all three vendors were tested. The Cooperative did not obtain sealed bids or competitive proposals, nor was a circumstance met that would have allowed for a noncompetitive procurement for the purchases. The total dollar amount spent with all three vendors was $1,417,349. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.320 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: . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance awards 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: INDIANA STATE BOARD OF ACCOUNTS 20 MERRILLVILLE COMMUNITY SCHOOL CORPORATION 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. . . . (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." Cause The Cooperative noted they were unaware of the procurement requirements of expenditures exceeding the SAT. They stated they have used the same vendors to provide professional services for several years but only recently started using federal grant award funds for the services. Effect Without the proper implementation of an effectively designed system of internal controls, the Cooperative cannot ensure the vendors paid with federal award funds are procured using the required methods. Without following the required methods for procurement, the Cooperative could be overpaying for services. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the Cooperative should develop written policies and procedures which would require that appropriate procurement methods are used for vendors that exceed the SAT. Appropriate documentation should be maintained to ensure the procurement methods are being followed and compliance with procurement methods are being followed. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2025-001 – Procurement (Material Weakness) Repeat Finding: No Federal Agency – National Science Foundation; National Institute of Health Research and Development Cluster Social, Behavioral, and Economic Sciences – Passed through New York University: 47.075, Mathematical and Physical Sciences – Passed through Loyola University of Chicago: 47.049, Biological Sciences: 47.074, Allergy and Infectious Disease Research: 93.855 Federal Award Years: Year Ended May 31, 2025 Condition The College's procurement policy does not reflect all applicable state and local laws and federal regulations. For two out of three (67%) small purchase procurements, there was not sufficient evidence to support that documentation of the noncompetitive procurement method selected was provided at the time of purchase. 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 200.327. 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. In accordance with 2 CFR sections 200.319 and 200.320(f), price quotations should be obtained from an adequate number of qualified sources for procurements that meet the small purchase procurement threshold or require documentation in support of the rationale to limit competition in those cases where competition was limited. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure the College has a procurement policy that meets the all applicable state and local laws and regulations. Questioned Costs There were no questioned costs related to this finding. Cause The College does not have a procurement policy that follows the procurement standards set out at 2 CFR sections 200.318 through 200.327. Context Two out of three vendors tested. Expenditures totaled $100,553. Effect Lack of a documented procurement policy that meets applicable state and local laws and federal regulations can result in improper procurement of goods and services which can lead to loss of future funding. Recommendation We recommend the College implement a procurement policy that conforms to federal regulations. We also recommend that the College implement policies and procedures around documentation of noncompetitive bidding. Views of Responsible Officials We agree with this finding. See corrective action plan.
2025-005 - Procurement Criteria: In accordance with 2 CFR Section 200.319(d), non-federal entities must have their own written policies for procurement transactions. The policy should incorporate all requirements within 2 CFR section 200.318 through 200.326 of the Uniform Guidance. Condition: As of March 31, 2025, the Township did not have their own written procurement policy as required by 2 CFR section 200.318 through 200.326 of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Cause: The Township was unaware of the requirement. Effect: The Township is not in compliance with the procurement policy requirements identified in 2 CFR section 200.318 through 200.326 which could jeopardize federal funding. Questioned Costs: This finding does not result in questioned costs. Recommendation: The Township should create a procurement policy that meets all the requirements of 2 CFR section 200.318 through 200.326. View of Responsible Officials: Management is in agreement and will create a procurement policy that meets all the requirements of 2 CFR section 200.318 through 200.326.
Finding No. 2024-002: Procurement – Significant Deficiency in Internal Control Over Compliance and Other Noncompliance Agency U.S. Department of Interior ALN 15.946 Federal Award Identification Number P17AC00528 and P22AM01146 Criteria According to 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 200.213, non-federal entities are prohibited from contracting with or making subawards to parties that are suspended or debarred. The non-federal entity must verify that the contractor or subrecipient is not suspended or debarred through the System for Award Management (SAM), which includes reviewing the Excluded Parties List System (EPLS), or by collecting a certification from the entity. In addition, NCSHPO must conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR section 200.319. Condition and Context We tested 9 vendors as part of procurement testing. NCSHPO failed to perform the required search for suspension and debarment in SAM for all vendors. The search should have been performed to ensure that the contractors were not suspended or debarred. We noted that none of the vendors were suspended or debarred. Cause NCSHPO has a procurement policy which does not state the process for search for suspension and debarment. Recommendation We recommend that NCSHPO implement and adhere to a protocol for verifying suspension and debarment status. We also recommend that suspension and debarment be included in NCSHPO’s procurement policy. In addition, NCSHPO should maintain documentation of the results of the searches and results to be in compliance. Views of Responsible Officials and Planned Corrective Action See attached corrective action plan. Questioned Costs None
Finding No. 2024-002: Procurement – Significant Deficiency in Internal Control Over Compliance and Other Noncompliance Agency U.S. Department of Interior ALN 15.946 Federal Award Identification Number P17AC00528 and P22AM01146 Criteria According to 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 200.213, non-federal entities are prohibited from contracting with or making subawards to parties that are suspended or debarred. The non-federal entity must verify that the contractor or subrecipient is not suspended or debarred through the System for Award Management (SAM), which includes reviewing the Excluded Parties List System (EPLS), or by collecting a certification from the entity. In addition, NCSHPO must conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR section 200.319. Condition and Context We tested 9 vendors as part of procurement testing. NCSHPO failed to perform the required search for suspension and debarment in SAM for all vendors. The search should have been performed to ensure that the contractors were not suspended or debarred. We noted that none of the vendors were suspended or debarred. Cause NCSHPO has a procurement policy which does not state the process for search for suspension and debarment. Recommendation We recommend that NCSHPO implement and adhere to a protocol for verifying suspension and debarment status. We also recommend that suspension and debarment be included in NCSHPO’s procurement policy. In addition, NCSHPO should maintain documentation of the results of the searches and results to be in compliance. Views of Responsible Officials and Planned Corrective Action See attached corrective action plan. Questioned Costs None
FINDING 2024-003 Subject: Water and Waste Disposal Systems for Rural Communities - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal Systems for Rural Communities Assistance Listings Number: 10.760 Federal Award Number and Year (or Other Identifying Number): FY2024 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 17 TOWN OF PAOLI SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-002. Condition and Context As part of sound management of the federal award, the Town was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The Town had not properly designed or implemented such a system, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The Town entered into contracts with three vendors in a prior year to provide goods and services for the duration of the Town's wastewater plant construction project. The total contract expenditures for all three vendors fell under the simplified acquisition threshold. The Town paid all three vendors with grant funds during the audit period, and all three were selected for testing accordingly. For two of the vendors, the Town properly procured the goods and services through the bidding process. For the third vendor, with disbursements totaling $106,269 in 2024, the Town was unable to provide any documentation that the procurement method used was appropriate or that the procurement provided full and open competition or rationale to support the determination to limit competition. Additionally, the history of the procurement, including rationale for the method of procurement, selection of the vendor, and the basis for the price, was not adequately documented. The lack of internal controls and noncompliance were isolated to one vendor throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." INDIANA STATE BOARD OF ACCOUNTS 18 TOWN OF PAOLI SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: ". . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance awards exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. INDIANA STATE BOARD OF ACCOUNTS 19 TOWN OF PAOLI SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement 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; (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. (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)(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." Cause The vendor in question was an engineering firm that the Town has utilized for various projects over the course of many years. For continuity purposes, the Town chose to limit competition when awarding the contract but was unaware of the requirements necessary to do so. Since this was a multi-year award for which the Town entered into the contract in a prior year, the Town was unable to correct the noncompliance for the current audit period. INDIANA STATE BOARD OF ACCOUNTS 20 TOWN OF PAOLI SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without a proper system of internal controls in place that operated effectively, noncompliance remained undetected. As a result, proper procurement procedures were not adhered to for all vendors. Without following the required methods for procurement, the Town could be overpaying for services. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funds to the Town. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Town's management establish a proper system of internal controls to ensure expenditures made from federal awards use the appropriate procurement method and retain the documentation to support the procurement methods used in order to ensure compliance with the terms and conditions of the federal award. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): Contract #65851 Pass-Through Entity: Schneck Medical Center Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-001. Condition and Context An effective internal control system was not in place at the City to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement 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. One vendor was identified that fell within the small purchase threshold. Purchases from the vendor totaled $148,800. As such, price or rate quotations from an adequate number of qualified sources should have been obtained. However, the City did not obtain price or rate quotations for the purchases, nor was full and open competition provided for the vendor. Additionally, there was no documentation available to support the rationale to limit competition. INDIANA STATE BOARD OF ACCOUNTS 15 CITY OF SEYMOUR SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Suspension and Debarment Prior to entering into subawards and covered transactions with the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The City did not have policies or procedures in place for verifying that an entity with which it planned to enter into a covered transaction was not suspended, debarred, or otherwise excluded until November 25, 2024. One of the two vendors selected for testing, with covered transactions totaling $148,800, was not verified to ensure that the vendor was not suspended, debarred, or otherwise excluded. The lack of internal controls and noncompliance were systemic issues until the City implemented new policies and procedures in November 2024. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.320 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 — INDIANA STATE BOARD OF ACCOUNTS 16 CITY OF SEYMOUR SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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. . . . 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 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 The City did not have a procurement policy in place that contained the requirements of the procurement standards as outlined in the Code of Federal Regulations prior to entering into an agreement with the vendor. Due to the timing of the adoption of the City's Procurement and Suspension and Debarment Policy, which defines procedures to ensure they are properly procuring services and verifying suspension and debarment status for covered transactions, not all of the items selected for testing were in compliance. Effect Without the proper implementation of an effectively designed system of internal controls, the City cannot ensure that goods and services are appropriately procured and that contractors paid with federal funds are eligible to participate in federal programs. Any program funds the City used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Furthermore, 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 costs identified. Recommendation We recommended adhering to the newly implemented procurement policies to ensure compliance with state and federal laws and regulations for procuring goods and services paid with federal funds. We also recommended that management of the City adhere to its newly approved policy of internal controls to ensure that all contractors that are expected to be paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into covered transactions. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding #24-001 – Significant Deficiency in Internal Control over Financial Reporting: Procurement Program Names: 3rd Street Housing Project Eagle Community Pool Replacement CFDA Titles and Numbers: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Agency: United States Treasury Pass-through Agency: Colorado Department of Local Affairs Award Year: December 31, 2024 Condition: No formal Federal procurement policy has been adopted by the Town of Eagle, Colorado, resulting in a lack of internal controls over Federal procurement. Criteria or Specific Requirement: The Town of Eagle, Colorado, must comply with procurement standards set out at 2 CFR sections 200.303 and 200.318 through 200.326 within Uniform Guidance. Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). UG §200.318 General Procurement Standards. (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, section of contract type, contractor selection or rejection, and the basis for the contract price. UG §200.320 states that the non-Federal entity must use one of the prescribed methods of procurement: (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 or property or services at or below the SAT include: (1) Micro-purchases. Procurement by micro-purchase is the acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see definition of micro-purchase in §200.1). To the maximum extent practicable, the non-Federal entity should distribute micro-purchases equitably among qualified suppliers. Micro-purchases may be awarded without soliciting competitive price or equitably among qualified suppliers. Micro-purchases may be awarded without soliciting competitive price or rate quotations if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. Purchase cards can be used for micro-purchases if procedures are documented and approved by the non-Federal entity. (2) Small purchase. Procurement by small purchase is the acquisition of property or services, the aggregate dollar amount of which is greater 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 non-Federal entity determines to be appropriate: (1) Sealed Bids. 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. (2) Proposals. Either a fixed price or cost-reimbursement-type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. (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 allowed circumstances apply. Questioned Costs: N/A Context: Although the Town of Eagle, Colorado, had not adopted a formal Federal procurement policy as outlined in 2CFR sections 200.303 and 200.318 through 200.326, during the course of our federal single audit testing of transactions and contracts, we found that the Town’s general contract purchase procedures that were followed meet the requirements of the Uniform Guidance and that no contracts were awarded without proper justification in 7 or 7 procurement transactions tested. Cause: Management was not aware of the requirement of adopting a formal Federal procurement policy under the procurement standards set out at 2CFR sections 200.303 and 200.318 through 200.626 within Uniform Guidance. Effect: The Town of Eagle, Colorado, is at risk for noncompliance with Federal grants as it relates to procurement. Recommendation: We recommend that the Town of Eagle, Colorado, adopts a formal Federal procurement policy to include all elements identified in 2CFR Sections 200.303 and 200.318 through 200.626. Views of Responsible Officials and Planned Corrective Action: Management agrees with this finding and will adopt a formal Federal procurement policy which includes all elements identified in 2CFR Sections 200.303 and 200.318 through 200.626.
Finding #24-003 – Procurement Program Names: 3rd Street Housing Project Eagle Community Pool Replacement CFDA Titles and Numbers: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Agency: United States Treasury Pass-through Agency: Colorado Department of Local Affairs Award Year: December 31, 2024 Condition: No formal Federal procurement policy has been adopted by the Town of Eagle, Colorado, resulting in a lack of compliance with Federal procurement. Criteria or Specific Requirement: The Town of Eagle, Colorado, must comply with procurement standards set out at 2 CFR sections 200.303 and 200.318 through 200.326 within Uniform Guidance. Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). UG §200.318 General Procurement Standards. (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, section of contract type, contractor selection or rejection, and the basis for the contract price. UG §200.320 states that the non-Federal entity must use one of the prescribed methods of procurement: (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 or property or services at or below the SAT include: (1) Micro-purchases. Procurement by micro-purchase is the acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see definition of micro-purchase in §200.1). To the maximum extent practicable, the non-Federal entity should distribute micro-purchases equitably among qualified suppliers. Micro-purchases may be awarded without soliciting competitive price or rate quotations if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. Purchase cards can be used for micro-purchases if procedures are documented and approved by the non-Federal entity. (2) Small purchase. Procurement by small purchase is the acquisition of property or services, the aggregate dollar amount of which is greater 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 non-Federal entity determines to be appropriate: (1) Sealed Bids. 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. (2) Proposals. Either a fixed price or cost-reimbursement-type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. (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 allowed circumstances apply. Questioned Costs: N/A Context: Although the Town of Eagle, Colorado, had not adopted a formal Federal procurement policy as outlined in 2CFR sections 200.303 and 200.318 through 200.326, during the course of our federal single audit testing of transactions and contracts, we found that the Town’s general contract purchase procedures that were followed meet the requirements of the Uniform Guidance and that no contracts were awarded without proper justification in 7 or 7 procurement transactions tested. Cause: Management was not aware of the requirement of adopting a formal Federal procurement policy under the procurement standards set out at 2CFR sections 200.303 and 200.318 through 200.626 within Uniform Guidance. Effect: The Town of Eagle, Colorado, is at risk for noncompliance with Federal grants as it relates to procurement. Recommendation: We recommend that the Town of Eagle, Colorado, adopts a formal Federal procurement policy to include all elements identified in 2CFR Sections 200.303 and 200.318 through 200.626. Views of Responsible Officials and Planned Corrective Action: Management agrees with this finding and will adopt a formal Federal procurement policy which includes all elements identified in 2CFR Sections 200.303 and 200.318 through 200.626.
Finding #24-001 – Significant Deficiency in Internal Control over Financial Reporting: Procurement Program Names: 3rd Street Housing Project Eagle Community Pool Replacement CFDA Titles and Numbers: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Agency: United States Treasury Pass-through Agency: Colorado Department of Local Affairs Award Year: December 31, 2024 Condition: No formal Federal procurement policy has been adopted by the Town of Eagle, Colorado, resulting in a lack of internal controls over Federal procurement. Criteria or Specific Requirement: The Town of Eagle, Colorado, must comply with procurement standards set out at 2 CFR sections 200.303 and 200.318 through 200.326 within Uniform Guidance. Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). UG §200.318 General Procurement Standards. (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, section of contract type, contractor selection or rejection, and the basis for the contract price. UG §200.320 states that the non-Federal entity must use one of the prescribed methods of procurement: (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 or property or services at or below the SAT include: (1) Micro-purchases. Procurement by micro-purchase is the acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see definition of micro-purchase in §200.1). To the maximum extent practicable, the non-Federal entity should distribute micro-purchases equitably among qualified suppliers. Micro-purchases may be awarded without soliciting competitive price or equitably among qualified suppliers. Micro-purchases may be awarded without soliciting competitive price or rate quotations if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. Purchase cards can be used for micro-purchases if procedures are documented and approved by the non-Federal entity. (2) Small purchase. Procurement by small purchase is the acquisition of property or services, the aggregate dollar amount of which is greater 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 non-Federal entity determines to be appropriate: (1) Sealed Bids. 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. (2) Proposals. Either a fixed price or cost-reimbursement-type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. (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 allowed circumstances apply. Questioned Costs: N/A Context: Although the Town of Eagle, Colorado, had not adopted a formal Federal procurement policy as outlined in 2CFR sections 200.303 and 200.318 through 200.326, during the course of our federal single audit testing of transactions and contracts, we found that the Town’s general contract purchase procedures that were followed meet the requirements of the Uniform Guidance and that no contracts were awarded without proper justification in 7 or 7 procurement transactions tested. Cause: Management was not aware of the requirement of adopting a formal Federal procurement policy under the procurement standards set out at 2CFR sections 200.303 and 200.318 through 200.626 within Uniform Guidance. Effect: The Town of Eagle, Colorado, is at risk for noncompliance with Federal grants as it relates to procurement. Recommendation: We recommend that the Town of Eagle, Colorado, adopts a formal Federal procurement policy to include all elements identified in 2CFR Sections 200.303 and 200.318 through 200.626. Views of Responsible Officials and Planned Corrective Action: Management agrees with this finding and will adopt a formal Federal procurement policy which includes all elements identified in 2CFR Sections 200.303 and 200.318 through 200.626.
Finding #24-003 – Procurement Program Names: 3rd Street Housing Project Eagle Community Pool Replacement CFDA Titles and Numbers: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Agency: United States Treasury Pass-through Agency: Colorado Department of Local Affairs Award Year: December 31, 2024 Condition: No formal Federal procurement policy has been adopted by the Town of Eagle, Colorado, resulting in a lack of compliance with Federal procurement. Criteria or Specific Requirement: The Town of Eagle, Colorado, must comply with procurement standards set out at 2 CFR sections 200.303 and 200.318 through 200.326 within Uniform Guidance. Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). UG §200.318 General Procurement Standards. (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, section of contract type, contractor selection or rejection, and the basis for the contract price. UG §200.320 states that the non-Federal entity must use one of the prescribed methods of procurement: (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 or property or services at or below the SAT include: (1) Micro-purchases. Procurement by micro-purchase is the acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see definition of micro-purchase in §200.1). To the maximum extent practicable, the non-Federal entity should distribute micro-purchases equitably among qualified suppliers. Micro-purchases may be awarded without soliciting competitive price or rate quotations if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. Purchase cards can be used for micro-purchases if procedures are documented and approved by the non-Federal entity. (2) Small purchase. Procurement by small purchase is the acquisition of property or services, the aggregate dollar amount of which is greater 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 non-Federal entity determines to be appropriate: (1) Sealed Bids. 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. (2) Proposals. Either a fixed price or cost-reimbursement-type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. (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 allowed circumstances apply. Questioned Costs: N/A Context: Although the Town of Eagle, Colorado, had not adopted a formal Federal procurement policy as outlined in 2CFR sections 200.303 and 200.318 through 200.326, during the course of our federal single audit testing of transactions and contracts, we found that the Town’s general contract purchase procedures that were followed meet the requirements of the Uniform Guidance and that no contracts were awarded without proper justification in 7 or 7 procurement transactions tested. Cause: Management was not aware of the requirement of adopting a formal Federal procurement policy under the procurement standards set out at 2CFR sections 200.303 and 200.318 through 200.626 within Uniform Guidance. Effect: The Town of Eagle, Colorado, is at risk for noncompliance with Federal grants as it relates to procurement. Recommendation: We recommend that the Town of Eagle, Colorado, adopts a formal Federal procurement policy to include all elements identified in 2CFR Sections 200.303 and 200.318 through 200.626. Views of Responsible Officials and Planned Corrective Action: Management agrees with this finding and will adopt a formal Federal procurement policy which includes all elements identified in 2CFR Sections 200.303 and 200.318 through 200.626.
FINDING 2024-002 Subject: Water and Waste Disposal Systems for Rural Communities - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal Systems for Rural Communities Assistance Listings Number: 10.760 Federal Award Number and Year (or Other Identifying Number): BAN-2 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context As part of sound management of the federal award, the City was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The City had not properly designed or implemented such a system, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. INDIANA STATE BOARD OF ACCOUNTS 16 CITY OF HUNTINGBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. 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 micropurchase 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. Procurement - Simplified Acquisition During the audit period, the City had two vendors with purchases over the $150,000 threshold that were considered simplified acquisition procurements. Both vendors were tested. For one vendor, the City could not provide the procurement history or the rationale for the method of procurement, the selection of vendor, or the basis for price. The total amount spent with this vendor was $2,391,895. Procurement - Policy The City provided its purchasing policy for review, but it did not include the applicable federal regulations, such as procedures to avoid the acquisition of unnecessary or duplicative items and procedures to ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Additionally, the City did not maintain written standards of conduct covering conflicts of interest and governing actions of its employees engaged in the selection, award, and administration of contracts. Suspension and Debarment Prior to entering into subawards and covered transactions with, recipients are required to verify that such contracts and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. A population of four covered transactions for goods or services were paid from USDA award funds during the audit period. A sample of two vendors were selected for testing. Of the two vendors tested, one vendor was not verified to not be suspended nor debarred or otherwise excluded or disqualified from participating in federal assistance programs or activities. The lack of internal controls and noncompliance were isolated to the same single vendor for both the simplified acquisition and the suspension and debarment issues as noted above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 17 CITY OF HUNTINGBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320(b) states in part: "Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance awards exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. . . . (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." INDIANA STATE BOARD OF ACCOUNTS 18 CITY OF HUNTINGBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The vendor in question was an engineering firm that the City originally hired to do a study at $40,000 in 2018 related to the wastewater treatment plant project. Through the years, the City did amendments to the contract to include more engineering services and did not advertise for bids or verify that the engineering firm was not suspended or debarred from receiving federal funds. Effect Without the proper implementation of an effectively designed system of internal controls, the City cannot ensure that the services obtained provided full and open competition or the basis of the price. In addition, the City cannot ensure the vendors paid were eligible to participate in federal programs. Any program funds the City used to pay vendors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. 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 costs identified. Recommendation We recommended that the City's management establish a proper system of internal controls to ensure expenditures made from federal awards use the appropriate procurement method and retain the documentation to support the procurement methods used in order to ensure compliance with the terms and conditions of the federal award. We recommended that management of the City establish a proper system of internal controls and develop policies and procedures to ensure contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into contracts or subawards. We also recommended strengthening its policies and procedures to ensure appropriate supporting documentation for federal programs is retained to be presented for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-001 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): 2021 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediate prior audit report. The prior audit finding number was 2023-001. Condition and Context An effective internal control system was not designed or implemented at the City to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement 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. Micro-purchases are typically for those purchases $10,000 or under, and small purchase procedures are 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. One vendor was identified that fell within the small purchase threshold. Purchases from the vendor totaled $40,458. As such, price or rate quotations from an adequate number of qualified sources should have been obtained. However, the City did not obtain price or rate quotations for the purchases, nor was full and open competition provided for the vendor. Additionally, there was no documentation available to support the rationale to limit competition. Suspension and Debarment The City elected to receive the standard revenue loss allowance, allowing the City to claim $10,000,000 of its total COVID-19 - State and Local Fiscal Recovery Funds (SLFRF) allocation of $16,549,045 as revenue loss to use for government services. The U.S. Department of the Treasury (Treasury) determined that there are no subawards under this eligible use category, and that recipients' use of revenue loss funds would not give rise to subrecipient relationships given that there is no federal program or purpose to carry out in the case of the revenue loss portion of the award. Prior to entering into subawards and covered transactions with SLFRF award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person or entity. Due to the Treasury's determination that the revenue loss eligible use category does not give rise to subawards, the City was only required to comply with suspension and debarment requirements related to contracts. The City's policies related to SLFRF suspension and debarment requirements include the Board of Public Works completing a review of each bid packet to ensure the bidder submitted a statement indicating if they were not suspended or debarred or an employee from the City Controller's office checking the Sam.gov website. There were 13 covered transactions identified that equaled or exceeded $25,000, and 2 covered transactions, totaling $251,334, were selected for testing. For both of the transactions tested, the City did not verify the suspension or debarment status prior to payment. 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). . . ." 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 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." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The nonfederal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 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. . . ." Cause The City did not follow the City's established policy to ensure the proper procurement of services and supplies and to verify suspension and debarment status for covered transactions. 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. The City did not use the proper method of procurement to choose a vendor. In addition, the City did not ensure the contractors paid with federal funds are eligible to participate in federal programs. Any program funds the City used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Furthermore, 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 costs identified. Recommendation We recommended that management of the City follow the City's established policies to ensure compliance with requirements related to procurement and suspension and debarment. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): TRSW222046 Pass-Through Entity: Indiana Finance Authority Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not designed or implemented at the City to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement 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. Micro-purchases are typically for those purchases $10,000 or under, and small purchase procedures are 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. The grant covered one project with one vendor that fell within the simplified acquisition threshold. Payments to the vendor for the project totaled $189,741 with $120,452 of that amount was grant funds. As such, the formal bid process should have been followed. The City did not perform bid procedures or provide the rationale for the method of procurement, the selection of vendor, or the basis for price. Additionally, the City did not obtain a written contract for the services. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAM exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person or entity. The City's policies related to COVID-19 - Coronavirus State and Local Fiscal Recovery Funds suspension and debarment requirements include the Board of Public Works completing a review of each bid packet to ensure the bidder submitted a statement indicating if they were not suspended or debarred or an employee from the City Controller's office checking the Sam.gov website. As noted above, the grant covered one project with one vendor utilized and the City did not verify the suspension or debarment status prior to payment for this vendor. The lack of internal controls and noncompliance was isolated to the instance noted above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The nonfederal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 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: . . . (b) Formal Procurement Methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. . . . (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." 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 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 The City did not follow the City's established policy to ensure the proper procurement of services and supplies and to verify suspension and debarment status for covered transactions. 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. The City did not use the proper method of procurement to choose a vendor. In addition, the City did not ensure the contractors paid with federal funds are eligible to participate in federal programs. Any program funds the City used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Furthermore, 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 costs identified. Recommendation We recommended that management of the City follow its established policies to ensure compliance with requirements related to procurement and suspension and debarment. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding Number: 2024-001 Finding Type: Federal award finding Federal Assistance Listing No.: 15.685 Program Name: National Fish Passage Federal Agency: U.S. Department of the Interior Federal Grant Number: F24C01411-00 Federal Award Year: 2024 Pass-through entity: Rogue River Watershed Council Grant Number: 205 Control Deficiency Type: Significant deficiency in internal controls and instances of non-compliance Instances of Noncompliance: Yes Compliance Requirement: Procurement, suspension and debarment Questioned Costs: None Repeat Finding: No Criteria: A non-federal organization must follow its own documented procurement procedures, provided they comply with applicable state and local laws and align with the federal standards outlined in 2 CFR 200.318–200.327 (“Uniform Guidance”). Specifically, 2 CFR 200.318(i) requires entities to maintain records sufficient to detail the history of the procurement, including but not limited to the rationale for the procurement method chosen, the basis for selecting or rejecting contractors, and the justification for the contract price. In addition, all procurement transactions must be conducted in a manner providing full and open competition. Furthermore, federal requirements prohibit grant recipients from contracting with, or purchasing from, contractors who are suspended and debarred from doing business with the federal government. Whenever the organization enters into contracts or purchases goods or services with federal funds that it expects to equal or exceed $25,000, it must verify that the contractor or vendor has not been suspended, debarred or otherwise excluded. Finally, the organization must ensure that all federal programs comply with Section 70914 of the Build America, Buy America (BABA) Act for infrastructure projects. Condition: The organization has enacted a written procurement policy and management believed that it met all the standards required under 2 CFR 200.318 through 200.326. However, the policy failed to include some of the most stringent requirements included in the Uniform Guidance, and the organization did not comply with all the documentation requirements laid out in its procurement policy. More specifically, the organization did not maintain written thorough documentation of the procurement process as stated in 2 CFR 200.318(i), nor publicized the request for proposal in accordance with 2 CFR 200.319. Finally, the contract funded under the major program did not incorporate the mandatory BABA Act compliance language. Cause: As this was the entity’s first federal audit, WaterWatch was unaware of some procurement requirements outlined in the Uniform Guidance that needed to be incorporated into its procurement policies and procedures. Furthermore, the entity was new to the federal procurement environment. Regarding suspension and debarment, and the BABA Act, the organization was generally aware of these requirements and believed it had achieved compliance. However, WaterWatch was not aware of the need to perform documented formal verification regarding debarment beyond regularly sharing information in their existing networks of restoration agency and NGOs which rely on the same pool of experience contractors. Regarding BABA, WaterWatch was not aware of the specific documentation requirements. WaterWatch did not add the required contract language regarding BABA or debarment. In addition, due to the limited number of contractors performing this type of work, only four contractors responded to this particular request for proposal and only one submitted a bid. As a result, WaterWatch did not generate their comparison-based procurement process written documentation. Effect: The organization did not comply with some of the procurement, suspension and debarment requirement as outline in the Uniform Guidance. Audit Recommendation: We recommend that management review its current procurement policy to ensure that all procurement activities fully comply with the federal regulations, as well as establish additional procedure and oversight mechanism to ensure that procurement activities fully comply with the organization’s policies. Management’s Response: The following corrective actions are being immediately implemented for contracts in WaterWatch’s restoration program in order to achieve compliance: 1. Language requiring all contractors to comply with the Build America, Buy America (BABA) Act is added to all new WaterWatch contracts and all current contracts via amendment. 2. Language requiring all contractors to comply with federal suspension and debarment contracting standards is added to all new WaterWatch contracts and all current contracts via amendment. 3. WaterWatch will keep formal documentation of debarment searches for all contractors. 4. WaterWatch will keep formal documentation of contractor procurement process in both Southern Oregon and Portland offices.
Finding Number: 2024-001 Finding Type: Federal award finding Federal Assistance Listing No.: 15.685 Program Name: National Fish Passage Federal Agency: U.S. Department of the Interior Federal Grant Number: F24C01411-00 Federal Award Year: 2024 Pass-through entity: Rogue River Watershed Council Grant Number: 205 Control Deficiency Type: Significant deficiency in internal controls and instances of non-compliance Instances of Noncompliance: Yes Compliance Requirement: Procurement, suspension and debarment Questioned Costs: None Repeat Finding: No Criteria: A non-federal organization must follow its own documented procurement procedures, provided they comply with applicable state and local laws and align with the federal standards outlined in 2 CFR 200.318–200.327 (“Uniform Guidance”). Specifically, 2 CFR 200.318(i) requires entities to maintain records sufficient to detail the history of the procurement, including but not limited to the rationale for the procurement method chosen, the basis for selecting or rejecting contractors, and the justification for the contract price. In addition, all procurement transactions must be conducted in a manner providing full and open competition. Furthermore, federal requirements prohibit grant recipients from contracting with, or purchasing from, contractors who are suspended and debarred from doing business with the federal government. Whenever the organization enters into contracts or purchases goods or services with federal funds that it expects to equal or exceed $25,000, it must verify that the contractor or vendor has not been suspended, debarred or otherwise excluded. Finally, the organization must ensure that all federal programs comply with Section 70914 of the Build America, Buy America (BABA) Act for infrastructure projects. Condition: The organization has enacted a written procurement policy and management believed that it met all the standards required under 2 CFR 200.318 through 200.326. However, the policy failed to include some of the most stringent requirements included in the Uniform Guidance, and the organization did not comply with all the documentation requirements laid out in its procurement policy. More specifically, the organization did not maintain written thorough documentation of the procurement process as stated in 2 CFR 200.318(i), nor publicized the request for proposal in accordance with 2 CFR 200.319. Finally, the contract funded under the major program did not incorporate the mandatory BABA Act compliance language. Cause: As this was the entity’s first federal audit, WaterWatch was unaware of some procurement requirements outlined in the Uniform Guidance that needed to be incorporated into its procurement policies and procedures. Furthermore, the entity was new to the federal procurement environment. Regarding suspension and debarment, and the BABA Act, the organization was generally aware of these requirements and believed it had achieved compliance. However, WaterWatch was not aware of the need to perform documented formal verification regarding debarment beyond regularly sharing information in their existing networks of restoration agency and NGOs which rely on the same pool of experience contractors. Regarding BABA, WaterWatch was not aware of the specific documentation requirements. WaterWatch did not add the required contract language regarding BABA or debarment. In addition, due to the limited number of contractors performing this type of work, only four contractors responded to this particular request for proposal and only one submitted a bid. As a result, WaterWatch did not generate their comparison-based procurement process written documentation. Effect: The organization did not comply with some of the procurement, suspension and debarment requirement as outline in the Uniform Guidance. Audit Recommendation: We recommend that management review its current procurement policy to ensure that all procurement activities fully comply with the federal regulations, as well as establish additional procedure and oversight mechanism to ensure that procurement activities fully comply with the organization’s policies. Management’s Response: The following corrective actions are being immediately implemented for contracts in WaterWatch’s restoration program in order to achieve compliance: 1. Language requiring all contractors to comply with the Build America, Buy America (BABA) Act is added to all new WaterWatch contracts and all current contracts via amendment. 2. Language requiring all contractors to comply with federal suspension and debarment contracting standards is added to all new WaterWatch contracts and all current contracts via amendment. 3. WaterWatch will keep formal documentation of debarment searches for all contractors. 4. WaterWatch will keep formal documentation of contractor procurement process in both Southern Oregon and Portland offices.
Finding No. 2024-002: Procurement – Significant Deficiency in Internal Control Over Compliance and Other Noncompliance Agency U.S. Department of Interior ALN 15.946 Federal Award Identification Number P17AC00528 and P22AM01146 Criteria According to 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 200.213, non-federal entities are prohibited from contracting with or making subawards to parties that are suspended or debarred. The non-federal entity must verify that the contractor or subrecipient is not suspended or debarred through the System for Award Management (SAM), which includes reviewing the Excluded Parties List System (EPLS), or by collecting a certification from the entity. In addition, NCSHPO must conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR section 200.319. Condition and Context We tested 9 vendors as part of procurement testing. NCSHPO failed to perform the required search for suspension and debarment in SAM for all vendors. The search should have been performed to ensure that the contractors were not suspended or debarred. We noted that none of the vendors were suspended or debarred. Cause NCSHPO has a procurement policy which does not state the process for search for suspension and debarment. Recommendation We recommend that NCSHPO implement and adhere to a protocol for verifying suspension and debarment status. We also recommend that suspension and debarment be included in NCSHPO’s procurement policy. In addition, NCSHPO should maintain documentation of the results of the searches and results to be in compliance. Views of Responsible Officials and Planned Corrective Action See attached corrective action plan. Questioned Costs None
Finding No. 2024-002: Procurement – Significant Deficiency in Internal Control Over Compliance and Other Noncompliance Agency U.S. Department of Interior ALN 15.946 Federal Award Identification Number P17AC00528 and P22AM01146 Criteria According to 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 200.213, non-federal entities are prohibited from contracting with or making subawards to parties that are suspended or debarred. The non-federal entity must verify that the contractor or subrecipient is not suspended or debarred through the System for Award Management (SAM), which includes reviewing the Excluded Parties List System (EPLS), or by collecting a certification from the entity. In addition, NCSHPO must conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR section 200.319. Condition and Context We tested 9 vendors as part of procurement testing. NCSHPO failed to perform the required search for suspension and debarment in SAM for all vendors. The search should have been performed to ensure that the contractors were not suspended or debarred. We noted that none of the vendors were suspended or debarred. Cause NCSHPO has a procurement policy which does not state the process for search for suspension and debarment. Recommendation We recommend that NCSHPO implement and adhere to a protocol for verifying suspension and debarment status. We also recommend that suspension and debarment be included in NCSHPO’s procurement policy. In addition, NCSHPO should maintain documentation of the results of the searches and results to be in compliance. Views of Responsible Officials and Planned Corrective Action See attached corrective action plan. Questioned Costs None
FINDING 2024-003 Subject: Water and Waste Disposal Systems for Rural Communities - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal Systems for Rural Communities Assistance Listings Number: 10.760 Federal Award Number and Year (or Other Identifying Number): FY2024 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 17 TOWN OF PAOLI SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-002. Condition and Context As part of sound management of the federal award, the Town was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The Town had not properly designed or implemented such a system, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The Town entered into contracts with three vendors in a prior year to provide goods and services for the duration of the Town's wastewater plant construction project. The total contract expenditures for all three vendors fell under the simplified acquisition threshold. The Town paid all three vendors with grant funds during the audit period, and all three were selected for testing accordingly. For two of the vendors, the Town properly procured the goods and services through the bidding process. For the third vendor, with disbursements totaling $106,269 in 2024, the Town was unable to provide any documentation that the procurement method used was appropriate or that the procurement provided full and open competition or rationale to support the determination to limit competition. Additionally, the history of the procurement, including rationale for the method of procurement, selection of the vendor, and the basis for the price, was not adequately documented. The lack of internal controls and noncompliance were isolated to one vendor throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." INDIANA STATE BOARD OF ACCOUNTS 18 TOWN OF PAOLI SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: ". . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance awards exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. INDIANA STATE BOARD OF ACCOUNTS 19 TOWN OF PAOLI SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement 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; (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. (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)(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." Cause The vendor in question was an engineering firm that the Town has utilized for various projects over the course of many years. For continuity purposes, the Town chose to limit competition when awarding the contract but was unaware of the requirements necessary to do so. Since this was a multi-year award for which the Town entered into the contract in a prior year, the Town was unable to correct the noncompliance for the current audit period. INDIANA STATE BOARD OF ACCOUNTS 20 TOWN OF PAOLI SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without a proper system of internal controls in place that operated effectively, noncompliance remained undetected. As a result, proper procurement procedures were not adhered to for all vendors. Without following the required methods for procurement, the Town could be overpaying for services. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funds to the Town. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Town's management establish a proper system of internal controls to ensure expenditures made from federal awards use the appropriate procurement method and retain the documentation to support the procurement methods used in order to ensure compliance with the terms and conditions of the federal award. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): Contract #65851 Pass-Through Entity: Schneck Medical Center Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-001. Condition and Context An effective internal control system was not in place at the City to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement 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. One vendor was identified that fell within the small purchase threshold. Purchases from the vendor totaled $148,800. As such, price or rate quotations from an adequate number of qualified sources should have been obtained. However, the City did not obtain price or rate quotations for the purchases, nor was full and open competition provided for the vendor. Additionally, there was no documentation available to support the rationale to limit competition. INDIANA STATE BOARD OF ACCOUNTS 15 CITY OF SEYMOUR SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Suspension and Debarment Prior to entering into subawards and covered transactions with the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The City did not have policies or procedures in place for verifying that an entity with which it planned to enter into a covered transaction was not suspended, debarred, or otherwise excluded until November 25, 2024. One of the two vendors selected for testing, with covered transactions totaling $148,800, was not verified to ensure that the vendor was not suspended, debarred, or otherwise excluded. The lack of internal controls and noncompliance were systemic issues until the City implemented new policies and procedures in November 2024. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.320 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 — INDIANA STATE BOARD OF ACCOUNTS 16 CITY OF SEYMOUR SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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. . . . 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 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 The City did not have a procurement policy in place that contained the requirements of the procurement standards as outlined in the Code of Federal Regulations prior to entering into an agreement with the vendor. Due to the timing of the adoption of the City's Procurement and Suspension and Debarment Policy, which defines procedures to ensure they are properly procuring services and verifying suspension and debarment status for covered transactions, not all of the items selected for testing were in compliance. Effect Without the proper implementation of an effectively designed system of internal controls, the City cannot ensure that goods and services are appropriately procured and that contractors paid with federal funds are eligible to participate in federal programs. Any program funds the City used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Furthermore, 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 costs identified. Recommendation We recommended adhering to the newly implemented procurement policies to ensure compliance with state and federal laws and regulations for procuring goods and services paid with federal funds. We also recommended that management of the City adhere to its newly approved policy of internal controls to ensure that all contractors that are expected to be paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into covered transactions. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding #24-001 – Significant Deficiency in Internal Control over Financial Reporting: Procurement Program Names: 3rd Street Housing Project Eagle Community Pool Replacement CFDA Titles and Numbers: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Agency: United States Treasury Pass-through Agency: Colorado Department of Local Affairs Award Year: December 31, 2024 Condition: No formal Federal procurement policy has been adopted by the Town of Eagle, Colorado, resulting in a lack of internal controls over Federal procurement. Criteria or Specific Requirement: The Town of Eagle, Colorado, must comply with procurement standards set out at 2 CFR sections 200.303 and 200.318 through 200.326 within Uniform Guidance. Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). UG §200.318 General Procurement Standards. (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, section of contract type, contractor selection or rejection, and the basis for the contract price. UG §200.320 states that the non-Federal entity must use one of the prescribed methods of procurement: (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 or property or services at or below the SAT include: (1) Micro-purchases. Procurement by micro-purchase is the acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see definition of micro-purchase in §200.1). To the maximum extent practicable, the non-Federal entity should distribute micro-purchases equitably among qualified suppliers. Micro-purchases may be awarded without soliciting competitive price or equitably among qualified suppliers. Micro-purchases may be awarded without soliciting competitive price or rate quotations if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. Purchase cards can be used for micro-purchases if procedures are documented and approved by the non-Federal entity. (2) Small purchase. Procurement by small purchase is the acquisition of property or services, the aggregate dollar amount of which is greater 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 non-Federal entity determines to be appropriate: (1) Sealed Bids. 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. (2) Proposals. Either a fixed price or cost-reimbursement-type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. (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 allowed circumstances apply. Questioned Costs: N/A Context: Although the Town of Eagle, Colorado, had not adopted a formal Federal procurement policy as outlined in 2CFR sections 200.303 and 200.318 through 200.326, during the course of our federal single audit testing of transactions and contracts, we found that the Town’s general contract purchase procedures that were followed meet the requirements of the Uniform Guidance and that no contracts were awarded without proper justification in 7 or 7 procurement transactions tested. Cause: Management was not aware of the requirement of adopting a formal Federal procurement policy under the procurement standards set out at 2CFR sections 200.303 and 200.318 through 200.626 within Uniform Guidance. Effect: The Town of Eagle, Colorado, is at risk for noncompliance with Federal grants as it relates to procurement. Recommendation: We recommend that the Town of Eagle, Colorado, adopts a formal Federal procurement policy to include all elements identified in 2CFR Sections 200.303 and 200.318 through 200.626. Views of Responsible Officials and Planned Corrective Action: Management agrees with this finding and will adopt a formal Federal procurement policy which includes all elements identified in 2CFR Sections 200.303 and 200.318 through 200.626.
Finding #24-003 – Procurement Program Names: 3rd Street Housing Project Eagle Community Pool Replacement CFDA Titles and Numbers: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Agency: United States Treasury Pass-through Agency: Colorado Department of Local Affairs Award Year: December 31, 2024 Condition: No formal Federal procurement policy has been adopted by the Town of Eagle, Colorado, resulting in a lack of compliance with Federal procurement. Criteria or Specific Requirement: The Town of Eagle, Colorado, must comply with procurement standards set out at 2 CFR sections 200.303 and 200.318 through 200.326 within Uniform Guidance. Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). UG §200.318 General Procurement Standards. (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, section of contract type, contractor selection or rejection, and the basis for the contract price. UG §200.320 states that the non-Federal entity must use one of the prescribed methods of procurement: (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 or property or services at or below the SAT include: (1) Micro-purchases. Procurement by micro-purchase is the acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see definition of micro-purchase in §200.1). To the maximum extent practicable, the non-Federal entity should distribute micro-purchases equitably among qualified suppliers. Micro-purchases may be awarded without soliciting competitive price or rate quotations if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. Purchase cards can be used for micro-purchases if procedures are documented and approved by the non-Federal entity. (2) Small purchase. Procurement by small purchase is the acquisition of property or services, the aggregate dollar amount of which is greater 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 non-Federal entity determines to be appropriate: (1) Sealed Bids. 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. (2) Proposals. Either a fixed price or cost-reimbursement-type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. (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 allowed circumstances apply. Questioned Costs: N/A Context: Although the Town of Eagle, Colorado, had not adopted a formal Federal procurement policy as outlined in 2CFR sections 200.303 and 200.318 through 200.326, during the course of our federal single audit testing of transactions and contracts, we found that the Town’s general contract purchase procedures that were followed meet the requirements of the Uniform Guidance and that no contracts were awarded without proper justification in 7 or 7 procurement transactions tested. Cause: Management was not aware of the requirement of adopting a formal Federal procurement policy under the procurement standards set out at 2CFR sections 200.303 and 200.318 through 200.626 within Uniform Guidance. Effect: The Town of Eagle, Colorado, is at risk for noncompliance with Federal grants as it relates to procurement. Recommendation: We recommend that the Town of Eagle, Colorado, adopts a formal Federal procurement policy to include all elements identified in 2CFR Sections 200.303 and 200.318 through 200.626. Views of Responsible Officials and Planned Corrective Action: Management agrees with this finding and will adopt a formal Federal procurement policy which includes all elements identified in 2CFR Sections 200.303 and 200.318 through 200.626.
Finding #24-001 – Significant Deficiency in Internal Control over Financial Reporting: Procurement Program Names: 3rd Street Housing Project Eagle Community Pool Replacement CFDA Titles and Numbers: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Agency: United States Treasury Pass-through Agency: Colorado Department of Local Affairs Award Year: December 31, 2024 Condition: No formal Federal procurement policy has been adopted by the Town of Eagle, Colorado, resulting in a lack of internal controls over Federal procurement. Criteria or Specific Requirement: The Town of Eagle, Colorado, must comply with procurement standards set out at 2 CFR sections 200.303 and 200.318 through 200.326 within Uniform Guidance. Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). UG §200.318 General Procurement Standards. (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, section of contract type, contractor selection or rejection, and the basis for the contract price. UG §200.320 states that the non-Federal entity must use one of the prescribed methods of procurement: (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 or property or services at or below the SAT include: (1) Micro-purchases. Procurement by micro-purchase is the acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see definition of micro-purchase in §200.1). To the maximum extent practicable, the non-Federal entity should distribute micro-purchases equitably among qualified suppliers. Micro-purchases may be awarded without soliciting competitive price or equitably among qualified suppliers. Micro-purchases may be awarded without soliciting competitive price or rate quotations if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. Purchase cards can be used for micro-purchases if procedures are documented and approved by the non-Federal entity. (2) Small purchase. Procurement by small purchase is the acquisition of property or services, the aggregate dollar amount of which is greater 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 non-Federal entity determines to be appropriate: (1) Sealed Bids. 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. (2) Proposals. Either a fixed price or cost-reimbursement-type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. (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 allowed circumstances apply. Questioned Costs: N/A Context: Although the Town of Eagle, Colorado, had not adopted a formal Federal procurement policy as outlined in 2CFR sections 200.303 and 200.318 through 200.326, during the course of our federal single audit testing of transactions and contracts, we found that the Town’s general contract purchase procedures that were followed meet the requirements of the Uniform Guidance and that no contracts were awarded without proper justification in 7 or 7 procurement transactions tested. Cause: Management was not aware of the requirement of adopting a formal Federal procurement policy under the procurement standards set out at 2CFR sections 200.303 and 200.318 through 200.626 within Uniform Guidance. Effect: The Town of Eagle, Colorado, is at risk for noncompliance with Federal grants as it relates to procurement. Recommendation: We recommend that the Town of Eagle, Colorado, adopts a formal Federal procurement policy to include all elements identified in 2CFR Sections 200.303 and 200.318 through 200.626. Views of Responsible Officials and Planned Corrective Action: Management agrees with this finding and will adopt a formal Federal procurement policy which includes all elements identified in 2CFR Sections 200.303 and 200.318 through 200.626.
Finding #24-003 – Procurement Program Names: 3rd Street Housing Project Eagle Community Pool Replacement CFDA Titles and Numbers: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Agency: United States Treasury Pass-through Agency: Colorado Department of Local Affairs Award Year: December 31, 2024 Condition: No formal Federal procurement policy has been adopted by the Town of Eagle, Colorado, resulting in a lack of compliance with Federal procurement. Criteria or Specific Requirement: The Town of Eagle, Colorado, must comply with procurement standards set out at 2 CFR sections 200.303 and 200.318 through 200.326 within Uniform Guidance. Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). UG §200.318 General Procurement Standards. (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, section of contract type, contractor selection or rejection, and the basis for the contract price. UG §200.320 states that the non-Federal entity must use one of the prescribed methods of procurement: (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 or property or services at or below the SAT include: (1) Micro-purchases. Procurement by micro-purchase is the acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see definition of micro-purchase in §200.1). To the maximum extent practicable, the non-Federal entity should distribute micro-purchases equitably among qualified suppliers. Micro-purchases may be awarded without soliciting competitive price or rate quotations if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. Purchase cards can be used for micro-purchases if procedures are documented and approved by the non-Federal entity. (2) Small purchase. Procurement by small purchase is the acquisition of property or services, the aggregate dollar amount of which is greater 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 non-Federal entity determines to be appropriate: (1) Sealed Bids. 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. (2) Proposals. Either a fixed price or cost-reimbursement-type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. (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 allowed circumstances apply. Questioned Costs: N/A Context: Although the Town of Eagle, Colorado, had not adopted a formal Federal procurement policy as outlined in 2CFR sections 200.303 and 200.318 through 200.326, during the course of our federal single audit testing of transactions and contracts, we found that the Town’s general contract purchase procedures that were followed meet the requirements of the Uniform Guidance and that no contracts were awarded without proper justification in 7 or 7 procurement transactions tested. Cause: Management was not aware of the requirement of adopting a formal Federal procurement policy under the procurement standards set out at 2CFR sections 200.303 and 200.318 through 200.626 within Uniform Guidance. Effect: The Town of Eagle, Colorado, is at risk for noncompliance with Federal grants as it relates to procurement. Recommendation: We recommend that the Town of Eagle, Colorado, adopts a formal Federal procurement policy to include all elements identified in 2CFR Sections 200.303 and 200.318 through 200.626. Views of Responsible Officials and Planned Corrective Action: Management agrees with this finding and will adopt a formal Federal procurement policy which includes all elements identified in 2CFR Sections 200.303 and 200.318 through 200.626.
FINDING 2024-002 Subject: Water and Waste Disposal Systems for Rural Communities - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal Systems for Rural Communities Assistance Listings Number: 10.760 Federal Award Number and Year (or Other Identifying Number): BAN-2 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context As part of sound management of the federal award, the City was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The City had not properly designed or implemented such a system, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. INDIANA STATE BOARD OF ACCOUNTS 16 CITY OF HUNTINGBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. 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 micropurchase 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. Procurement - Simplified Acquisition During the audit period, the City had two vendors with purchases over the $150,000 threshold that were considered simplified acquisition procurements. Both vendors were tested. For one vendor, the City could not provide the procurement history or the rationale for the method of procurement, the selection of vendor, or the basis for price. The total amount spent with this vendor was $2,391,895. Procurement - Policy The City provided its purchasing policy for review, but it did not include the applicable federal regulations, such as procedures to avoid the acquisition of unnecessary or duplicative items and procedures to ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Additionally, the City did not maintain written standards of conduct covering conflicts of interest and governing actions of its employees engaged in the selection, award, and administration of contracts. Suspension and Debarment Prior to entering into subawards and covered transactions with, recipients are required to verify that such contracts and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. A population of four covered transactions for goods or services were paid from USDA award funds during the audit period. A sample of two vendors were selected for testing. Of the two vendors tested, one vendor was not verified to not be suspended nor debarred or otherwise excluded or disqualified from participating in federal assistance programs or activities. The lack of internal controls and noncompliance were isolated to the same single vendor for both the simplified acquisition and the suspension and debarment issues as noted above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 17 CITY OF HUNTINGBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320(b) states in part: "Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance awards exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. . . . (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." INDIANA STATE BOARD OF ACCOUNTS 18 CITY OF HUNTINGBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The vendor in question was an engineering firm that the City originally hired to do a study at $40,000 in 2018 related to the wastewater treatment plant project. Through the years, the City did amendments to the contract to include more engineering services and did not advertise for bids or verify that the engineering firm was not suspended or debarred from receiving federal funds. Effect Without the proper implementation of an effectively designed system of internal controls, the City cannot ensure that the services obtained provided full and open competition or the basis of the price. In addition, the City cannot ensure the vendors paid were eligible to participate in federal programs. Any program funds the City used to pay vendors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. 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 costs identified. Recommendation We recommended that the City's management establish a proper system of internal controls to ensure expenditures made from federal awards use the appropriate procurement method and retain the documentation to support the procurement methods used in order to ensure compliance with the terms and conditions of the federal award. We recommended that management of the City establish a proper system of internal controls and develop policies and procedures to ensure contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into contracts or subawards. We also recommended strengthening its policies and procedures to ensure appropriate supporting documentation for federal programs is retained to be presented for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-001 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): 2021 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediate prior audit report. The prior audit finding number was 2023-001. Condition and Context An effective internal control system was not designed or implemented at the City to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement 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. Micro-purchases are typically for those purchases $10,000 or under, and small purchase procedures are 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. One vendor was identified that fell within the small purchase threshold. Purchases from the vendor totaled $40,458. As such, price or rate quotations from an adequate number of qualified sources should have been obtained. However, the City did not obtain price or rate quotations for the purchases, nor was full and open competition provided for the vendor. Additionally, there was no documentation available to support the rationale to limit competition. Suspension and Debarment The City elected to receive the standard revenue loss allowance, allowing the City to claim $10,000,000 of its total COVID-19 - State and Local Fiscal Recovery Funds (SLFRF) allocation of $16,549,045 as revenue loss to use for government services. The U.S. Department of the Treasury (Treasury) determined that there are no subawards under this eligible use category, and that recipients' use of revenue loss funds would not give rise to subrecipient relationships given that there is no federal program or purpose to carry out in the case of the revenue loss portion of the award. Prior to entering into subawards and covered transactions with SLFRF award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person or entity. Due to the Treasury's determination that the revenue loss eligible use category does not give rise to subawards, the City was only required to comply with suspension and debarment requirements related to contracts. The City's policies related to SLFRF suspension and debarment requirements include the Board of Public Works completing a review of each bid packet to ensure the bidder submitted a statement indicating if they were not suspended or debarred or an employee from the City Controller's office checking the Sam.gov website. There were 13 covered transactions identified that equaled or exceeded $25,000, and 2 covered transactions, totaling $251,334, were selected for testing. For both of the transactions tested, the City did not verify the suspension or debarment status prior to payment. 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). . . ." 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 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." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The nonfederal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 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. . . ." Cause The City did not follow the City's established policy to ensure the proper procurement of services and supplies and to verify suspension and debarment status for covered transactions. 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. The City did not use the proper method of procurement to choose a vendor. In addition, the City did not ensure the contractors paid with federal funds are eligible to participate in federal programs. Any program funds the City used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Furthermore, 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 costs identified. Recommendation We recommended that management of the City follow the City's established policies to ensure compliance with requirements related to procurement and suspension and debarment. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): TRSW222046 Pass-Through Entity: Indiana Finance Authority Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not designed or implemented at the City to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement 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. Micro-purchases are typically for those purchases $10,000 or under, and small purchase procedures are 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. The grant covered one project with one vendor that fell within the simplified acquisition threshold. Payments to the vendor for the project totaled $189,741 with $120,452 of that amount was grant funds. As such, the formal bid process should have been followed. The City did not perform bid procedures or provide the rationale for the method of procurement, the selection of vendor, or the basis for price. Additionally, the City did not obtain a written contract for the services. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAM exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person or entity. The City's policies related to COVID-19 - Coronavirus State and Local Fiscal Recovery Funds suspension and debarment requirements include the Board of Public Works completing a review of each bid packet to ensure the bidder submitted a statement indicating if they were not suspended or debarred or an employee from the City Controller's office checking the Sam.gov website. As noted above, the grant covered one project with one vendor utilized and the City did not verify the suspension or debarment status prior to payment for this vendor. The lack of internal controls and noncompliance was isolated to the instance noted above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The nonfederal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 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: . . . (b) Formal Procurement Methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. . . . (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." 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 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 The City did not follow the City's established policy to ensure the proper procurement of services and supplies and to verify suspension and debarment status for covered transactions. 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. The City did not use the proper method of procurement to choose a vendor. In addition, the City did not ensure the contractors paid with federal funds are eligible to participate in federal programs. Any program funds the City used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Furthermore, 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 costs identified. Recommendation We recommended that management of the City follow its established policies to ensure compliance with requirements related to procurement and suspension and debarment. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding Number: 2024-001 Finding Type: Federal award finding Federal Assistance Listing No.: 15.685 Program Name: National Fish Passage Federal Agency: U.S. Department of the Interior Federal Grant Number: F24C01411-00 Federal Award Year: 2024 Pass-through entity: Rogue River Watershed Council Grant Number: 205 Control Deficiency Type: Significant deficiency in internal controls and instances of non-compliance Instances of Noncompliance: Yes Compliance Requirement: Procurement, suspension and debarment Questioned Costs: None Repeat Finding: No Criteria: A non-federal organization must follow its own documented procurement procedures, provided they comply with applicable state and local laws and align with the federal standards outlined in 2 CFR 200.318–200.327 (“Uniform Guidance”). Specifically, 2 CFR 200.318(i) requires entities to maintain records sufficient to detail the history of the procurement, including but not limited to the rationale for the procurement method chosen, the basis for selecting or rejecting contractors, and the justification for the contract price. In addition, all procurement transactions must be conducted in a manner providing full and open competition. Furthermore, federal requirements prohibit grant recipients from contracting with, or purchasing from, contractors who are suspended and debarred from doing business with the federal government. Whenever the organization enters into contracts or purchases goods or services with federal funds that it expects to equal or exceed $25,000, it must verify that the contractor or vendor has not been suspended, debarred or otherwise excluded. Finally, the organization must ensure that all federal programs comply with Section 70914 of the Build America, Buy America (BABA) Act for infrastructure projects. Condition: The organization has enacted a written procurement policy and management believed that it met all the standards required under 2 CFR 200.318 through 200.326. However, the policy failed to include some of the most stringent requirements included in the Uniform Guidance, and the organization did not comply with all the documentation requirements laid out in its procurement policy. More specifically, the organization did not maintain written thorough documentation of the procurement process as stated in 2 CFR 200.318(i), nor publicized the request for proposal in accordance with 2 CFR 200.319. Finally, the contract funded under the major program did not incorporate the mandatory BABA Act compliance language. Cause: As this was the entity’s first federal audit, WaterWatch was unaware of some procurement requirements outlined in the Uniform Guidance that needed to be incorporated into its procurement policies and procedures. Furthermore, the entity was new to the federal procurement environment. Regarding suspension and debarment, and the BABA Act, the organization was generally aware of these requirements and believed it had achieved compliance. However, WaterWatch was not aware of the need to perform documented formal verification regarding debarment beyond regularly sharing information in their existing networks of restoration agency and NGOs which rely on the same pool of experience contractors. Regarding BABA, WaterWatch was not aware of the specific documentation requirements. WaterWatch did not add the required contract language regarding BABA or debarment. In addition, due to the limited number of contractors performing this type of work, only four contractors responded to this particular request for proposal and only one submitted a bid. As a result, WaterWatch did not generate their comparison-based procurement process written documentation. Effect: The organization did not comply with some of the procurement, suspension and debarment requirement as outline in the Uniform Guidance. Audit Recommendation: We recommend that management review its current procurement policy to ensure that all procurement activities fully comply with the federal regulations, as well as establish additional procedure and oversight mechanism to ensure that procurement activities fully comply with the organization’s policies. Management’s Response: The following corrective actions are being immediately implemented for contracts in WaterWatch’s restoration program in order to achieve compliance: 1. Language requiring all contractors to comply with the Build America, Buy America (BABA) Act is added to all new WaterWatch contracts and all current contracts via amendment. 2. Language requiring all contractors to comply with federal suspension and debarment contracting standards is added to all new WaterWatch contracts and all current contracts via amendment. 3. WaterWatch will keep formal documentation of debarment searches for all contractors. 4. WaterWatch will keep formal documentation of contractor procurement process in both Southern Oregon and Portland offices.
Finding Number: 2024-001 Finding Type: Federal award finding Federal Assistance Listing No.: 15.685 Program Name: National Fish Passage Federal Agency: U.S. Department of the Interior Federal Grant Number: F24C01411-00 Federal Award Year: 2024 Pass-through entity: Rogue River Watershed Council Grant Number: 205 Control Deficiency Type: Significant deficiency in internal controls and instances of non-compliance Instances of Noncompliance: Yes Compliance Requirement: Procurement, suspension and debarment Questioned Costs: None Repeat Finding: No Criteria: A non-federal organization must follow its own documented procurement procedures, provided they comply with applicable state and local laws and align with the federal standards outlined in 2 CFR 200.318–200.327 (“Uniform Guidance”). Specifically, 2 CFR 200.318(i) requires entities to maintain records sufficient to detail the history of the procurement, including but not limited to the rationale for the procurement method chosen, the basis for selecting or rejecting contractors, and the justification for the contract price. In addition, all procurement transactions must be conducted in a manner providing full and open competition. Furthermore, federal requirements prohibit grant recipients from contracting with, or purchasing from, contractors who are suspended and debarred from doing business with the federal government. Whenever the organization enters into contracts or purchases goods or services with federal funds that it expects to equal or exceed $25,000, it must verify that the contractor or vendor has not been suspended, debarred or otherwise excluded. Finally, the organization must ensure that all federal programs comply with Section 70914 of the Build America, Buy America (BABA) Act for infrastructure projects. Condition: The organization has enacted a written procurement policy and management believed that it met all the standards required under 2 CFR 200.318 through 200.326. However, the policy failed to include some of the most stringent requirements included in the Uniform Guidance, and the organization did not comply with all the documentation requirements laid out in its procurement policy. More specifically, the organization did not maintain written thorough documentation of the procurement process as stated in 2 CFR 200.318(i), nor publicized the request for proposal in accordance with 2 CFR 200.319. Finally, the contract funded under the major program did not incorporate the mandatory BABA Act compliance language. Cause: As this was the entity’s first federal audit, WaterWatch was unaware of some procurement requirements outlined in the Uniform Guidance that needed to be incorporated into its procurement policies and procedures. Furthermore, the entity was new to the federal procurement environment. Regarding suspension and debarment, and the BABA Act, the organization was generally aware of these requirements and believed it had achieved compliance. However, WaterWatch was not aware of the need to perform documented formal verification regarding debarment beyond regularly sharing information in their existing networks of restoration agency and NGOs which rely on the same pool of experience contractors. Regarding BABA, WaterWatch was not aware of the specific documentation requirements. WaterWatch did not add the required contract language regarding BABA or debarment. In addition, due to the limited number of contractors performing this type of work, only four contractors responded to this particular request for proposal and only one submitted a bid. As a result, WaterWatch did not generate their comparison-based procurement process written documentation. Effect: The organization did not comply with some of the procurement, suspension and debarment requirement as outline in the Uniform Guidance. Audit Recommendation: We recommend that management review its current procurement policy to ensure that all procurement activities fully comply with the federal regulations, as well as establish additional procedure and oversight mechanism to ensure that procurement activities fully comply with the organization’s policies. Management’s Response: The following corrective actions are being immediately implemented for contracts in WaterWatch’s restoration program in order to achieve compliance: 1. Language requiring all contractors to comply with the Build America, Buy America (BABA) Act is added to all new WaterWatch contracts and all current contracts via amendment. 2. Language requiring all contractors to comply with federal suspension and debarment contracting standards is added to all new WaterWatch contracts and all current contracts via amendment. 3. WaterWatch will keep formal documentation of debarment searches for all contractors. 4. WaterWatch will keep formal documentation of contractor procurement process in both Southern Oregon and Portland offices.
Internal control deficiency and noncompliance over procurement and suspension and debarment. Identification of the federal program: Assistance Listing Number 21.027: • COVID-19 – Coronavirus State and Local Fiscal Recovery Funds • U.S. Department of the Treasury • Federal award identification number – Not Applicable • Federal award year – March 3, 2021 to December 1, 2024 • Pass-through entity – State of Georgia Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303 Internal controls. 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). Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 General procurement standards (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; (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders; (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. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 General procurement standards (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. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.319 Competition (a) All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and 200.320. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 Methods of procurement to be followed. 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) (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 simplified acquisition threshold, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate – (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price; (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 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; (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. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.324 Contract cost and price. (a) The non-Federal entity must perform a cost or price analysis in connection with every procurement action in excess of the Simplified Acquisition Threshold including contract modifications. The method and degree of analysis is dependent on the facts surrounding the particular procurement situation, but as a starting point, the non-Federal entity must make independent estimates before receiving bids or proposals. Title 2, Subtitle A, Chapter II, Part 200, Subpart C 200.214 Suspension and debarment. Non-Federal entities are subject to the non-procurement debarment and suspension regulations that restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Title 2, Subtitle A, Chapter I, Part 180, Subpart C 180.300 What must I do before I enter into a covered transaction with another person at the next lower tier? When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) checking SAM Exclusions; (b) Collecting a certification from that person; or (c) adding a clause or condition to the covered transaction with that person. Condition: During our testing over procurement, we observed management did not have documented procurement procedures that conformed to the procurement standards identified in 2 CFR section 200.318 to 200.327 and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Management did not have internal controls in place over small purchase procurements to ensure price or rate quotations were obtained from an adequate number of qualified sources, formal procurements to ensure sealed bids or proposals were obtained through public advertising, and completion of a cost or price analysis in connection with all procurement actions exceeding the simplified acquisition threshold. Management did not maintain records for procurements to document the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. In addition, during our testing over suspension and debarment, we observed management did not have documented suspension and debarment procedures and did not have internal controls in place to ensure vendors were searched for suspension and debarment at the time of vendor selection. Cause: Management did not have internal controls in place over the compliance requirements as stated in the criteria or specific requirement section above. Effect or potential effect: Procurements were not supported by internal controls and could potentially include unreasonable prices or rates. In addition, if a search for suspension and debarment is not conducted, the entity could contract with vendors that are suspended or debarred. Questioned costs: $917,218 – Assistance Listing Number 21.027 – Federal award identification number – Not Applicable Questioned costs were computed as the entire population of procurement transactions subject to small purchase, formal procurement, and suspension and debarment compliance requirements. Questioned costs means an amount, expended or received from a Federal award, that (1) is noncompliant or suspected noncompliant with Federal statutes, regulations, or the terms and conditions of the Federal award or (2) at the time of the audit, lacked adequate documentation to support compliance. Context: During our testing over procurements, we obtained a listing of expenditures that included $917,218 of procurement transactions subject to small purchase, formal procurement, and suspension and debarment compliance requirements. We observed management did not have internal controls in place to ensure the compliance requirements as stated in the criteria or specific requirement section above were performed. Identification as a repeat finding, if applicable: No. Recommendation: Management should create documented procurement procedures that conform to the procurement standards identified in 2 CFR section 200.318 through 200.327 and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Management should develop and implement internal controls over small purchase procurements to ensure price or rate quotations are obtained from an adequate number of qualified sources, formal procurements to ensure sealed bids or proposals are obtained through public advertising, and completion of a cost or price analysis in connection with all procurement actions exceeding the simplified acquisition threshold. Management should maintain records for procurements to document the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Management should create documented suspension and debarment procedures and develop and implement internal controls to ensure vendors were searched for suspension and debarment at the time of vendor selection. Management should review the procurements identified as questioned costs to identify if any improper payments were made to the entity. Views of responsible officials: We agree with the finding that internal controls were not sufficient to maintain compliance with federal procurement standards under Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 to 200.327 for a non-federal entity. However, the funds were expended for the intended purpose of the federal award. The Company is committed to implementing internal controls to ensure procurement related to federal awards follow 2 CFR section 200.318 to 200.327. The Company will update the procurement policy to ensure it complies with the requirements of 2 CFR section 200.318 through 200.327, that includes the written standards of conduct covering conflicts of interest, governing the actions of its employees who select, award and administer procurement contracts. This policy will include procedures to ensure proper procurement for small purchases to ensure sufficient price quotations are obtained from the required number of qualified sources, proper sealed bids or proposals are obtained through public advertising, an appropriate cost or price analysis is performed for procurement actions exceeding the simplified acquisition threshold, documentation is retained, and proper oversight is exercised to demonstrate compliance with 2 CFR section 200.318 through 200.327. While the Company did not perform a check of each vendor against the SAM Exclusions prior to selecting a vendor, the Company has procedures in place to ensure the vendors are approved by Corporate purchasing and in good standing, which limits the risk of conflict of interest between employees and vendors, and contracting with a vendor who is suspended or debarred from federal related contracting. Further, the Company confirmed the vendors that were contracted with were not included on the SAM Exclusions listing.
Internal control deficiency and noncompliance over procurement and suspension and debarment. Identification of the federal program: Assistance Listing Number 84.116Z: • Fund for the Improvement of Postsecondary Education • U.S. Department of Education • Federal award identification number – P116Z230323 • Federal award year – June 1, 2023 to May 31, 2026 Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303 Internal controls. 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). Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 General procurement standards (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; (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders; (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. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 General procurement standards (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. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.319 Competition (a) All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and 200.320. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 Methods of procurement to be followed. 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) (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. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 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; (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. Title 2, Subtitle A, Chapter II, Part 200, Subpart C 200.214 Suspension and debarment. Non-Federal entities are subject to the non-procurement debarment and suspension regulations that restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Title 2, Subtitle A, Chapter I, Part 180, Subpart C 180.300 What must I do before I enter into a covered transaction with another person at the next lower tier? When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) checking SAM Exclusions; (b) Collecting a certification from that person; or (c) adding a clause or condition to the covered transaction with that person. Condition: During our testing over procurement, we observed management did not have documented procurement procedures that conformed to the procurement standards identified in 2 CFR section 200.318 to 200.327 and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Management did not have internal controls in place over small purchase procurements to ensure price or rate quotations were obtained from an adequate number of qualified sources. Management did not maintain records for procurements to document the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. In addition, during our testing over suspension and debarment, we observed management did not have documented suspension and debarment procedures and did not have internal controls in place to ensure vendors were searched for suspension and debarment at the time of vendor selection. Cause: Management did not have internal controls in place over the compliance requirements as stated in the criteria or specific requirement section above. Effect or potential effect: Procurements were not supported by internal controls and could potentially include unreasonable prices or rates. In addition, if a search for suspension and debarment is not conducted, the entity could contract with vendors that are suspended or debarred. Questioned costs: $153,169 – Assistance Listing Number 84.116Z – Federal award identification number – P116Z230323 Questioned costs were computed as the entire population of procurement transactions subject to small purchase and suspension and debarment compliance requirements. Questioned costs means an amount, expended or received from a Federal award, that (1) is noncompliant or suspected noncompliant with Federal statutes, regulations, or the terms and conditions of the Federal award or (2) at the time of the audit, lacked adequate documentation to support compliance. Context: During our testing over procurements, we obtained a listing of expenditures that included $153,169 of procurement transactions subject to small purchase and suspension and debarment compliance requirements. We observed management did not have internal controls in place to ensure the compliance requirements as stated in the criteria or specific requirement section above were performed. Identification as a repeat finding, if applicable: No. Recommendation: Management should create documented procurement procedures that conform to the procurement standards identified in 2 CFR section 200.318 through 200.327 and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Management should develop and implement internal controls over small purchase procurements to ensure price or rate quotations are obtained from an adequate number of qualified sources. Management should maintain records for procurements to document the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Management should create documented suspension and debarment procedures and develop and implement internal controls to ensure vendors were searched for suspension and debarment at the time of vendor selection. Management should review the procurements identified as questioned costs to identify if any improper payments were made to the entity. Views of responsible officials: We agree with the finding that internal controls were not sufficient to maintain compliance with federal procurement standards under Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 to 200.327 for a non-federal entity. However, the funds were expended for the intended purpose of the federal award. The Company is committed to implementing internal controls to ensure procurement related to federal awards follow 2 CFR section 200.318 to 200.327. The Company will update the procurement policy to ensure it complies with the requirements of 2 CFR section 200.318 through 200.327, that includes the written standards of conduct covering conflicts of interest, governing the actions of its employees who select, award and administer procurement contracts. This policy will include procedures to ensure proper procurement for small purchases to ensure sufficient price quotations are obtained from the required number of qualified sources, proper sealed bids or proposals are obtained through public advertising, an appropriate cost or price analysis is performed for procurement actions exceeding the simplified acquisition threshold, documentation is retained, and proper oversight is exercised to demonstrate compliance with 2 CFR section 200.318 through 200.327. While the Company did not perform a check of each vendor against the SAM Exclusions prior to selecting a vendor, the Company has procedures in place to ensure the vendors are approved by Corporate purchasing and in good standing, which limits the risk of conflict of interest between employees and vendors, and contracting with a vendor who is suspended or debarred from federal related contracting. Further, the Company confirmed the vendors that were contracted with were not included on the SAM Exclusions listing.
Finding 2024-006 I. Procurement, Suspension and Debarment Identification of the federal program: Federal Agency: U.S. Department of Housing and Urban Development (HUD) Federal Assistance Listing Number: 14.881 Federal Program Name: Moving to Work (MTW) Demonstration Program Public and Indian Housing (Public Housing) Program Year: January 1, 2024 through December 31, 2024 Program No.: IL002-01-00024D Criteria or specific requirement (including statutory, regulatory or other citation): The Uniform Guidance 2 CFR section 200.303 states, “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).” The Uniform Guidance 2 CFR section 200.318, general procurement standards states “(a) Documented procurement procedures. The recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services.” The Uniform Guidance 2 CFR section 200.319 states that “all procurement transactions under the Federal award must be conducted in a manner that provides for full and open competition and is consistent with the standards of this section and §200.320.” The Authority’s procurement policy for a cooperative (“piggyback”) procurement requires an agency contract and amendments. The Authority’s internal control procedures require procurements of more than $500,000 to have Board of Commissioners' approval. Condition: For one of nine (11.1%) procurement transactions sampled to test the Authority’s internal controls to ensure procurements are executed and documented in accordance with the Uniform Guidance procurement standards, we noted that the procurement was not approved by the Board of Commissioners and there was no executed agreement or amendment that covered fiscal year 2024. Cause: The Authority’s internal control over the review and approval of procurement transactions was not operating effectively. Effect or Potential Effect: Procurements may not be following Uniform Guidance procurement standards. Questioned Costs: A total of $3,500,000 related to Assistance Listing No. 14.881, representing the one procurement that was not approved by the Board and did not have an agreement or amendment in place that covered fiscal year 2024. Context: The one procurement totaled $3,500,000 out of nine procurement transactions sampled totaling $4,983,902. Public Housing expenditures reported in the schedule of expenditures of federal awards were $171,219,053 for the year ended December 31, 2024, representing 15.1% of total federal expenditures under Assistance Listing No. 14.881 of $1,106,629,432. Identification as a Repeat Finding, if Applicable: This finding is not a repeat finding from the prior year. Recommendation: The Authority should follow its established internal control over the review and approval of procurement transactions. Views of Responsible Officials: Management concurs with the finding and has developed a plan to correct the finding.
FINDING 2024-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): SLFRP1096 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Each entity that accepts federal money must comply with 2 CFR 300.318, which requires each entity to have their own documented procurement procedures. The City provided a procurement policy from Title II of an employee manual that did not fully satisfy the standards of 2 CFR 200.318. The employee manual was adopted in 2004. The COVID-19 - Coronavirus State and Local Fiscal Recovery Funds were used to pay for engineering services in the amount of $301,000. These services were not publicly bid even though the dollar amount of the services exceeds the simplified acquisition threshold. Prior to entering into subawards and covered transactions with the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is done by checking the Excluded Parties List System (EPLS), collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. INDIANA STATE BOARD OF ACCOUNTS 16 CITY OF ANDERSON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The City included suspension and debarment certifications with the agreements with many of the vendors who participated in the activities funded by the SLFRF funds. The City also checked the EPLS for some vendors. Evidence of compliance with the suspension and debarment verification requirements was not provided for two of four vendors selected for suspension and debarment testing. The lack of internal controls and noncompliance was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 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 the 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. . . . INDIANA STATE BOARD OF ACCOUNTS 17 CITY OF ANDERSON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. . . ." INDIANA STATE BOARD OF ACCOUNTS 18 CITY OF ANDERSON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 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 The City did not have adequate internal controls over procurement and suspension and debarment. The City had not adopted a formal or informal policy for procurement that meets the requirements of 2 CFR 300.318. The City did not apply its procedures over suspension and debarment uniformly with one vendor not tested for suspension and debarment due to the specific aspects of the City's grant plan that the vendor was assigned to. Effect Without establishing effective internal controls over procurement and suspension and debarment, the City cannot ensure free and open competition or that the vendors paid with federal funds are eligible to participate in federal programs and might allow for payments to suspended or debarred parties that would be unallowable. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could potentially result in the loss of future funding to the City. Recommendation We recommended that management of the City establish a formal policy on procurement that meets the standards of 2 CFR 200.318 and develop effective internal controls and procedures to ensure that all vendors in which expenditures exceed $25,000 are not suspended, debarred, or otherwise excluded prior to entering into contracts or subawards.
2024-003 Procurement, Suspension, and Debarment Prior Year Finding Number: N/A Year of Finding Origination: 2024 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of Agriculture Program: 10.561 State Administrative Matching Grants for the Supplemental Nutrition Assistance Program Award Number and Year: 242MN101S2514; 2024 Pass-Through Agency: Minnesota Department of Human Services 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. Title 2 U.S. Code of Federal Regulations § 200.318(i) states that the Health and Human Services 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. Additionally, the Health and Human Services must follow further federal guidance over full and open competition as provided in Title 2 U.S. Code of Federal Regulations § 200.319, and perform a cost or price analysis as provided in Title 2 U.S. Code of Federal Regulations § 200.324. Federal requirements prohibit non-federal entities from contracting with or making subawards under covered transactions to parties that are suspended or debarred. Title 2 U.S. Code of Federal Regulations § 180.300 describes a required verification process. Prior to entering into the transaction, one of the following must be performed: (1) checking SAM.gov exclusions, (2) collecting a certification, or (3) adding a clause or condition to the covered transaction. Condition: The following exceptions were noted in the procurements testing: • All five small purchases tested did not have documentation of price or rate quotations obtained from an adequate number of qualified sources detailing the history of procurement or documentation of full and open competition. • For the five micro-purchase procurements tested, Southwest Health and Human Services did not document how purchases are distributed among qualified suppliers, as practical. • For one of the four covered transactions tested, the verification for suspended or debarred vendors was not performed before entering into the procurement. • For the one transaction over the simplified acquisition threshold tested, no documentation was maintained detailing the history of the procurement, demonstrating full and open competition, or that a cost or price analysis was performed. Questioned Costs: None. Context: The threshold used for the procurement testing was based on the Health and Human Services’ policy for simplified acquisition threshold (over $150,000), small purchases ($3,000 to $150,000), and micro-purchases ($3,000 or less). The suspension and debarment covered transaction threshold is $25,000. The population consisted of one procurement over the simplified acquisition threshold, 37 small purchases, 38 micro-purchases, and 18 covered transactions. The sample was one over the simplified acquisition threshold, five small purchases, five micro-purchases, and four covered transactions. The sample size was based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing and Single Audits. Effect: It cannot be determined that the contracting process was open and fair because the Health and Human Services did not document the rationale for the contractor selection. It also cannot be determined that an entity was not suspended, debarred, or otherwise excluded from conducting business with the Health and Human Services. Cause: Southwest Health and Human Services does not have processes in place to ensure federal requirements for procurement are followed. Recommendation: We recommend the Health and Human Services maintain documentation on the history of a procurement, provide for full and open competition, and perform a cost or price analysis to support compliance with Title 2 U.S. Code of Federal Regulations §§ 200.318, 200.319, and 200.324. We further recommend the Health and Human Services maintain documentation to demonstrate that vendors were not debarred, suspended, or otherwise excluded from conducting business with the Health and Human Services; this documentation should be completed prior to entering into a covered transaction. View of Responsible Official: Concur
FINDING 2024-004 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): SWIF224568 Pass-Through Entity: Indiana Finance Authority Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context As part of sound management of the federal award, the Town was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The Town had not properly designed or implemented such a system, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. INDIANA STATE BOARD OF ACCOUNTS 19 TOWN OF RIDGEVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Procurement 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. One vendor was identified that fell within the small purchase threshold. Purchases from the vendor totaled $38,225. As such, price or rate quotations from an adequate number of qualified sources should have been obtained. However, the Town did not obtain price or rate quotations for the purchases, nor was full and open competition provided for the vendor. Additionally, there was no documentation available to support the rationale to limit competition. Suspension and Debarment Prior to entering into subawards and covered transactions with the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The Town did not have policies or procedures in place for verifying that an entity with which it planned to enter into a covered transaction was not suspended, debarred, or otherwise excluded. Two of the three vendors selected for testing, with covered transactions, were not verified to ensure that the vendor was not suspended, debarred, or otherwise excluded. 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 20 TOWN OF RIDGEVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." 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 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 The Town did not have policies or procedures in place to document the process performed to ensure each vendor related to the SLFRF program was not suspended or debarred from participation in federal awards. The Town was not aware of the requirements for specific federal procurement policies or the need to verify covered transactions for suspension and debarment. Effect Without the proper implementation of an effectively designed system of internal controls and procedures, the Town could not ensure the vendors paid with federal funds were eligible to participate in federal programs. Any program funds the Town used to pay vendors that have been suspended or debarred would be unallowable and the funding agency could potentially recover the funds. Questioned Costs No questioned costs noted. INDIANA STATE BOARD OF ACCOUNTS 21 TOWN OF RIDGEVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended the Town implement procurement policies to ensure compliance with state and federal laws and regulations for procuring goods and services paid with federal funds. We also recommended that management of the Town adopt internal controls to ensure that all contractors that are expected to be paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into covered transactions. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Highway Planning and Construction - Procurement Federal Agency: Department of Transportation Federal Program: Highway Planning and Construction Assistance Listings Number: 20.205 Federal Award Number and Year (or Other Identifying Number): DES 2300096 Pass-Through Entity: Indiana Department of Transportation Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The County had not properly designed or implemented a system of internal controls that would be effective in preventing, or detecting and correcting, noncompliance to ensure that the Local Public Agency (LPA) followed all federal requirements related to engineering and design services. In addition, the County did not have documented procurement procedures or policies used to procure engineering and design services. For consultant contracting (engineering and design related services), the LPA was to create and send a Request for Proposal (RFP) to the Indiana Department of Transportation (INDOT), who would review and advertise them. Consultants could then respond to those RFPs by completing and submitting a Letter of Interest (LOI). After all LOIs were received and ranked, the County was to report the number of LOIs received on the LPA Selection Review Checklist. The County did not maintain the LOIs as reported to the INDOT on the LPA Selection Review Checklist. As a result, the number of LOIs documented on the checklist provided to the INDOT could not be verified or audited. In addition, we were unable to ensure the minimum number of LOIs were received to meet the procurement competition standards. The lack of internal controls and noncompliance was isolated to DES 2300096. The lack of written procedures or policies was a systemic issue throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 18 CRAWFORD COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320(b) states in part: "Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance awards 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: . . . (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement 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 19 CRAWFORD COUNTY 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. Cause Management did not develop effective internal controls to maintain records sufficient to detail the history of a procurement as required by retaining the LOIs. The County was unaware that it needed to maintain documented procurement procedures or policies. Effect The failure to establish and maintain an effective internal control system for procurement placed the County at risk of noncompliance with the federal requirements. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Due to the lack of retention of the LOIs, compliance with the procurement process could not be determined. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the County establish and implement written policies and procedures for the procurement of engineering and design services. We further recommended that the County ensure it retains all LOIs and other procurement documentation to ensure compliance with federal regulations. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2024 001 Reporting and Procurement U.S. Department of the Treasury: Passed-through State of New Jersey Department of Community Affairs: COVID 19 Coronavirus State and Local Fiscal Recovery Funds (ALN 21.027) Contract Number and Years: G2022 09 (03/02/2021 – 12/31/2026) Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample Repeat Finding: Yes (2023-001) Finding Type: Material Weakness, Material Noncompliance Criteria Reporting Per 2 CFR 200.502, the determination of when a Federal award is expended must be based on when the activity related to the Federal award occurs. Generally, the activity pertains to events that require the non Federal statutes, regulations and the terms and conditions of Federal awards, such as: expenditures/expense transactions associated with awards including grants. Further, the Uniform Guidance compliance supplement notes, each recipient must report program outlays and program income on a cash or accrual basis, as prescribed by the Federal awarding agency. In accordance with the grant agreement and the reporting requirements for the State of New Jersey Department of Community Affairs, direct grants and pass through funds are fulfilled utilizing an advanced payment method and tracking reports. The grantee shall submit quarterly financial reports, in a format to be provided by the Department, and including the number of government full time employees responding to COVID 19 as supported by this funding. The reports are prepared and submitted to allow for relevant and reliable information to be provided to the Federal government or State of New Jersey for tracking purposes. The reports are the source documents for the grantee to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the grantee’s financial statements in accordance with 2 CFR 200.502, Basis for determining Federal awards expended, for the SEFA. Procurement 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. A non Federal entity must: 1. Meet the general procurement standards in 2 CFR section 200.318, which include oversight of contractors’ performance, maintaining written standards of conduct for employees involved in contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurements. 2. Conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR section 200.319. 3. Use the micro purchase and small purchase methods only for procurements that meet the applicable criteria under 2 CFR sections 200.320(a) (1) and (2). Under the micro purchase method, the aggregate dollar amount does not exceed $10,000 ($2,000 in the case of acquisition for construction subject to the Wage Rate Requirements (Davis Bacon Act)). Small purchase procedures are used for purchases that exceed the micro purchase amount but do not exceed the simplified acquisition threshold ($250,000). Micro purchases may be awarded without soliciting competitive quotations if the non Federal entity considers the price to be reasonable (2 CFR section 200.320(a)). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR section 200.320(b)). In accordance with the grant agreement and the reporting requirements for the State of New Jersey Department of Community Affairs, recipients may use award funds to enter into contracts to procure goods and services necessary to implement one or more of the eligible purposes outlined in sections 602(c) and 603(c) of the Act and Treasury’s Interim Final Rule and Final Rule. As such, recipients are expected to have procurement policies and procedures in place that comply with the procurement standards outlined in the Uniform Guidance. Under the program, St. Joseph’s Health, Inc. must follow the procurement standards in 2 CFR sections 200.318 through 200.327, including ensuring that the procurement method used for the contracts are appropriate based on the dollar amount and conditions specified in 2 CFR section 200.320. Internal Control Additionally, in accordance with Federal requirements, a non Federal entity shall maintain internal controls over Federal programs designed to provide reasonable assurance that transactions are executed in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award that could have a direct and material effect on a Federal program. Condition and Context Reporting On a quarterly basis, St. Joseph’s Health, Inc. (the System) prepares and reports to New Jersey Department of Community Affairs (the Department) the program expenditures for Federal funding amounts on the tracking report of expenditures, which are then used to prepare the annual SEFA in conjunction with the general ledger detail at the end of the fiscal year. While expenditures per the SEFA as prepared by the System were accurate and the quarterly reporting was accepted by the State, the System’s expenditures per the report of expenditures continue to be based upon purchase order amounts, which include expenditures that were incurred subsequent to year end. Procurement Further, the System engaged multiple vendors for several projects under the G2022 09 grant that were above the $10K micro purchase threshold, but below the simplified acquisition threshold. However, the System did not obtain multiple quotes from different vendors to encourage fair competition in the market. The System’s policies and procedures to ensure compliance with the above compliance requirements did not include certain internal controls that were designed properly and operating effectively to ensure that the System properly reported costs on the report of expenditures or obtained the necessary quotes from potential bidders for procurements over the micro purchase threshold. Cause Management’s review of the submitted quarterly report of expenditures continuing not to be identified the need for a reconciliation of incurred expenditures and purchase order balances reported to the Department and as such, as there is a variance between the amounts reported on the SEFA and the amounts reported to the Department on the quarterly reports of approximately $2.1 million. We noted, however, that this variance did not represent any unallowable costs. Additionally, Management did not retain or obtain the required documentation indicating quotes from multiple vendors were obtained for the ongoing construction projects under the grant. Effect The System had a material variance in the amount of expenditures reported to the Department as compared to the SEFA and did not obtain multiple quotations from vendors when making selections for various projects ongoing under the Federal program. Questioned Costs None Recommendation Reporting We recommend that the System strengthen its processes and internal controls to ensure the tracking of each report of expenditures provided to the Department has a reconciliation of the amount of expenditures incurred in the period based upon the general ledger and accounting records, used to prepare the annual SEFA, as compared to the purchase order balances. Procurement We recommend that the System strengthen its processes and internal controls to ensure that all procurement related transactions are supported by the appropriate bidding documentation as required by the Uniform Guidance for each respective bidding threshold. View of Responsible Official Management agrees with the auditor’s recommendations and will strengthen its processes and internal controls to ensure the report of expenditures provided to the Department has a reconciliation of the amount of expenditures incurred in the period compared to the purchase order balances and all procurement transactions contain the required bidding documentation for each bidding threshold in accordance with the Uniform Guidance.