Findings Citing § 200.320

2 CFR § 1000.10 gives regulatory effect to the Department of Treasury for 2 CFR § 200.320 that states that the non-Federal entity must have and use documented procurement procedures, consistent with the standards of 2 CFR § 200.317 - 200.320. Furthermore, 2 CFR 200.§ 320(a)(2) states that "small purchases are 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 19.305 states that Non-Federal entities may not enter into a covered transaction with an excluded person, unless the Department of the Treasury grants an exception under 31 CFR § 19.120. 31 CFR 19.200 identifies “covered transactions” as nonprocurement or procurement transactions subject to the prohibitions of 31 CFR Part 19 which is either at the primary tier, between a Federal agency and a person, or at a lower tier, between a participant in a covered transaction and another person. 31 CFR 19.220 indicates that procurement contracts for goods or services awarded by a participant in a nonprocurement transaction are covered transactions if the amount of the contract is expected to equal or exceed $25,000 or meets certain other specified criteria outlined in 31 CFR § 19.220. All nonprocurement transactions, irrespective of award amount, are considered covered transactions, unless exempt by 31 CFR 19.215. 31 CFR 19.300 provide that when a non-Federal entity enters into a covered transaction, the non-Federal entity must verify that the entity is not excluded or disqualified. This verification may be accomplished by checking the System for Award Management (SAM) exclusions (https://sam.gov), collecting a certification from the entity, or adding a clause or condition to the covered transaction with that entity. The District has an established procurement policy and procedures manual, DJF-R, Purchasing Procedures, which states that for purchases above the micro purchases threshold of $10,000 and below the simplified acquisition threshold of $250,000, the District must obtain price rates or quotes from a minimum of two vendors or providers. The District Policy also states that no purchase will be made with federal funds unless the District verifies that the contractor is not suspended or debarred. Additionally, the District is responsible for checking the Ohio Auditor of State website, pursuant to Ohio Revised Code § 9.24 for certified unresolved findings of recovery for any sub-award or contract exceeding $25,000, or when the aggregate amount provided under multiple contracts with a single person or entity during the preceding fiscal year exceeded $50,000 and shall also confirm that the supplier is not debarred or suspended by doing one of the following: (i) checking the Federal government's SAM, which maintains a list of such debarred or suspended suppliers at www.sam.gov; (ii) collecting a certification from the supplier; or (iii) adding a clause or condition to the covered transaction with that supplier. The District did not have proper internal controls in place to document procurement procedures or to verify that all entities with whom the District had entered into covered transactions had not been suspended or debarred. During testing of the AL #21.027 Coronavirus State and Local Fiscal Recovery Funds program, we noted the District could not provide documentation supporting that rates or quotes were obtained from an appropriate number of vendors or providers for all three small purchase contracts reviewed. Additionally, we noted no evidence the District checked the SAM exclusions, collected a certification from the entity, or added a clause or condition to the covered transaction with the vendor for two out of three small purchase contracts that exceeded $25,000. The above-listed noncompliance also resulted in a qualified opinion over the AL #21.027 Coronavirus State and Local Fiscal Recovery Funds program. Failure to follow the applicable federal procurement, suspension & debarment requirements could result in unallowable purchases, misuse of public funds, questioned costs related to federal monies, or vendors receiving federal funds that are suspended or debarred. The District should implement internal control procedures to ensure they are following the established District policy as well as the federal procurement requirements for small purchases. Additionally, prior to entering into a contract for covered transactions, the District should verify the vendor is not suspended or debarred by checking the SAM exclusions, collecting a certification from the vendor, or adding a clause or condition to the covered transaction with the vendor.

Finding 2024-001: Significant Deficiency – Lack of Procurement Policy and Documentation on Sole Source Contracts and Verification of Vendors Federal Grantor: Department of Health and Human Services Condition: The Organization does not have a procurement policy in place that complies with Uniform Guidance. The Organization contracted with a vendor on a sole-source basis and did not document justification for the use of a sole source vendor. In addition, the Organization did not verify that the vendor was not on the list of vendors suspended or debarred from federal contracting before contracting with the vendor. Criteria: Entities are required to have written standards of conduct that cover conflicts of interest and govern the performance of its employees engaged in the selection, award, and administration of contracts (2 CFR section 200.318(c) and 48 CFR sections 52.203-13 and 52.303-16). Entities are required to 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 and noncompetitive procurements. Entities also must comply with 2 CFR Part 1326 that prohibits entities that have been debarred, suspended or voluntarily excluded from participating in Federal procurement. Cause: The Organization does not have a procurement policy that addresses sole source contracting and verifying vendor certification that they are not debarred, suspended, ineligible or voluntarily excluded from Federal procurements. Effect: The Department of Health and Human Services may impose additional conditions on the receipt of a subsequent tranche of future award funds, if any, or take other available remedies as set forth in 2 C.F.C. section 200.339. Recommendation: We recommend the Organization review policies with staff to ensure procurement requirements are followed, and that staff are familiar with federal procurement requirements. Management’s Response: The Organization will develop a procurement policy that complies with federal requirements and will document its justification for vendor selections.

FA 2024-001 Improve Controls over Procurement Compliance Requirement: Procurement and Suspension and Debarment Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 10.553 – School Breakfast Program 10.555 – National School Lunch Program COVID-19 - 10.555 – National School Lunch Program 10.582 – Fresh Fruit and Vegetable Program Federal Award Numbers: 245GA324N1199 (Year: 2024) 245GA324L1603 (Year: 2024) 245GA324L1603 (Year: 2024) Questioned Costs: $5,380.74 Description: A review of expenditures charged to the Child Nutrition Cluster revealed that the School District’s internal control procedures were not operating appropriately to ensure that the School District’s procurement procedures were followed. Background Information: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $450,874.38 were expended and reported on the Quitman County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant 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 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state in part that “(a) the non-Federal entity must use its own documented procurement procedures, which reflects applicable State and local laws and regulations and… (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.” In addition, provisions included in the Uniform Guidance, Section 200.320 – Methods of Procurement to Be Followed provide guidance for procurement through small purchase procedures and state “If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources…” Condition: A sample of 22 procurement transactions was randomly selected for testing using a non-statistical sampling approach. These transactions were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The School District could not provide evidence that an adequate number of rate or price quotations were obtained from qualified sources for ten small purchase expenditures. Questioned Costs: Upon testing a sample of $25,223.43 in procurement transactions, known questioned costs of $5,380.74 were identified for expenditures that did not follow the School District’s procurement procedures. Using the total population of $302,197.99 in procurement transactions, we project the likely questioned costs to be approximately $64,465.81. The following Assistance Listing Numbers were affected by known and likely questioned costs: 10.553, 10.555, and 10.582. Cause: In discussing these deficiencies with the School District, they indicated the errors occurred due to oversight in following board-approved policies related to procurement. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to appropriately implement procedures to address procurement compliance requirements exposes the School District to unnecessary risk of error and misuse of federal funds and could result in the expenditure of federal funds with unqualified vendors. In addition, this deficiency could lead to the return of grant funds associated with unallowable expenditures in the future. Recommendation: The School District should evaluate and improve internal control procedures to ensure that required procurement methods are properly identified and followed and appropriate procurement documentation is obtained and retained on-file. In addition, management should develop a monitoring process to ensure that these procedures are operating appropriately. Views of Responsible Officials: We concur with this finding

2 CFR § 400.1 gives regulatory effect to the Department of Agriculture for 2 CFR § 200.318 through 200.327 which describe specific procedures non-Federal entities must follow when making procurement transactions using Federal funds. 2 CFR § 200.318(a) indicates that a non-Federal entity must use its own documented procurement procedures which reflect applicable State and local laws and regulations, provided that such procurements conform to applicable Federal law and standards. 2 CFR § 200.320 indicates the non-Federal entity must use one of the following methods of procurement: (a) procurement by micro-purchases, which are acquisitions of supplies or services for which the aggregate dollar amount does not exceed the micro-purchase threshold; (b) procurement by small purchase procedures, which are relatively simple and informal procurements that do 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; (c) procurement by sealed bids, which are purchases made through publicly solicited bids and result in a firm fixed-price contract (lump-sum or unit price) awarded to the lowest responsive and responsible bidder whose bid conforms to all material terms and conditions of the invitation for bids. This method is appropriate when a complete, adequate, and realistic specification or purchase description is available, two or more responsible bidders are willing and able to compete effectively for the business, and the procurement lends itself to a firm fixed-price contract with the selection of the successful bidder made principally on price; (d) procurement by competitive proposals, which is appropriate when purchases are large and competitive bidding is not appropriate; or (e) procurement by noncompetitive proposals, which are appropriate when the item is available only from a single source, the noncompetitive procurement is expressly authorized in the Federal award, competition is deemed inadequate after solicitation of multiple sources, or the item must be purchased without delay due to a public emergency or exigent circumstances. 2 CFR § 200.318(i) indicates the non-Federal entity must maintain records sufficient to detail the history of procurement. Such records must include, but are not necessarily limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Maple Heights City School District Board Policy EAG – Administration of Federal Grant Funds requires that all purchases of property and services using federal funds be conducted in accordance with applicable federal, state, and local laws and regulations, the Uniform Guidance, and the District’s written policies and procedures. The policy also requires the District to perform a cost or price analysis for every procurement exceeding the simplified acquisition threshold. In addition, purchasing records must be maintained in sufficient detail to document the history of each procurement, including at a minimum: the rationale for the method of procurement, the selection of contract type, the contractor selected or rejected, the basis for the contract price, and verification that the contractor is not suspended or debarred. Although the District provided verbal justification for the four vendors selected during procurement testing for the Child Nutrition Cluster, it did not maintain written documentation sufficient to detail the history of the procurements, as required by federal regulations and District procurement policy. The procurements tested were below the simplified acquisition threshold; however, for three of the four procurements, required price or rate quotations from an adequate number of qualified sources were not documented. As a result, the District could not demonstrate compliance with federal procurement requirements. Failure to follow Uniform Guidance requirements and district federal procurement policies could lead to reduced future federal funding and questioned costs. The District should adopt and implement procedures to ensure that the history of each procurement is documented, including the rationale for the method of procurement, vendor selection, cost or price analysis, if applicable, and the justification for limiting competition, such as the use of a sole source provider or procurement due to emergency or exigent circumstances.

Finding: 2024-006 Procurement, Suspension, and Debarment (Significant Deficiency) Information on the Federal Programs: ALN #10.937 Partnerships for Climate-Smart Commodities Criteria or Specific Requirement (including Statutory, Regulatory, or Other Citation):  2 CFR 200.320(a)(1)(iv) allows for an increased micro-purchase threshold of up to $50,000 only if the non-Federal entity self-certifies that it meets specific conditions, including internal controls, organizational risk, and procurement oversight capacity.  2 CFR 200.214 prohibits contracting with or making subawards to parties that are suspended or debarred, and entities are required to verify that contractors are not listed on the System for Award Management (SAM.gov) at the time of contact/award.  2 CFR 200.318(c)(1) requires non-Federal entities to maintain written standards of conduct covering conflicts of interest and governing the performance of employees engaged in the selection, award, and administration of contracts. Condition: Our testing identified the following exceptions: 1. CIF did not maintain a comprehensive written procurement, suspension, and debarment policy during the fiscal year under audit. A draft policy was developed during the audit planning phase and is pending approval from the Board of Directors. 2. The draft policy self-certified a micro-purchase threshold of $50,000, which is not appropriate given that CIF does not meet all criteria required under 2 CFR 200.320(a)(1)(iv), and the elevated threshold is excessive relative to the size and scope of the Organization’s operations. 3. CIF provided SAM.gov suspension and debarment checks for contractors in our sample; however, the checks were undated, and we were unable to confirm that the verification was performed at the time of contract execution. 4. CIF did not maintain a conflict of interest policy during the fiscal year under audit, as required by 2 CFR 200.318(c)(1). While a draft conflict of interest policy was included in the draft procurement policy, it was not in effect during the year under audit. Cause: These conditions occurred because the Organization did not have formalized procurement policies and procedures in place throughout the year.Effect or Potential Effect: Failure to maintain compliant procurement and conflict of interest policies and procedures increases the risk that Federal funds may be spent in a manner inconsistent with Uniform Guidance requirements. Questioned Costs: $96,051 (all contractual expenses changed to ALN #10.937) Context: We tested a statistically valid sample of contractual relationships charged to Federal awards. The deficiencies noted were consistent across the sample population, indicating a systemic issue rather than isolated exceptions. Identification as a Repeat Finding, if Applicable: N/A Recommendation: We recommend that management: 1. Finalize and implement a comprehensive procurement, suspension, and debarment policy that incorporates all requirements of 2 CFR 200.318–200.320. 2. Amend the draft policy to adopt a micro-purchase threshold appropriate for the Organization’s size and risk profile, consistent with 2 CFR 200.320(a)(1)(iv). 3. Ensure that SAM.gov checks are performed and documented with date-stamps at the time of contract execution. 4. Adopt and enforce a formal conflict of interest policy as required by 2 CFR 200.318(c)(1), and amend the policy to require annual (written) reaffirmations from all employees and Board members.

Condition: Due to the size of the purchase amount, the County failed to procure through formal methods as required by 2 CFR 200.320. In addition, the County’s internal policy was not followed and was found not to comply with Uniform Guidance. Criteria: The program specifically requires that all procurement activity be conducted in accordance with the Uniform Guidance at 2 CFR Part 200, specifically section 200.320 which identifies three types of procurement methods to be used with purchases over certain dollar thresholds. For purchases in excess of $250,000, a formal procurement method is required. Formal procurement methods are competitive and require public notice. Effect: Compliance with such requirements is necessary, in our opinion, for the County to comply with the requirements applicable to that program. Recommendation: We recommend that the County revise its procurement policy to align with the Uniform Guidance requirements. We further recommend all program managers of federal programs receive training for federal program management prior to receiving and managing federal funds and review all federal program requirements including compliance requirements prior to expending the federal funds to ensure compliance with the federal program requirements. Response/Corrective Action Plan: We concur with the finding and will revise the procurement policy as well as the internal control policies and procedures specific to the County to be in alignment with the Uniform Guidance requirements. Upon completion, the new policy will be provided to all department heads to ensure proper compliance in the utilization and disbursement of federal funds.

2024 – 011 – Procurement Federal Agency: US Department of Agriculture, US Department of Education Federal Program Name: Extension Services at 1890 Colleges, Education Stabilization Fund Assistance Listing Number: 10.512, 84.425 Federal Award Identification Number and Year: NI201444XXXXG008-0005, P425J200025 - 2024 Award Period: July 1, 2023 – June 30, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: Uniform guidance requires auditees to follow procurement standards. Sections of the Uniform Guidance set forth five permissible procurement methods for nonfederal entities expending federal financial assistance: (1) micro-purchases (§ 200.320(a)(1)); (2) small purchases (§ 200.320(a)(2)); (3) sealed bids (§ 200.320(b)(1)); (4) proposals (§ 200.320(b)(2)); and (5) noncompetitive procurement (§ 200.320(c)(1)-(5)). Condition: The University's procurement policy does not currently match all requirements of the Uniform Guidance, and CliftonLarsonAllen LLP (CLA) was unable to sight evidence of their key control being performed. Questioned costs: None Context: The University's procurement policy does not currently match all requirements of the uniform guidance related to defining the required levels of procurement and when competitive bids are required, and CLA was unable to sight evidence of a key control being performed for five of six sample selections for the Extension Services at 1890 Colleges grant. Cause: The University did not have a process in place to ensure the procurement policy met Uniform Guidance. Effect: The University is not in compliance with Uniform Guidance for procurement. Repeat Finding: Yes, 2023-025 Recommendation: We recommend the University review its procurement policy to ensure it meets federal regulations and ensure they retain documentation of quotes received and final approval forms. Views of responsible officials: There is no disagreement with the audit finding.

FINDING 2024-010 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 21611-045-PN01, 22611-045-PN01, 22611-045-ARP, 21619-045-PN01, 22619-045-PN01, 22619-045-ARP 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 had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to the Procurement and Suspension and Debarment compliance requirement. 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. The population for those procurements that fell within the small purchase range consisted of three vendors with a total purchased amount from those vendors of $75,284. The School Corporation did not provide adequate documentation detailing the history of procurement, which must include the reason for the procurement method used, for all three 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 vendor, or adding a clause or condition to the covered transaction with that vendor. One vendor provided contracted services paid with Special Education Grant funds during the audit period totaling $44,827. Upon inquiry of the School Corporation, it was determined that the School Corporation did not verify that the contractor was not suspended, debarred, or otherwise excluded. INDIANA STATE BOARD OF ACCOUNTS 36 NORTH LAWRENCE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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: (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. (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. . . ." INDIANA STATE BOARD OF ACCOUNTS 37 NORTH LAWRENCE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Indiana Code 5-22-8-3 states in part: "(a) . . . if the purchasing agent expects the purchase to be: (1) at least fifty thousand dollars ($50,000); and (2) not more than one hundred fifty thousand dollars ($150,000). . . . (d) . . . the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required. . . ." 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 A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to affect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, procurement procedures for goods and services were not adhered to, and vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Noncompliance with the 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 not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. INDIANA STATE BOARD OF ACCOUNTS 38 NORTH LAWRENCE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

DEPARTMENT OF EDUCATION-FINDING 2024-002 – PROCUREMENT PROCEDURES-AMERICAN RESCUE PLAN (ARP) ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF FUND (ESSER III) - ALN 84.425U-CONDITION: During my review of the District’s compliance with the requirements for noncompetitive procurement, I noted the District did not document its rationale for purchases made from ‘Associates in Counseling’. This is a repeat finding 2023-002 from the prior fiscal year-CRITERIA: In accordance with Section 2 CFR 200.318(i) of the Uniform Guidance, the District must maintain records sufficient to detail the history of procurement. These records include but are not limited to the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Furthermore, Section 2 CFR 200.320(c’) of the Uniform Guidance details five (5) circumstances in which noncompetitive procurement can be used.-EFFECT: The District did not comply with Section 2 CFR 200.318(i) and Section 2CFR 200.320(c’) of the Uniform Guidance, and District Procurement Policy #626, regarding the proper documentation required for noncompetitive procurement.-QUESTIONED COST: $163,315-CAUSE: The District utilized this vendor as they felt these professional services best fit the needs of the District. However, the additional procedures addressed in its Procurement Policy for Federal Programs (#626) which addresses the issue of noncompetitive procurement as outlined in Section 2 CFR 200.320(c’), were inadvertently not performed.-RECOMMENDATION: I recommend that for all future purchases involving noncompetitive procurement, that the District adhere to the requirements of 1) the District’s Procurement Policy for Federal Programs (#626), and 2) Section 2 CFR 200.320(c) of the Uniform Guidance.-VIEWS OF RESPONSIBLE OFFICIALS: Management of the School District has reviewed the above noted finding and recommendation and have developed a corresponding ‘Corrective Action Plan’ to address this matter (See Corrective Action Plan).

Condition Upon inquiry of county personnel and a test of four (4) disbursements totaling $452,184, the following instances of noncompliance were noted: • The County failed to document suspension and debarment of vendors for purchases over $25,000. • The County failed to have written standards of conduct that cover conflicts of interest and that govern the performance of its employees engaged in the selection, award, and administration of contract. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal disbursements are made in accordance with federal compliance requirements. Effect of Condition: This condition resulted in noncompliance with grant requirements and could result in a loss of federal funds. Recommendation: OSAI recommends the County gain an understanding of the grant requirements for this program and implement internal controls to ensure compliance with these grant requirements. Management Response: Chairman of the Board of County Commissioners: These procurement issues originated during the prior County Clerk’s administration, but the current leadership is focused on corrective measures. Together, we are: • developing a SOP to ensure vendor checks for suspension and debarment are conducted on all purchases over $25,000, • establishing written standards of conduct to address conflicts of interest and set clear procurement guidelines, • and enhancing oversight and review to ensure all procurement processes are fully compliant with federal regulations. Our goal is to build a consistent, transparent procurement framework that safeguards both compliance and public trust. County Clerk: I was not the County Clerk in Office at this time. To correct this issue, the County plans to develop a SOP to timely and accurately track and report on the SEFA. The SOP will be reviewed, adopted, and monitored by the Board of County Commissioners. Criteria: Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds (8. Procurement, Suspension & Debarment.) reads as follows: Recipients are responsible for ensuring that any procurement using SLFRF funds, or payments under procurement contracts using such funds, are consistent with the procurement standards set forth in the Uniform Guidance at 2 CFR 200.317 through 2 CFR 200.327, unless stated otherwise by Treasury. As outlined in FAQ 13.15, only a subset of the Uniform Guidance requirements at 2 CFR Part 200 Subpart D (Post Federal Award Requirements) applies to recipients’ use of funds in the revenue loss eligible use category. The procurement standards set forth in the Uniform Guidance at 2 CRF 200.317 through 2 CRF 200.327 are not included in FAQ 13.15’s list of applicable Subpart D requirements that apply to recipients’ use of funds in the revenue loss eligible use category. The Uniform Guidance establishes in 2 CFR 200.319 that all procurement transactions for property or services must be conducted in a manner providing full and open competition, consistent with standards outlined in 2 CFR 200.320, which allows for non-competitive procurements only in certain circumstances. Recipients must have and use documented procurement procedures that are consistent with the standards outlined in 2 CFR 200.317 through 2 CFR 200.320. In addition, the Uniform Guidance at 2 CFR 200.214, 2 CFR Part 180, and Treasury’s implementing regulations at 31 CFR Part 19, prohibit recipients from entering into contracts with suspended or debarred parties. The procurement standards outlined in the Uniform Guidance require an infrastructure for competitive bidding and contractor oversight, including maintaining written standards of conduct. Your organization must ensure adherence to all applicable local, State, and federal procurement laws and regulations. Further, 2 CFR § 200.319 Competition (d) reads as follows: The non-Federal entity must have written procedures for procurement transactions.

Finding 2024-005 – Inadequate Procurement Documentation (Material Weakness) Name of Federal Agency: U.S. Environmental Protection Agency Federal Program Name: Nonpoint Source Implementation Grants Assistance Listing Numbers: 66.460 Pass-Through Entity: Oregon Department of Environmental Quality Name of Federal Agency: U.S. Department of Commerce – National Oceanic and Atmospheric Administration Federal Program Name: Pacific Coast Salmon Recovery Program Assistance Listing Numbers: 11.438, 15.015, 15.244 Pass-Through Entity: State of Oregon – Oregon Watershed Enhancement Board (OWEB) Name of Federal Agency: U.S. Department of Agriculture Federal Program Name: National Fish and Wildlife Foundation Assistance Listing Numbers: 10.665 Pass-Through Entity: U.S. Forest Service Name of Federal Agency: U.S. Department of Agriculture Federal Program Name: Natural Resources Conservation Service Assistance Listing Numbers: 10.905 Pass-Through Entity: U.S. Forest Service Name of Federal Agency: U.S. Department of the Interior Federal Program Name: Wildlife, Sport Fish and Restoration Program Assistance Listing Numbers: 15.244 Pass-Through Entity: Bureau of Land Management Name of Federal Agency: U.S. Department of the InteriorFederal Program Name: Secure Rural Schools and community Self-Determination – Watershed and water-quality improvements Assistance Listing Numbers: 15.234 Pass-Through Entity: Bureau of Land Management Criteria: Federal procurement standards require non-Federal entities to maintain records sufficient to detail the history of procurement, including the method of procurement, selection of contract type, contractor selection or rejection, and basis for the contract price. Competitive procurement must follow the entity’s written procedures consistent with 2 CFR §§200.317-200.327, including:  Written procedures for procurement (§200.318(a)).  Full and open competition requirements (§200.319).  Methods of procurement (sealed bids, proposal requirements, and required documentation (§200.320).  Contract cost and price justification, (§200.324).  Suspension/debarment verification for covered transactions (§200.214; §200.213). Condition: During the audit period, the Entity did not retain sufficient procurement documentation for several contracts funded under the above Assistance Listings. Specifically, files lacked one or more of the following:  Evidence of the procurement method used.  Price or cost analysis.  Suspension/debarment checks for vendors where required.  Documentation of competition.  Conflict-of-interest attestations. Cause: Partnership for the Umpqua Rivers procurement procedures were not sufficiently detailed or consistently applied to federal purchases. No evidence of procedures or review for procurement or suspension / debarment was provided to auditors. Turnover and limited training on Uniform Guidance procurement standards contributed to the inconsistent file completeness. Effect or Potential Effect: Without complete procurement documentation, the Entity cannot demonstrate compliance with federal procurement requirements, increasing the risk of:  Noncompetitive awards or unreasonable prices.  Unallowable costs for the award requirements.  Potential disallowance or repayment of federal funds.  Findings in federal or pass-through monitoring and future audits. Questioned Cost: Yes, $902,496 related to expenditures that had no procurement support or detail. Context: During our audit, it was found that the Partnership for the Umpqua Rivers had experienced complete staff turnover in Financial Management for the year being audited. No current finance employees had worked for the organization during the year being audited. Award files provided to auditors did not contain information related to procurement, suspension or debarment procedures or processes. Repeat of a Prior-Year Finding: No, Prior- year did not require a Single Audit. Recommendation: We recommend that Partnership for the Umpqua Rivers: Update Written Procurement Procedures o Incorporate Uniform Guidance thresholds and methods (§200.320), competition requirements (§200.319), and documentation expectations (history of procurement). o Embed steps for suspension / debarment checks and Appendix II Contract clauses.  Standardized Procurement Checklist o Pre-award checklist that verifies: method, competition evidence, cost/price analysis, conflict of interest attestations, SAM exclusion check, and required federal clauses. o Post -award checklist ensuring complete contract file (award memo, bid tab / evaluation, signed agreement, clause verification).  Cost/Price Analysis Guidance o Require documented price reasonableness for small purchases, formal cost or price analysis for larger or sole-source awards, per (§200.324).  Training & Accountability o Provide targeted training to procurement and program staff on 2 CFR §§200.317- 20.327 and Assistance Listing award conditions. o Implement supervisory pre-award review and periodic file audits. District Response: Partnership for the Umpqua Rivers acknowledges the deficiencies. Corrective Action Plan: ____________ (To be completed by Partnership for the Umpqua Rivers) Planned Implementation Date: _____________ Responsible Person: Partnership for the Umpqua Rivers Finance Manager

Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Period of Performance Procurement and Suspension and Debarment Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Number and Title: 84.371C – Comprehensive Literacy Development Federal Award Number: S371C190016-19A (Years: 2017-21) Questioned Costs: $12,921.61 Repeat of Prior Year Findings: FA 2022-002, FA 2023-001 Description: A review of expenditures and journal entries charged to the Comprehensive Literacy Development program revealed that the School District’s internal control procedures were not operating to ensure that appropriate reviews and approvals occurred and the School District’s procurement procedures were followed. Background Information: The Comprehensive Literacy Development Program (CLD) was authorized under Sections 2222-2225 of the Elementary and Secondary Education Act of 1965 to create a comprehensive literacy program to advance literacy skills, including pre-literacy skills, reading, and writing, for children from birth to grade 12, with an emphasis on disadvantaged children, including children living in poverty, English learners, and children with disabilities. CLD funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the expenditure of funds by LEAs. CLD funds totaling $454,278.20 were expended and reported on the Burke County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant 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 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented, (h) Cost must be incurred during the approved budget period…” Lastly, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state in part that “(a) the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations and… (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.” In addition, provisions included in the Uniform Guidance, Section 200.320 – Methods of Procurement to Be Followed provide guidance for procurement through small purchase procedures and state “If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources.” Condition: Auditors performed a review of various expenditure activity associated with the CLD program to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The following deficiencies were identified: • A sample of 60 expenditures was randomly selected for testing using a non-statistical sampling approach. Evidence of review and approval was not reflected for 17 expenditures, and adequate evidence of receipt was not maintained for 20 expenditures. • A sample of two journal entries was randomly selected for testing using a non-statistical sampling approach. Evidence of review to ensure that the activity was allowable and occurred during the period of performance was not reflected for either journal entry tested. • A sample of 45 procurement transactions was randomly selected for testing using a non-statistical sampling approach. Four procurement transactions did not reflect evidence of supervisory review and approval, and the School District could not provide evidence that an adequate number of rate or price quotations were obtained from qualified sources for 13 small purchase procurements reviewed. Questioned Costs: Upon testing a sample of $45,625.42 in procurement transactions, known questioned costs of $12,921.61 were identified for expenditures that did not follow the School District’s procurement procedures. Using the total population of $327,567.83 in procurement transactions, we project the likely questioned costs to be approximately $92,770.73. Cause: The School District did not maintain evidence of review and approval of expenditures, journal entries, and procurement transactions as a result of oversight. Small purchase procurement transactions did not follow the School District’s procurement policy because the Federal Programs Director was unaware that it was necessary to follow these procedures for the purchase of instructional materials. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to review expenditures for allowability and journal entries for allowability and period of performance compliance exposes the School District to unnecessary risk of error and misuse of federal funds. In addition, failure to appropriately follow applicable procurement procedures exposes the School District to unnecessary risk of error and misuse of federal funds. Lastly, this deficiency could lead to the return of grant funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to the CLD program. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all expenditures, journal entries, and procurement transactions reflect evidence of review for associated compliance requirements. In addition, expenditure voucher packages should contain all required components. Furthermore, the School District should evaluate and improve internal control procedures to ensure that required procurement methods are properly identified and followed and required procurement documentation is properly identified, safeguarded, and retained. Management should develop a monitoring process to ensure that these procedures are operating appropriately. Views of Responsible Officials: The finding states evidence of review and approval was not reflected for 17 expenditures. While 3 invoices were not approved, 14 were approved by multiple levels including the building level Principal, Central Office Director, including the Director in charge of the grant, and/or the Superintendent. Additionally, all expenditures charged to the grant were submitted to the Georgia Department of Education for review and approval for reimbursement of expenditures. All expenditures were approved and reimbursed. The finding states adequate evidence of receipt was not maintained for 20 expenditures; however, 10 of the expenditures were not for tangible items. Instead, the expenditures were for dues and fees and travel. Dues and fees and travel expenditures do not have packing slips due to the nature of the activity. Of the remaining 10, all but 1 were approved by multiple levels including the building level Principal, Central Office Director, including the Director in charge of the grant, and/or the Superintendent. Approval for payment isn’t granted unless items are received. The finding states evidence of review to ensure that the activity was allowable and occurred during the period of performance was not reflected for 2 journal entries. Both of the journal entries were usual in nature and occurred in the normal course of business including a journal entry to reverse accounts receivable from the prior year and a journal entry to record accounts receivable in the current year. Both journal entries are annual, standard journal entries that are required under Generally Accepted Accounting Principles. While not approved by the Director in charge of the grant, the journal entry was appropriate, allowable, and necessary to ensure revenues were accurately recorded in the proper accounting period. The finding states 4 procurement transactions did not reflect evidence of supervisory review and approval. While 4 transactions included invoices that were not approved by the Director in charge of the grant, 2 invoices were approved by the building level Principal and the Superintendent, and 1 was approved by the Superintendent. Three of the transactions included purchase orders that were properly approved by the Director in charge of the grant. Auditor’s Concluding Remarks: Under the Uniform Guidance, auditees are required to implement internal controls over federal awards. Upon completing procedures over internal controls associated with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance, and Procurement and Suspension and Debarment compliance requirements, auditors obtained an understanding of internal controls put in place and subsequently tested those controls. Auditors noted that the internal controls described by the School District were not in place for the transactions identified. Based on this information, we reaffirm our finding and will review the status of the finding during our next audit.

U.S. Department of Environmental Protection Agency Passed through State Department of Natural Resources and Conservation FFAL# 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Procurement, Suspension and Debarment Material Non-compliance Material Weakness in Internal Control Criteria: • 2 CFR §200.303 requires non-federal entities to establish and maintain effective internal control over federal awards. • 2 CFR §200.318 requires non-federal entities to have and follow written procurement procedures that conform to applicable federal laws and standards. • 2 CFR §200.320 outlines requirements for procurement to be followed depending on the purchase threshold. • 2 CFR §200.213 requires non-federal entities to ensure that entities with which they contract are not suspended or debarred from federal programs. Condition: The District does not have documented internal controls over procurement activities. Additionally, the District did not follow procurement methods including obtaining quotes or bids as necessary or perform any of the required suspension and debarment procedures for vendors, such as verifying that vendors were not excluded from federal programs. Further, the District does not have a written procurement policy as required by Uniform Guidance. Cause: The District has not implemented documented internal controls or written procurement policies and did not perform suspension and debarment checks. Effect: Failure to implement these requirements increases the risk of noncompliance with Uniform Guidance and may result in unallowable costs or questioned costs. Questioned Costs: $1,124,156 Context/Sampling: A nonstatistical sample of three vendors were selected for testing. Repeat Finding from Prior Years: No. Recommendation: We recommend the District: • Develop and adopt a written procurement policy that complies with Uniform Guidance requirements. • Implement documented internal controls over procurement activities, including procedures for suspension and debarment checks. • Train staff responsible for procurement to ensure compliance with federal requirements. Views of Responsible Officials: Agree.

Finding Reference: 2024-006 – I. Procurement, Suspension and Debarment Federal Program Information Federal Agencies: Department of Treasury Awards: Assistance Listing 21.027 – COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award Periods: July 1, 2023 – December 31, 2026 Description: Incomplete Federal Requirements within Procurement Policies Criteria In accordance with Title 2 U.S. Code of Federal Regulations, Part 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).” Part 200.320 Methods of procurement to be followed states the following: “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” regarding the methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. Condition As part of our testing over the operating effectiveness of internal controls over the Procurement, Suspension and Debarment assertion for our major programs, we noted that the Corporation did not have a procurement policy that conforms to all applicable standards contained in the Uniform Guidance, when purchasing goods or services with the federal funds. Cause The Corporation did not comply and maintain a procurement policy that conforms to the provisions required by the Uniform Guidance upon receiving such federal funds related to their federal programs. Effect or potential effect Purchasing of goods and/or servicing with the major federal programs may not be in compliance with the Uniform Guidance. Questioned costs None. Identification of a repeat finding This is a repeat finding of Finding 2023-001. Context Management has not established a procurement policy in line with the applicable standards contained in the Uniform Guidance based on review of the existing policy and discussions with management, however, no other instances of noncompliance with procurement standards identified in 2 CFR part 200 were noted as the amount of purchases exceeding the micro-purchase threshold was not direct and material to this program and therefore no further testing over procurement was performed. Recommendation The Corporation should update its procurement policy to include the provisions required by the Uniform Guidance for purchasing goods and/or services with federal funds. View of responsible officials There is no disagreement with the audit finding.

Finding 2024-003: Documentation of Procurement and Competitive Bidding Procedures Condition During testing of procurement transactions, we noted that a vendor was selected for services without documented evidence that competitive bidding or price quotations were obtained, and the procurement file did not include documentation describing the basis for vendor selection. While Home Start, Inc.’s fiscal policies allow for the use of oral quotes and permit vendor selection based on responsiveness and advantage to the Organization considering factors such as price, quality, and other relevant considerations, the procurement documentation maintained by the Organization did not include evidence that quotes were obtained or documentation supporting the basis for vendor selection. Criteria Under 2 CFR §200.318(a), non-federal entities must establish and maintain effective internal controls over the procurement process to ensure compliance with federal statutes, regulations, and the terms and conditions of federal awards. Additionally, 2 CFR §200.318(i) requires non-federal entities to maintain records sufficient to detail the history of procurement, including documentation of the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Further, 2 CFR §§200.319–200.320 require that procurements be conducted in a manner providing full and open competition, and that appropriate price or rate quotations be obtained depending on the procurement method. Cause The Organization did not consistently maintain documentation supporting the procurement process, including evidence of quotes obtained or documentation explaining the basis for vendor selection when competitive quotes were not documented. Effect The absence of procurement documentation reduces the Organization’s ability to demonstrate compliance with Uniform Guidance procurement requirements and increases the risk that procurements funded with federal awards may not meet federal competition standards. Recommendation We recommend that management strengthen procurement documentation procedures to ensure that procurement files include sufficient documentation of the competitive bidding or quotation process, including: • Evidence of quotes or bids obtained, including oral quotes where permitted by policy. • Documentation supporting the evaluation and selection of vendors. • Written justification when competitive bids or quotes are not obtained, consistent with both Uniform Guidance requirements (2 CFR §200.318(i)) and the Organization’s fiscal policies. Implementing these procedures will help ensure that procurement activities funded by federal awards are adequately documented and compliant with Uniform Guidance procurement standards.

Coronavirus State and Local Fiscal Recovery Funds – Assistance Listing No. 21.027 U.S. Department of Treasury Missouri Primary Care Association Criteria or specific requirement – Procurement (2 CFR 200.319 and 2 CFR 200.320) Condition – The Organization’s internal controls over compliance were not sufficient to ensure the appropriate procurement method was utilized based on the value of the procurement transaction or to ensure procurement transactions were conducted in a manner that provided full and open competition. Cause – The Organization did not follow its policy when procuring services during the pre-construction phase of a project later funded by federal grants. Effect or potential effect – A contract for services was entered into during 2022 with estimated fees in excess of the threshold requiring a formal procurement method. The request for proposal did not allow for full and open competition as the Organization did not publicly request proposals or bids and only one proposal was obtained. Services purchased in 2024 under this contract may not have been obtained in the most effective manner. Questioned costs – Unknown Context – A sample of one procurement totaling $336,274 was tested out of a population of three procurements. The sample was not, and is not intended to be, statistically valid. The Organization’s procurement records were insufficient in accordance with the Organization’s procurement policy and Uniform Guidance. Identification as a repeat finding, if applicable – Not a repeat finding Recommendation – The Organization should educate employees on its procurement policy, which is compliant with Uniform Guidance. The Organization should also implement additional internal controls, such as the creation of a standard form or template for purchase orders, contracts, requests for proposals/bids, cost/price analyses, bid evaluation, etc., to ensure compliance with its procurement policy and that procurement records sufficient to detail the history of each procurement transaction are maintained. Views of responsible officials and planned corrective actions – This error occurred during fiscal year 2022, when the architect for an upcoming project was chosen. We are in a very rural area, where architects are not easy to come by. For this project, we had decided to utilize a local firm we had a good track record with. We presented it to our board for approval, and it was approved by them at that time so we originally had thought we could justify with having them as a sole source vendor. At the time, the total amount of the project was unknown, and has even changed significantly since that date. However, come to find out, due to the size of the project it should have been bid out. We have revised our procurement policy since this date and have educated all staff on proper procurement procedures.

Coronavirus State and Local Fiscal Recovery Funds – Assistance Listing No. 21.027 U.S. Department of Treasury Missouri Primary Care Association Criteria or specific requirement – Procurement (2 CFR 200.319 and 2 CFR 200.320) Condition – The Organization’s internal controls over compliance were not sufficient to ensure the appropriate procurement method was utilized based on the value of the procurement transaction or to ensure procurement transactions were conducted in a manner that provided full and open competition. Cause – The Organization did not follow its policy when procuring services during the pre-construction phase of a project later funded by federal grants. Effect or potential effect – A contract for services was entered into during 2022 with estimated fees in excess of the threshold requiring a formal procurement method. The request for proposal did not allow for full and open competition as the Organization did not publicly request proposals or bids and only one proposal was obtained. Services purchased in 2024 under this contract may not have been obtained in the most effective manner. Questioned costs – Unknown Context – A sample of one procurement totaling $336,274 was tested out of a population of three procurements. The sample was not, and is not intended to be, statistically valid. The Organization’s procurement records were insufficient in accordance with the Organization’s procurement policy and Uniform Guidance. Identification as a repeat finding, if applicable – Not a repeat finding Recommendation – The Organization should educate employees on its procurement policy, which is compliant with Uniform Guidance. The Organization should also implement additional internal controls, such as the creation of a standard form or template for purchase orders, contracts, requests for proposals/bids, cost/price analyses, bid evaluation, etc., to ensure compliance with its procurement policy and that procurement records sufficient to detail the history of each procurement transaction are maintained. Views of responsible officials and planned corrective actions – This error occurred during fiscal year 2022, when the architect for an upcoming project was chosen. We are in a very rural area, where architects are not easy to come by. For this project, we had decided to utilize a local firm we had a good track record with. We presented it to our board for approval, and it was approved by them at that time so we originally had thought we could justify with having them as a sole source vendor. At the time, the total amount of the project was unknown, and has even changed significantly since that date. However, come to find out, due to the size of the project it should have been bid out. We have revised our procurement policy since this date and have educated all staff on proper procurement procedures.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds; Health Center Program Cluster Assistance Listing Number: 21.027; 93.224/93.527 Pass-Through Entity: Cook County Department of Public Health, N/A Pass-Through Number: None; N/A Award Periods: May 1, 2023-November 30, 2026; July 1, 2021 – June 30, 2023. Type of Finding: Material weakness in internal control over compliance Criteria: 2 CFR section 200.320 outlines the acceptable methods of procurement. Purchases below the simplified acquisition threshold, but above the micro-purchase threshold, require price or rate quotations to be obtained from an adequate number of qualified sources. Noncompetitive procurement can be used in certain circumstances however the non-Federal entity is to maintain appropriate documentation justifying the use of sole source procurement consistent with 2 CFR 200.320(c). Condition: Legacy did not maintain appropriate documentation to support the procurement method utilized for procurements selected for testing. Questioned Costs: Unknown. Context: One (1) of two (2) transactions selected for testing within 21.027 and three (3) of three (3) transactions selected for testing within 93.224/93.527. Cause: Legacy did not maintain appropriate documentation based on the method of procurement utilized. Effect: Legacy may inadvertently select vendors without regard to fair competition and cost analysis. Repeat Finding: Yes. Prior Year Finding: 2023-005. Recommendation: We recommend Legacy consistently follow its established policies and procedures related to maintaining necessary documentation to support the method of procurement utilized. Legacy may also consider qualifying multiple vendors for particular goods/service and then utilizing an approved vendors list. Views of Responsible Officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds; Health Center Program Cluster Assistance Listing Number: 21.027; 93.224/93.527 Pass-Through Entity: Cook County Department of Public Health, N/A Pass-Through Number: None; N/A Award Periods: May 1, 2023-November 30, 2026; July 1, 2021 – June 30, 2023. Type of Finding: Material weakness in internal control over compliance Criteria: 2 CFR section 200.320 outlines the acceptable methods of procurement. Purchases below the simplified acquisition threshold, but above the micro-purchase threshold, require price or rate quotations to be obtained from an adequate number of qualified sources. Noncompetitive procurement can be used in certain circumstances however the non-Federal entity is to maintain appropriate documentation justifying the use of sole source procurement consistent with 2 CFR 200.320(c). Condition: Legacy did not maintain appropriate documentation to support the procurement method utilized for procurements selected for testing. Questioned Costs: Unknown. Context: One (1) of two (2) transactions selected for testing within 21.027 and three (3) of three (3) transactions selected for testing within 93.224/93.527. Cause: Legacy did not maintain appropriate documentation based on the method of procurement utilized. Effect: Legacy may inadvertently select vendors without regard to fair competition and cost analysis. Repeat Finding: Yes. Prior Year Finding: 2023-005. Recommendation: We recommend Legacy consistently follow its established policies and procedures related to maintaining necessary documentation to support the method of procurement utilized. Legacy may also consider qualifying multiple vendors for particular goods/service and then utilizing an approved vendors list. Views of Responsible Officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds; Health Center Program Cluster Assistance Listing Number: 21.027; 93.224/93.527 Pass-Through Entity: Cook County Department of Public Health, N/A Pass-Through Number: None; N/A Award Periods: May 1, 2023-November 30, 2026; July 1, 2021 – June 30, 2023. Type of Finding: Material weakness in internal control over compliance Criteria: 2 CFR section 200.320 outlines the acceptable methods of procurement. Purchases below the simplified acquisition threshold, but above the micro-purchase threshold, require price or rate quotations to be obtained from an adequate number of qualified sources. Noncompetitive procurement can be used in certain circumstances however the non-Federal entity is to maintain appropriate documentation justifying the use of sole source procurement consistent with 2 CFR 200.320(c). Condition: Legacy did not maintain appropriate documentation to support the procurement method utilized for procurements selected for testing. Questioned Costs: Unknown. Context: One (1) of two (2) transactions selected for testing within 21.027 and three (3) of three (3) transactions selected for testing within 93.224/93.527. Cause: Legacy did not maintain appropriate documentation based on the method of procurement utilized. Effect: Legacy may inadvertently select vendors without regard to fair competition and cost analysis. Repeat Finding: Yes. Prior Year Finding: 2023-005. Recommendation: We recommend Legacy consistently follow its established policies and procedures related to maintaining necessary documentation to support the method of procurement utilized. Legacy may also consider qualifying multiple vendors for particular goods/service and then utilizing an approved vendors list. Views of Responsible Officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds; Health Center Program Cluster Assistance Listing Number: 21.027; 93.224/93.527 Pass-Through Entity: Cook County Department of Public Health, N/A Pass-Through Number: None; N/A Award Periods: May 1, 2023-November 30, 2026; July 1, 2021 – June 30, 2023. Type of Finding: Material weakness in internal control over compliance Criteria: 2 CFR section 200.320 outlines the acceptable methods of procurement. Purchases below the simplified acquisition threshold, but above the micro-purchase threshold, require price or rate quotations to be obtained from an adequate number of qualified sources. Noncompetitive procurement can be used in certain circumstances however the non-Federal entity is to maintain appropriate documentation justifying the use of sole source procurement consistent with 2 CFR 200.320(c). Condition: Legacy did not maintain appropriate documentation to support the procurement method utilized for procurements selected for testing. Questioned Costs: Unknown. Context: One (1) of two (2) transactions selected for testing within 21.027 and three (3) of three (3) transactions selected for testing within 93.224/93.527. Cause: Legacy did not maintain appropriate documentation based on the method of procurement utilized. Effect: Legacy may inadvertently select vendors without regard to fair competition and cost analysis. Repeat Finding: Yes. Prior Year Finding: 2023-005. Recommendation: We recommend Legacy consistently follow its established policies and procedures related to maintaining necessary documentation to support the method of procurement utilized. Legacy may also consider qualifying multiple vendors for particular goods/service and then utilizing an approved vendors list. Views of Responsible Officials: There is no disagreement with the audit finding.

2024-006 Procurement Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 & 93.527 Health Center Program Cluster Award Numbers H80CS00513, H8FCS41684, H8GC48547, H8LCS51197 Criteria [X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Entities receiving federal awards must have and use their documented procurement policies. Title 2 CFR 200.320 outlines the acceptable methods of procurement and establishes the maximum thresholds allowed. Purchases below the simplified acquisition threshold, but above the micro-purchase threshold, require price or rate quotations to be obtained from an adequate number of qualified sources. Noncompetitive procurement can be used only in certain circumstances as allowed for in 2 CFR 200.320(c). Condition The Organization’s procurement policy allows the Board to authorize noncompetitive procurement for certain types expenditures which are outside the circumstances allowing for noncompetitive bids under 2 CFR 200.320(c). In addition, the Organization did not follow its documented procurement policy. Cause The Organization’s procurement policy was not compared with the federal regulations when it was developed. Management did not follow its established procurement policy and documentation was not maintained evidencing its compliance with the policy. Effect The Organization may overpay for goods and services due to selecting vendors without appropriate consideration of the competitive bids and cost analysis. Questioned Costs $514,086 (of which $318,272 was previously reported in findings 2024-004 and 2024-005 above) Context In a sample of sixty invoices, we noted fourteen with issues related to the procurement process. Four of these related to the Organization’s procurement policy being non-compliant with the federal requirements. Two of these were due to the Organization not following their established procurement policy and eight were due to the lack of appropriate documentation of the competitive bids. Recommendation We recommend the Organization maintain documentation supporting reports filed with awarding agencies. Views of responsible officials and planned corrective action Management is in agreement with this finding and will take corrective action as outlined below.

2024-006 Procurement Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 & 93.527 Health Center Program Cluster Award Numbers H80CS00513, H8FCS41684, H8GC48547, H8LCS51197 Criteria [X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Entities receiving federal awards must have and use their documented procurement policies. Title 2 CFR 200.320 outlines the acceptable methods of procurement and establishes the maximum thresholds allowed. Purchases below the simplified acquisition threshold, but above the micro-purchase threshold, require price or rate quotations to be obtained from an adequate number of qualified sources. Noncompetitive procurement can be used only in certain circumstances as allowed for in 2 CFR 200.320(c). Condition The Organization’s procurement policy allows the Board to authorize noncompetitive procurement for certain types expenditures which are outside the circumstances allowing for noncompetitive bids under 2 CFR 200.320(c). In addition, the Organization did not follow its documented procurement policy. Cause The Organization’s procurement policy was not compared with the federal regulations when it was developed. Management did not follow its established procurement policy and documentation was not maintained evidencing its compliance with the policy. Effect The Organization may overpay for goods and services due to selecting vendors without appropriate consideration of the competitive bids and cost analysis. Questioned Costs $514,086 (of which $318,272 was previously reported in findings 2024-004 and 2024-005 above) Context In a sample of sixty invoices, we noted fourteen with issues related to the procurement process. Four of these related to the Organization’s procurement policy being non-compliant with the federal requirements. Two of these were due to the Organization not following their established procurement policy and eight were due to the lack of appropriate documentation of the competitive bids. Recommendation We recommend the Organization maintain documentation supporting reports filed with awarding agencies. Views of responsible officials and planned corrective action Management is in agreement with this finding and will take corrective action as outlined below.

2024-006 Procurement Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 & 93.527 Health Center Program Cluster Award Numbers H80CS00513, H8FCS41684, H8GC48547, H8LCS51197 Criteria [X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Entities receiving federal awards must have and use their documented procurement policies. Title 2 CFR 200.320 outlines the acceptable methods of procurement and establishes the maximum thresholds allowed. Purchases below the simplified acquisition threshold, but above the micro-purchase threshold, require price or rate quotations to be obtained from an adequate number of qualified sources. Noncompetitive procurement can be used only in certain circumstances as allowed for in 2 CFR 200.320(c). Condition The Organization’s procurement policy allows the Board to authorize noncompetitive procurement for certain types expenditures which are outside the circumstances allowing for noncompetitive bids under 2 CFR 200.320(c). In addition, the Organization did not follow its documented procurement policy. Cause The Organization’s procurement policy was not compared with the federal regulations when it was developed. Management did not follow its established procurement policy and documentation was not maintained evidencing its compliance with the policy. Effect The Organization may overpay for goods and services due to selecting vendors without appropriate consideration of the competitive bids and cost analysis. Questioned Costs $514,086 (of which $318,272 was previously reported in findings 2024-004 and 2024-005 above) Context In a sample of sixty invoices, we noted fourteen with issues related to the procurement process. Four of these related to the Organization’s procurement policy being non-compliant with the federal requirements. Two of these were due to the Organization not following their established procurement policy and eight were due to the lack of appropriate documentation of the competitive bids. Recommendation We recommend the Organization maintain documentation supporting reports filed with awarding agencies. Views of responsible officials and planned corrective action Management is in agreement with this finding and will take corrective action as outlined below.

2024-006 Procurement Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 & 93.527 Health Center Program Cluster Award Numbers H80CS00513, H8FCS41684, H8GC48547, H8LCS51197 Criteria [X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Entities receiving federal awards must have and use their documented procurement policies. Title 2 CFR 200.320 outlines the acceptable methods of procurement and establishes the maximum thresholds allowed. Purchases below the simplified acquisition threshold, but above the micro-purchase threshold, require price or rate quotations to be obtained from an adequate number of qualified sources. Noncompetitive procurement can be used only in certain circumstances as allowed for in 2 CFR 200.320(c). Condition The Organization’s procurement policy allows the Board to authorize noncompetitive procurement for certain types expenditures which are outside the circumstances allowing for noncompetitive bids under 2 CFR 200.320(c). In addition, the Organization did not follow its documented procurement policy. Cause The Organization’s procurement policy was not compared with the federal regulations when it was developed. Management did not follow its established procurement policy and documentation was not maintained evidencing its compliance with the policy. Effect The Organization may overpay for goods and services due to selecting vendors without appropriate consideration of the competitive bids and cost analysis. Questioned Costs $514,086 (of which $318,272 was previously reported in findings 2024-004 and 2024-005 above) Context In a sample of sixty invoices, we noted fourteen with issues related to the procurement process. Four of these related to the Organization’s procurement policy being non-compliant with the federal requirements. Two of these were due to the Organization not following their established procurement policy and eight were due to the lack of appropriate documentation of the competitive bids. Recommendation We recommend the Organization maintain documentation supporting reports filed with awarding agencies. Views of responsible officials and planned corrective action Management is in agreement with this finding and will take corrective action as outlined below.

2024-006 Procurement Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 & 93.527 Health Center Program Cluster Award Numbers H80CS00513, H8FCS41684, H8GC48547, H8LCS51197 Criteria [X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Entities receiving federal awards must have and use their documented procurement policies. Title 2 CFR 200.320 outlines the acceptable methods of procurement and establishes the maximum thresholds allowed. Purchases below the simplified acquisition threshold, but above the micro-purchase threshold, require price or rate quotations to be obtained from an adequate number of qualified sources. Noncompetitive procurement can be used only in certain circumstances as allowed for in 2 CFR 200.320(c). Condition The Organization’s procurement policy allows the Board to authorize noncompetitive procurement for certain types expenditures which are outside the circumstances allowing for noncompetitive bids under 2 CFR 200.320(c). In addition, the Organization did not follow its documented procurement policy. Cause The Organization’s procurement policy was not compared with the federal regulations when it was developed. Management did not follow its established procurement policy and documentation was not maintained evidencing its compliance with the policy. Effect The Organization may overpay for goods and services due to selecting vendors without appropriate consideration of the competitive bids and cost analysis. Questioned Costs $514,086 (of which $318,272 was previously reported in findings 2024-004 and 2024-005 above) Context In a sample of sixty invoices, we noted fourteen with issues related to the procurement process. Four of these related to the Organization’s procurement policy being non-compliant with the federal requirements. Two of these were due to the Organization not following their established procurement policy and eight were due to the lack of appropriate documentation of the competitive bids. Recommendation We recommend the Organization maintain documentation supporting reports filed with awarding agencies. Views of responsible officials and planned corrective action Management is in agreement with this finding and will take corrective action as outlined below.

2024-006 Procurement Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 & 93.527 Health Center Program Cluster Award Numbers H80CS00513, H8FCS41684, H8GC48547, H8LCS51197 Criteria [X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Entities receiving federal awards must have and use their documented procurement policies. Title 2 CFR 200.320 outlines the acceptable methods of procurement and establishes the maximum thresholds allowed. Purchases below the simplified acquisition threshold, but above the micro-purchase threshold, require price or rate quotations to be obtained from an adequate number of qualified sources. Noncompetitive procurement can be used only in certain circumstances as allowed for in 2 CFR 200.320(c). Condition The Organization’s procurement policy allows the Board to authorize noncompetitive procurement for certain types expenditures which are outside the circumstances allowing for noncompetitive bids under 2 CFR 200.320(c). In addition, the Organization did not follow its documented procurement policy. Cause The Organization’s procurement policy was not compared with the federal regulations when it was developed. Management did not follow its established procurement policy and documentation was not maintained evidencing its compliance with the policy. Effect The Organization may overpay for goods and services due to selecting vendors without appropriate consideration of the competitive bids and cost analysis. Questioned Costs $514,086 (of which $318,272 was previously reported in findings 2024-004 and 2024-005 above) Context In a sample of sixty invoices, we noted fourteen with issues related to the procurement process. Four of these related to the Organization’s procurement policy being non-compliant with the federal requirements. Two of these were due to the Organization not following their established procurement policy and eight were due to the lack of appropriate documentation of the competitive bids. Recommendation We recommend the Organization maintain documentation supporting reports filed with awarding agencies. Views of responsible officials and planned corrective action Management is in agreement with this finding and will take corrective action as outlined below.

2024-006 Procurement Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 & 93.527 Health Center Program Cluster Award Numbers H80CS00513, H8FCS41684, H8GC48547, H8LCS51197 Criteria [X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Entities receiving federal awards must have and use their documented procurement policies. Title 2 CFR 200.320 outlines the acceptable methods of procurement and establishes the maximum thresholds allowed. Purchases below the simplified acquisition threshold, but above the micro-purchase threshold, require price or rate quotations to be obtained from an adequate number of qualified sources. Noncompetitive procurement can be used only in certain circumstances as allowed for in 2 CFR 200.320(c). Condition The Organization’s procurement policy allows the Board to authorize noncompetitive procurement for certain types expenditures which are outside the circumstances allowing for noncompetitive bids under 2 CFR 200.320(c). In addition, the Organization did not follow its documented procurement policy. Cause The Organization’s procurement policy was not compared with the federal regulations when it was developed. Management did not follow its established procurement policy and documentation was not maintained evidencing its compliance with the policy. Effect The Organization may overpay for goods and services due to selecting vendors without appropriate consideration of the competitive bids and cost analysis. Questioned Costs $514,086 (of which $318,272 was previously reported in findings 2024-004 and 2024-005 above) Context In a sample of sixty invoices, we noted fourteen with issues related to the procurement process. Four of these related to the Organization’s procurement policy being non-compliant with the federal requirements. Two of these were due to the Organization not following their established procurement policy and eight were due to the lack of appropriate documentation of the competitive bids. Recommendation We recommend the Organization maintain documentation supporting reports filed with awarding agencies. Views of responsible officials and planned corrective action Management is in agreement with this finding and will take corrective action as outlined below.

2024-006 Procurement Program Information Federal Organization U.S Department of Health and Human Services Assistance Listing Numbers 93.224 & 93.527 Health Center Program Cluster Award Numbers H80CS00513, H8FCS41684, H8GC48547, H8LCS51197 Criteria [X] Compliance Finding [ ] Significant Deficiency [X] Material Weakness Entities receiving federal awards must have and use their documented procurement policies. Title 2 CFR 200.320 outlines the acceptable methods of procurement and establishes the maximum thresholds allowed. Purchases below the simplified acquisition threshold, but above the micro-purchase threshold, require price or rate quotations to be obtained from an adequate number of qualified sources. Noncompetitive procurement can be used only in certain circumstances as allowed for in 2 CFR 200.320(c). Condition The Organization’s procurement policy allows the Board to authorize noncompetitive procurement for certain types expenditures which are outside the circumstances allowing for noncompetitive bids under 2 CFR 200.320(c). In addition, the Organization did not follow its documented procurement policy. Cause The Organization’s procurement policy was not compared with the federal regulations when it was developed. Management did not follow its established procurement policy and documentation was not maintained evidencing its compliance with the policy. Effect The Organization may overpay for goods and services due to selecting vendors without appropriate consideration of the competitive bids and cost analysis. Questioned Costs $514,086 (of which $318,272 was previously reported in findings 2024-004 and 2024-005 above) Context In a sample of sixty invoices, we noted fourteen with issues related to the procurement process. Four of these related to the Organization’s procurement policy being non-compliant with the federal requirements. Two of these were due to the Organization not following their established procurement policy and eight were due to the lack of appropriate documentation of the competitive bids. Recommendation We recommend the Organization maintain documentation supporting reports filed with awarding agencies. Views of responsible officials and planned corrective action Management is in agreement with this finding and will take corrective action as outlined below.

Finding 2023-001 Noncompliance and material weakness in internal control over compliance with procurement requirements Federal Agency: Department of Housing and Urban Development Assistance Listing Number: 14.251 Assistance Listing Name: Community Project Funding Award Number: B-23-CP-WA-1530 Criteria Nonfederal entities must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. For acquisitions exceeding the simplified acquisition threshold, the nonfederal 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)(i); 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 and Effect During our testing of the procurement compliance requirement, we noted that the Aquarium had not performed the required procurement procedures for one of the vendors in our sample. For this one vendor the acquisition exceeded the simplified acquisition threshold. The Aquarium used a noncompetitive method to select the vendor; however, the acquisition did not meet one of the four qualifying circumstances for a noncompetitive procurement. Cause The Aquarium’s system of internal control did not operate effectively to prevent the Aquarium from incorrectly using a noncompetitive procurement process, when instead a proscribed competitive procurement process should have been followed. Context During the year under audit there was a total population of nine vendors to which the procurement compliance requirement applied. For our testing of the procurement compliance requirement, we tested a sample of two vendors from the total population of nine. As noted in the condition section above, our testing found that the Aquarium did not comply with the procurement compliance requirements for one of the vendors tested. We also noted that the procurement activity for this vendor occurred in 2017 and prior to the Aquarium seeking federal funding for the Ocean Pavilion project. Questioned Costs Payments to that one vendor during 2023 that were charged to the major federal program totaled $118,845. Repeat Finding This is not a repeat finding. Recommendation We recommend management provide training for those involved with procurement activities for acquisitions that will be charged to federal awards to ensure the Aquarium’s procurement policies and procedures are consistently applied. We also recommend management update the Aquarium’s procurement policies and procedures to ensure they incorporate the required procedures and controls to ensure compliance with the procurement requirements in 2 CFR 200 (the Uniform Guidance) for acquisitions that will be charged to federal awards. Views of Responsible Officials and Corrective Action Plan Management agrees with the finding and has provided the accompanying corrective action plan.

Finding 2023-003: Significant Deficiency - Internal Control Over Procurement, Suspension and Debarment Program Water and Waste Disposal Systems for Rural Communities Federal Agency U.S. Department of Agriculture Assistance Listing Number 10.760 Criteria: For federal awards after January 1, 2018, guidance provided in 2 CFR part 200.318 requires nonfederal entities to establish and follow their own documented procurement procedures that conform to applicable federal law and standards. 2 CFR part 200.320 includes different allowable methods of procurement. There are also requirements to verify the vendors are not suspended or debarred. Condition/Context: During our testing for this program, we noted that the City did not have a written procurement policy to conform with Uniform Guidance requirements. The City contracted with a thirdparty administrator who provided the services related to procurement for this grant program. Cause: The City was not aware that a written policy was required to be in place outside of the terms and condition in the grant agreement. Effect: Without an adequate policy in place, procurement procedures may not adhere to requirements of federal awards. Questioned Costs: None noted. Recommendation: Program personnel should become familiar with the procurement, suspension and debarment rules for Federal programs and implement a formal written policy to conform with Uniform Guidance requirements. Views of Responsible Officials: Management agrees with the finding and will make efforts to implement a formal procurement policy.

Assistance Listing, Federal Agency, and Program Name - ALN 47.074, National Science Foundation, Biological Sciences - Collaborative Research: Phenobase: Community, Infrastructure, and Data for Global Scale Analyses of Plant Phenology; ALN 47.074, National Science Foundation, Biological Sciences - REU Site: Plant Biology and Conservation Research Experiences for Undergraduates Federal Award Identification Number and Year - DBI-2223510, DBI2149888 Pass through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 180.300 - 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 of 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. 2 CFR 200.318(i) - The entity must maintain records sufficient to detail the history of procurement. These records will include, but are not 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 200.319(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. 2 CFR 200.320(a)(2)(i) - If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non Federal entity. Condition - The Society did not have documentation to support that two covered transactions were checked for potential suspension or debarment before entering into the transaction. There was one covered transaction where the Society did not have documentation to support the procurement process followed or that more than one vendor was reviewed for pricing before selecting the vendor chosen. Questioned Costs - The Society charged a total of $31,000 to grant DBI-2223510 during 2023 for a covered transaction in which there was not supporting documentation that the service was procured under the requirements above. Identification of How Questioned Costs Were Computed - The amount of the covered transaction that was submitted for reimbursement during 2023. Context - Two covered transactions with total expenditures charged to the grants of $85,735 were reviewed. The population subject to testing included a total of three covered transactions. Cause and Effect - The Society experienced significant personnel turnover during the year within its accounting and grants departments, which resulted in issues with documentation retention and records retrieval. Recommendation - The Society should implement an internal review process of its record retention to ensure that all procurement documentation is appropriately retained in accordance with its formal policies. Views of Responsible Officials and Planned Corrective Actions - Staff turnover in early 2023 resulted in limited capacity for dedicated staff to check for potential suspension or debarment before adding vendors to the system. We have dedicated staff who will be managing this process going forward. The Society has written procurement policies and procedures. Key leadership stakeholders have been apprised of our policies and procedures. The Society will be implementing a training series for government funded procurement stakeholders within the Society to ensure compliance.

Assistance Listing, Federal Agency, and Program Name - ALN 47.074, National Science Foundation, Biological Sciences - Collaborative Research: Phenobase: Community, Infrastructure, and Data for Global Scale Analyses of Plant Phenology; ALN 47.074, National Science Foundation, Biological Sciences - REU Site: Plant Biology and Conservation Research Experiences for Undergraduates Federal Award Identification Number and Year - DBI-2223510, DBI2149888 Pass through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 180.300 - 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 of 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. 2 CFR 200.318(i) - The entity must maintain records sufficient to detail the history of procurement. These records will include, but are not 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 200.319(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. 2 CFR 200.320(a)(2)(i) - If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non Federal entity. Condition - The Society did not have documentation to support that two covered transactions were checked for potential suspension or debarment before entering into the transaction. There was one covered transaction where the Society did not have documentation to support the procurement process followed or that more than one vendor was reviewed for pricing before selecting the vendor chosen. Questioned Costs - The Society charged a total of $31,000 to grant DBI-2223510 during 2023 for a covered transaction in which there was not supporting documentation that the service was procured under the requirements above. Identification of How Questioned Costs Were Computed - The amount of the covered transaction that was submitted for reimbursement during 2023. Context - Two covered transactions with total expenditures charged to the grants of $85,735 were reviewed. The population subject to testing included a total of three covered transactions. Cause and Effect - The Society experienced significant personnel turnover during the year within its accounting and grants departments, which resulted in issues with documentation retention and records retrieval. Recommendation - The Society should implement an internal review process of its record retention to ensure that all procurement documentation is appropriately retained in accordance with its formal policies. Views of Responsible Officials and Planned Corrective Actions - Staff turnover in early 2023 resulted in limited capacity for dedicated staff to check for potential suspension or debarment before adding vendors to the system. We have dedicated staff who will be managing this process going forward. The Society has written procurement policies and procedures. Key leadership stakeholders have been apprised of our policies and procedures. The Society will be implementing a training series for government funded procurement stakeholders within the Society to ensure compliance.

Federal Agency: U.S. Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP0135 – 2021 Pass-Through Agency: Wisconsin Department of Administration Pass-Through Number(s): ARPA-NIF-072 Award Period: March 3, 2021 through December 31, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance and Other Matter Criteria or specific requirement: 2 CFR 200.320 Methods of Procurement state that if the small purchases method is used, price or rate quotations must be obtained from an adequate number of qualified sources. The City should have internal controls designed to ensure compliance with those provisions. Condition: The City did not follow controls related to ensuring procurement policies were followed. Questioned Costs: None Context: There were 55 transactions that exceeded procurement thresholds during the granting period. The sample size selected tested was 19. During our testing, it was noted on 6 of the 19 items tested that the City was not following the requirements under the adopted procurement policies. Cause: The City did not follow the requirements under the adopted procurement policies. Effect: The County is not in compliance with procurement requirements. Contracts for construction, non- construction related procurements, and those over the simplified acquisition threshold may not be in compliance with the Uniform Guidance. Repeat Finding: The finding is not a repeat of a finding in the immediately prior year. Recommendation: We recommend the City design controls to ensure an adequate review process is in place to review potential contractors to determine they are not suspended or debarred. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP0135 – 2021 Pass-Through Agency: Wisconsin Department of Administration Pass-Through Number(s): ARPA-NIF-072 Award Period: March 3, 2021 through December 31, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance and Other Matter Criteria or specific requirement: 2 CFR 200.320 Methods of Procurement state that if the small purchases method is used, price or rate quotations must be obtained from an adequate number of qualified sources. The City should have internal controls designed to ensure compliance with those provisions. Condition: The City did not follow controls related to ensuring procurement policies were followed. Questioned Costs: None Context: There were 55 transactions that exceeded procurement thresholds during the granting period. The sample size selected tested was 19. During our testing, it was noted on 6 of the 19 items tested that the City was not following the requirements under the adopted procurement policies. Cause: The City did not follow the requirements under the adopted procurement policies. Effect: The County is not in compliance with procurement requirements. Contracts for construction, non- construction related procurements, and those over the simplified acquisition threshold may not be in compliance with the Uniform Guidance. Repeat Finding: The finding is not a repeat of a finding in the immediately prior year. Recommendation: We recommend the City design controls to ensure an adequate review process is in place to review potential contractors to determine they are not suspended or debarred. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP0135 – 2021 Pass-Through Agency: Wisconsin Department of Administration Pass-Through Number(s): ARPA-NIF-072 Award Period: March 3, 2021 through December 31, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance and Other Matter Criteria or specific requirement: 2 CFR 200.320 Methods of Procurement state that if the small purchases method is used, price or rate quotations must be obtained from an adequate number of qualified sources. The City should have internal controls designed to ensure compliance with those provisions. Condition: The City did not follow controls related to ensuring procurement policies were followed. Questioned Costs: None Context: There were 55 transactions that exceeded procurement thresholds during the granting period. The sample size selected tested was 19. During our testing, it was noted on 6 of the 19 items tested that the City was not following the requirements under the adopted procurement policies. Cause: The City did not follow the requirements under the adopted procurement policies. Effect: The County is not in compliance with procurement requirements. Contracts for construction, non- construction related procurements, and those over the simplified acquisition threshold may not be in compliance with the Uniform Guidance. Repeat Finding: The finding is not a repeat of a finding in the immediately prior year. Recommendation: We recommend the City design controls to ensure an adequate review process is in place to review potential contractors to determine they are not suspended or debarred. Views of responsible officials: There is no disagreement with the audit finding.

Finding 2023-001: Procurement Policy Information on the Federal Program: All Criteria: According to 2 CFR §200.303, the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United States or the internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Additionally, according to 2 CFR §200.318 Procurement standards, the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Title 2, Subtitle A Chapter II Part 200 Subpart D 200.319 Procurement Standards. All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and §200.320. The non-Federal entity must have written procedures for procurement transactions." Additionally, according to 2 CFR §200.318 Procurement standards, the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Title 2, Subtitle A Chapter II Part 200 Subpart D 200.319 Procurement Standards. All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and §200.320. The non-Federal entity must have written procedures for procurement transactions. Condition: During our testing performed over procurement and through inquiries with management, we noted the Organization does not have a formally documented procurement policy in place that is consistent with 2 CFR §200.318(a). Cause: Management has not formalized and implemented an official organizational procurement policy. Effect or Potential Effect: An official procurement policy will outline specified thresholds for which procurement is required, required documentation needed for each threshold, and individuals responsible for ensuring procurement is performed in all required circumstances. When no policy is in place, there is a risk that procurement would not be performed, or adequate documentation would not be obtained, when required. Questioned Costs: None noted. Context: We noted that the Organization does not have a documented procurement policy in effect.Identification as a Repeat Finding, if Applicable: Not a repeat finding. Recommendation: We recommend that management formalize and implement an official procurement policy. This policy should include thresholds for which various levels of procurement are required. The policy should also include what documentation is required for each level of procurement. Additionally, the policy should specify individuals responsible for conducting procurement, and approving the final selection.

Federal Agency: U.S. Department of Health and Human Services Program Title: Consolidated Health Centers Assistance Listing Number: 93.224 and 93.527 Award Period: January 1, 2023 to December 31, 2023 Type of Finding: Compliance and Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: § 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 approved procurement methods used for the acquisition of property or services required under a Federal award or sub-award. Condition: The Organization did not have documentation of multiple quotes for certain capital purchases as stated under their procurement policy. Questioned costs: None Cause: In certain circumstances the Organization utilizes a supply chain vendor for equipment and supply acquisitions, however the documentation around multiple quotes was not received and maintained. Effect: The Organization may inadvertently select vendors without regard to fair competition and cost analysis. Recommendation: Management should adhere to or revise the Organization’s existing procurement policy and implement a system of processes and internal controls to ensure that the appropriate level of documentation is maintained based on the procurement methodology selected for a transaction of contract. Views of responsible officials and planned corrective actions: There is no disagreement with the audit finding. Management identified that subsequent to the conclusion of the 2022 audit in May of 2023 procedures were implemented to the procurement process to assure adherence with the Organization’s policy on a go forward basis. The expenditures in question tested for 2023 were spent in the first quarter of 2023 prior to the procedure improvements and therefore caused the repeat finding.

Federal Agency: U.S. Department of Health and Human Services Program Title: Consolidated Health Centers Assistance Listing Number: 93.224 and 93.527 Award Period: January 1, 2023 to December 31, 2023 Type of Finding: Compliance and Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: § 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 approved procurement methods used for the acquisition of property or services required under a Federal award or sub-award. Condition: The Organization did not have documentation of multiple quotes for certain capital purchases as stated under their procurement policy. Questioned costs: None Cause: In certain circumstances the Organization utilizes a supply chain vendor for equipment and supply acquisitions, however the documentation around multiple quotes was not received and maintained. Effect: The Organization may inadvertently select vendors without regard to fair competition and cost analysis. Recommendation: Management should adhere to or revise the Organization’s existing procurement policy and implement a system of processes and internal controls to ensure that the appropriate level of documentation is maintained based on the procurement methodology selected for a transaction of contract. Views of responsible officials and planned corrective actions: There is no disagreement with the audit finding. Management identified that subsequent to the conclusion of the 2022 audit in May of 2023 procedures were implemented to the procurement process to assure adherence with the Organization’s policy on a go forward basis. The expenditures in question tested for 2023 were spent in the first quarter of 2023 prior to the procedure improvements and therefore caused the repeat finding.

Criteria: Under the Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requires certain elements to be part of the District's procurement standards. The general procurement standards require the District to have and use documented procurement procedures that conform to the procurement standards identified in §§ 200.317 through 200.327 of the Uniform Guidance. The details of these requirements can be found in Title 2, Part 200, CFR Section 318(a). The procurement standard also requires written documentation including criteria for when sole source solicitation may be used. The District's written sole source policy does not state that sole source may be used in a public emergency; when a pass-through entity expressly authorizes; or after solicitation of more than one, competition is determined inadequate. The details of these requirements can be found in 2 CFR Section 320(c)(2). Please refer to URL https://www.ecfr.gov/current/title-2/subtitle-A/chapter-II/part- 200#200.320. Condition/Context: The District has not formally updated their procurement policies to include the thresholds and policies required by the federal government uniform guidance Title 2, Part 200, 2 CFR Section 320 on competitive bidding. Additionally, procurement procedures, specifically required by the federal government for use in sole source solicitations, were not performed for expenses using federal awards. Effect: Major federal programs tested required procurement policies and specific competitive bidding procedures to comply with the use of awarded federal funds to the District. As of the date of this report, the District is not in compliance with those requirements. Cause: The District had not formally amended their procurement policies to conform to the federal procurement policies before spending federal funds. Additionally, the District uses a third-party grant manager (Electrical District #3, Pinal County Arizona) to perform competitive procurement on the District's behalf, in which all federal funds reimburse Electrical District #3 who had paid the vendor awarded the work through competitive means. The third-party grant manager was not awarded in conformity with sole source requirements. Recommendation: We recommend that management formally adopt amendments to their existing procurement policies to conform with U.S. Code of Federal Regulations, Title 2, Part 200, Uniform Administrative Guidance CFR Section 318(a). Additionally, we recommend management perform competitive procurement on all purchases made with federal funds and pay all vendors awarded directly from the District and not through a third-party conduit grant manager. Views of Responsible Officials and Planned Corrective Action: Management concurs with the finding, see corrective action plan.

Identification of the federal program: Federal Agency: United States Department of Health and Human Services, Health Resources and Services Administration (HRSA) Pass-Through Entities: North Dakota Department of Health, South Dakota Department of Health and Minnesota Department of Health Assistance Listing: 93.155; COVID-19 Rural Health Research Centers Award Numbers: Various Award Year: FY 2021 – 2023 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “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 200.213 states, “Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR Part 180. These regulations 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”.   In addition, Uniform Guidance 2 CFR Section 200.320 (c) states: “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.” Further, Uniform Guidance 2 CFR Section 200.320(a)(2) states: Small purchases – “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.” Condition: We noted the following matters during our testing of Procurement and Suspension and Debarment compliance requirements: • A third-party vendor performed the suspension and debarment validation process for Sanford. The third-party vendor does not have a SOC 1 (System and Organization Controls) Report. For a portion of the year, Sanford relied on the suspension and debarment checks performed by the third-party vendor for results concluding no match without completing a validation control to ensure the results provided by the third-party vendor were accurate. • We noted instances where the vendor screening for suspension and debarment was not performed prior to setting up the vendor in the System and procuring the goods/services. Section III—Federal Award Findings and Questioned Costs (continued) • For certain procurement transactions tested, we noted Sanford did not adhere to the compliance requirements and did not follow its procurement policy by maintaining documentation related to cost/price analysis or sole-source procurement and completing the sole-source justification forms timely. Cause: Sanford utilizes a third-party vendor to perform suspension and debarment checks on its vendors, both during the vendor setup process as well as ongoing monitoring of active vendors. Sanford did not add an additional validation control until August 2023 to ensure that the suspension and debarment checks performed by the third-party vendor aligned with the governmental suspension and debarment database when the search resulted in no match. In addition, Sanford did not follow its procurement policy and perform the vendor screening for suspension and debarment prior to setting up the vendor in the system and transacting with the vendors. Furthermore, Sanford, prior to entering into the procurement transaction, did not complete the sole-source justification forms, or maintain documentation to support the sole-sourced procurements for those procurement transactions that exceeded the small purchase threshold. Effect or potential effect: Sanford’s screening for suspension and debarment through the third-party vendor results may not be accurate for the period January 1, 2023 through July 31, 2023. Further, by not performing the vendor screening for suspension and debarment prior to transacting with the vendor, Sanford could have potentially entered into a business transaction with suspended or debarred parties. Sanford did not comply with the federal procurement requirements and its procurement policy by not maintaining adequate documentation to support the cost/price analysis or sole sourced vendor selections in addition to not timely completing the sole source justification forms.   Section III—Federal Award Findings and Questioned Costs (continued) Questioned costs: $307,249 determined as the amount of the procurement expenditures included in the Schedule of Expenditures of Federal Awards for two procurement transactions that had inadequate documentation to justify sole source selection. Context: To ensure compliance with 2 CFR Section 200.213, Sanford conducts both preventive and detective controls in its vendor setup and monitoring process to ensure new vendors and active vendors are not suspended or debarred. A consistent vendor setup process is followed for each new vendor that Sanford transacts with, regardless of whether the vendor transactions are funded through federal grant funding or through other sources. To prevent a suspended or debarred vendor from being added as a new vendor, the vendor is checked against the suspension and debarment database electronically before completion of the vendor setup. Subsequent to vendor setup, Sanford also monitors the status of its vendors to ensure the vendor’s status has not changed. We selected 25 new vendors to verify that the suspension and debarment screening was performed and performed timely. We noted for 3 of the 25 vendors, the suspension and debarment screening was not performed prior to setting up the vendor in the system and for 1 of these vendors, Sanford had entered into a transaction prior to performing the suspension and debarment screening. We selected 8 procurement transactions that exceeded the small purchase threshold. Of the 8 transactions, 4 transactions did not follow the federal procurement standards and Sanford’s procurement policy which requires sole source documentation be completed prior to procuring the items. Additionally, for 2 of these 4 transactions, Sanford did not have sufficient documentation maintained to support the cost/price analysis performed or justification to support the sole source selection of the vendors. Total federal expenditures subject to suspension and debarment is $2,870,421, and federal expenditures exceeding the micro purchase threshold is $2,298,733. Total federal expenditures under the program, as reported on the SEFA, is $2,870,421. Identification as a repeat finding, if applicable: This finding is a repeat of Finding 2022-001 in the prior year. Recommendation: Management should ensure that the suspension and debarment screening is performed prior to entering into the transaction with the vendor and also ensure that it follows the procurement policy to verify suspension and debarment of the vendor prior to setting up the vendor in the system. In addition, Management should ensure that any sole sourced purchases or when quotes are obtained, that those be documented prior to entering into the procurement transaction. Views of responsible officials: Sanford continues to document periodic validation of the suspension and debarment search results performed by the third-party vendor for vendor searches that yield no suspension and debarment match. Additionally, as part of the periodic validation, Sanford will include a validation to ensure a suspension and debarment search is completed prior to setting the vendor up in the system. Sanford will re-educate appropriate staff regarding the process to verify a suspension and debarment search is completed prior to setting up the vendor in the system. Sanford’s preventative and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being paid to vendors that are suspended or debarred. Sanford’s preventive and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being utilized for items that do not adhere to the procurement standards. Sanford will re-educate applicable parties and enhance its procedural documentation regarding procurement. Sanford will implement a monthly review process of federal funds utilized for procurement.

Identification of the federal program: Federal Agency: United States Department of Health and Human Services, Health Resources and Services Administration (HRSA) Pass-Through Entities: North Dakota Department of Health, South Dakota Department of Health and Minnesota Department of Health Assistance Listing: 93.155; COVID-19 Rural Health Research Centers Award Numbers: Various Award Year: FY 2021 – 2023 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “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 200.213 states, “Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR Part 180. These regulations 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”.   In addition, Uniform Guidance 2 CFR Section 200.320 (c) states: “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.” Further, Uniform Guidance 2 CFR Section 200.320(a)(2) states: Small purchases – “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.” Condition: We noted the following matters during our testing of Procurement and Suspension and Debarment compliance requirements: • A third-party vendor performed the suspension and debarment validation process for Sanford. The third-party vendor does not have a SOC 1 (System and Organization Controls) Report. For a portion of the year, Sanford relied on the suspension and debarment checks performed by the third-party vendor for results concluding no match without completing a validation control to ensure the results provided by the third-party vendor were accurate. • We noted instances where the vendor screening for suspension and debarment was not performed prior to setting up the vendor in the System and procuring the goods/services. Section III—Federal Award Findings and Questioned Costs (continued) • For certain procurement transactions tested, we noted Sanford did not adhere to the compliance requirements and did not follow its procurement policy by maintaining documentation related to cost/price analysis or sole-source procurement and completing the sole-source justification forms timely. Cause: Sanford utilizes a third-party vendor to perform suspension and debarment checks on its vendors, both during the vendor setup process as well as ongoing monitoring of active vendors. Sanford did not add an additional validation control until August 2023 to ensure that the suspension and debarment checks performed by the third-party vendor aligned with the governmental suspension and debarment database when the search resulted in no match. In addition, Sanford did not follow its procurement policy and perform the vendor screening for suspension and debarment prior to setting up the vendor in the system and transacting with the vendors. Furthermore, Sanford, prior to entering into the procurement transaction, did not complete the sole-source justification forms, or maintain documentation to support the sole-sourced procurements for those procurement transactions that exceeded the small purchase threshold. Effect or potential effect: Sanford’s screening for suspension and debarment through the third-party vendor results may not be accurate for the period January 1, 2023 through July 31, 2023. Further, by not performing the vendor screening for suspension and debarment prior to transacting with the vendor, Sanford could have potentially entered into a business transaction with suspended or debarred parties. Sanford did not comply with the federal procurement requirements and its procurement policy by not maintaining adequate documentation to support the cost/price analysis or sole sourced vendor selections in addition to not timely completing the sole source justification forms.   Section III—Federal Award Findings and Questioned Costs (continued) Questioned costs: $307,249 determined as the amount of the procurement expenditures included in the Schedule of Expenditures of Federal Awards for two procurement transactions that had inadequate documentation to justify sole source selection. Context: To ensure compliance with 2 CFR Section 200.213, Sanford conducts both preventive and detective controls in its vendor setup and monitoring process to ensure new vendors and active vendors are not suspended or debarred. A consistent vendor setup process is followed for each new vendor that Sanford transacts with, regardless of whether the vendor transactions are funded through federal grant funding or through other sources. To prevent a suspended or debarred vendor from being added as a new vendor, the vendor is checked against the suspension and debarment database electronically before completion of the vendor setup. Subsequent to vendor setup, Sanford also monitors the status of its vendors to ensure the vendor’s status has not changed. We selected 25 new vendors to verify that the suspension and debarment screening was performed and performed timely. We noted for 3 of the 25 vendors, the suspension and debarment screening was not performed prior to setting up the vendor in the system and for 1 of these vendors, Sanford had entered into a transaction prior to performing the suspension and debarment screening. We selected 8 procurement transactions that exceeded the small purchase threshold. Of the 8 transactions, 4 transactions did not follow the federal procurement standards and Sanford’s procurement policy which requires sole source documentation be completed prior to procuring the items. Additionally, for 2 of these 4 transactions, Sanford did not have sufficient documentation maintained to support the cost/price analysis performed or justification to support the sole source selection of the vendors. Total federal expenditures subject to suspension and debarment is $2,870,421, and federal expenditures exceeding the micro purchase threshold is $2,298,733. Total federal expenditures under the program, as reported on the SEFA, is $2,870,421. Identification as a repeat finding, if applicable: This finding is a repeat of Finding 2022-001 in the prior year. Recommendation: Management should ensure that the suspension and debarment screening is performed prior to entering into the transaction with the vendor and also ensure that it follows the procurement policy to verify suspension and debarment of the vendor prior to setting up the vendor in the system. In addition, Management should ensure that any sole sourced purchases or when quotes are obtained, that those be documented prior to entering into the procurement transaction. Views of responsible officials: Sanford continues to document periodic validation of the suspension and debarment search results performed by the third-party vendor for vendor searches that yield no suspension and debarment match. Additionally, as part of the periodic validation, Sanford will include a validation to ensure a suspension and debarment search is completed prior to setting the vendor up in the system. Sanford will re-educate appropriate staff regarding the process to verify a suspension and debarment search is completed prior to setting up the vendor in the system. Sanford’s preventative and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being paid to vendors that are suspended or debarred. Sanford’s preventive and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being utilized for items that do not adhere to the procurement standards. Sanford will re-educate applicable parties and enhance its procedural documentation regarding procurement. Sanford will implement a monthly review process of federal funds utilized for procurement.

Identification of the federal program: Federal Agency: United States Department of Health and Human Services, Health Resources and Services Administration (HRSA) Pass-Through Entities: North Dakota Department of Health, South Dakota Department of Health and Minnesota Department of Health Assistance Listing: 93.155; COVID-19 Rural Health Research Centers Award Numbers: Various Award Year: FY 2021 – 2023 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “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 200.213 states, “Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR Part 180. These regulations 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”.   In addition, Uniform Guidance 2 CFR Section 200.320 (c) states: “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.” Further, Uniform Guidance 2 CFR Section 200.320(a)(2) states: Small purchases – “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.” Condition: We noted the following matters during our testing of Procurement and Suspension and Debarment compliance requirements: • A third-party vendor performed the suspension and debarment validation process for Sanford. The third-party vendor does not have a SOC 1 (System and Organization Controls) Report. For a portion of the year, Sanford relied on the suspension and debarment checks performed by the third-party vendor for results concluding no match without completing a validation control to ensure the results provided by the third-party vendor were accurate. • We noted instances where the vendor screening for suspension and debarment was not performed prior to setting up the vendor in the System and procuring the goods/services. Section III—Federal Award Findings and Questioned Costs (continued) • For certain procurement transactions tested, we noted Sanford did not adhere to the compliance requirements and did not follow its procurement policy by maintaining documentation related to cost/price analysis or sole-source procurement and completing the sole-source justification forms timely. Cause: Sanford utilizes a third-party vendor to perform suspension and debarment checks on its vendors, both during the vendor setup process as well as ongoing monitoring of active vendors. Sanford did not add an additional validation control until August 2023 to ensure that the suspension and debarment checks performed by the third-party vendor aligned with the governmental suspension and debarment database when the search resulted in no match. In addition, Sanford did not follow its procurement policy and perform the vendor screening for suspension and debarment prior to setting up the vendor in the system and transacting with the vendors. Furthermore, Sanford, prior to entering into the procurement transaction, did not complete the sole-source justification forms, or maintain documentation to support the sole-sourced procurements for those procurement transactions that exceeded the small purchase threshold. Effect or potential effect: Sanford’s screening for suspension and debarment through the third-party vendor results may not be accurate for the period January 1, 2023 through July 31, 2023. Further, by not performing the vendor screening for suspension and debarment prior to transacting with the vendor, Sanford could have potentially entered into a business transaction with suspended or debarred parties. Sanford did not comply with the federal procurement requirements and its procurement policy by not maintaining adequate documentation to support the cost/price analysis or sole sourced vendor selections in addition to not timely completing the sole source justification forms.   Section III—Federal Award Findings and Questioned Costs (continued) Questioned costs: $307,249 determined as the amount of the procurement expenditures included in the Schedule of Expenditures of Federal Awards for two procurement transactions that had inadequate documentation to justify sole source selection. Context: To ensure compliance with 2 CFR Section 200.213, Sanford conducts both preventive and detective controls in its vendor setup and monitoring process to ensure new vendors and active vendors are not suspended or debarred. A consistent vendor setup process is followed for each new vendor that Sanford transacts with, regardless of whether the vendor transactions are funded through federal grant funding or through other sources. To prevent a suspended or debarred vendor from being added as a new vendor, the vendor is checked against the suspension and debarment database electronically before completion of the vendor setup. Subsequent to vendor setup, Sanford also monitors the status of its vendors to ensure the vendor’s status has not changed. We selected 25 new vendors to verify that the suspension and debarment screening was performed and performed timely. We noted for 3 of the 25 vendors, the suspension and debarment screening was not performed prior to setting up the vendor in the system and for 1 of these vendors, Sanford had entered into a transaction prior to performing the suspension and debarment screening. We selected 8 procurement transactions that exceeded the small purchase threshold. Of the 8 transactions, 4 transactions did not follow the federal procurement standards and Sanford’s procurement policy which requires sole source documentation be completed prior to procuring the items. Additionally, for 2 of these 4 transactions, Sanford did not have sufficient documentation maintained to support the cost/price analysis performed or justification to support the sole source selection of the vendors. Total federal expenditures subject to suspension and debarment is $2,870,421, and federal expenditures exceeding the micro purchase threshold is $2,298,733. Total federal expenditures under the program, as reported on the SEFA, is $2,870,421. Identification as a repeat finding, if applicable: This finding is a repeat of Finding 2022-001 in the prior year. Recommendation: Management should ensure that the suspension and debarment screening is performed prior to entering into the transaction with the vendor and also ensure that it follows the procurement policy to verify suspension and debarment of the vendor prior to setting up the vendor in the system. In addition, Management should ensure that any sole sourced purchases or when quotes are obtained, that those be documented prior to entering into the procurement transaction. Views of responsible officials: Sanford continues to document periodic validation of the suspension and debarment search results performed by the third-party vendor for vendor searches that yield no suspension and debarment match. Additionally, as part of the periodic validation, Sanford will include a validation to ensure a suspension and debarment search is completed prior to setting the vendor up in the system. Sanford will re-educate appropriate staff regarding the process to verify a suspension and debarment search is completed prior to setting up the vendor in the system. Sanford’s preventative and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being paid to vendors that are suspended or debarred. Sanford’s preventive and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being utilized for items that do not adhere to the procurement standards. Sanford will re-educate applicable parties and enhance its procedural documentation regarding procurement. Sanford will implement a monthly review process of federal funds utilized for procurement.

Identification of the federal program: Federal Agency: United States Department of Health and Human Services, Health Resources and Services Administration (HRSA) Pass-Through Entities: North Dakota Department of Health, South Dakota Department of Health and Minnesota Department of Health Assistance Listing: 93.155; COVID-19 Rural Health Research Centers Award Numbers: Various Award Year: FY 2021 – 2023 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “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 200.213 states, “Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR Part 180. These regulations 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”.   In addition, Uniform Guidance 2 CFR Section 200.320 (c) states: “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.” Further, Uniform Guidance 2 CFR Section 200.320(a)(2) states: Small purchases – “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.” Condition: We noted the following matters during our testing of Procurement and Suspension and Debarment compliance requirements: • A third-party vendor performed the suspension and debarment validation process for Sanford. The third-party vendor does not have a SOC 1 (System and Organization Controls) Report. For a portion of the year, Sanford relied on the suspension and debarment checks performed by the third-party vendor for results concluding no match without completing a validation control to ensure the results provided by the third-party vendor were accurate. • We noted instances where the vendor screening for suspension and debarment was not performed prior to setting up the vendor in the System and procuring the goods/services. Section III—Federal Award Findings and Questioned Costs (continued) • For certain procurement transactions tested, we noted Sanford did not adhere to the compliance requirements and did not follow its procurement policy by maintaining documentation related to cost/price analysis or sole-source procurement and completing the sole-source justification forms timely. Cause: Sanford utilizes a third-party vendor to perform suspension and debarment checks on its vendors, both during the vendor setup process as well as ongoing monitoring of active vendors. Sanford did not add an additional validation control until August 2023 to ensure that the suspension and debarment checks performed by the third-party vendor aligned with the governmental suspension and debarment database when the search resulted in no match. In addition, Sanford did not follow its procurement policy and perform the vendor screening for suspension and debarment prior to setting up the vendor in the system and transacting with the vendors. Furthermore, Sanford, prior to entering into the procurement transaction, did not complete the sole-source justification forms, or maintain documentation to support the sole-sourced procurements for those procurement transactions that exceeded the small purchase threshold. Effect or potential effect: Sanford’s screening for suspension and debarment through the third-party vendor results may not be accurate for the period January 1, 2023 through July 31, 2023. Further, by not performing the vendor screening for suspension and debarment prior to transacting with the vendor, Sanford could have potentially entered into a business transaction with suspended or debarred parties. Sanford did not comply with the federal procurement requirements and its procurement policy by not maintaining adequate documentation to support the cost/price analysis or sole sourced vendor selections in addition to not timely completing the sole source justification forms.   Section III—Federal Award Findings and Questioned Costs (continued) Questioned costs: $307,249 determined as the amount of the procurement expenditures included in the Schedule of Expenditures of Federal Awards for two procurement transactions that had inadequate documentation to justify sole source selection. Context: To ensure compliance with 2 CFR Section 200.213, Sanford conducts both preventive and detective controls in its vendor setup and monitoring process to ensure new vendors and active vendors are not suspended or debarred. A consistent vendor setup process is followed for each new vendor that Sanford transacts with, regardless of whether the vendor transactions are funded through federal grant funding or through other sources. To prevent a suspended or debarred vendor from being added as a new vendor, the vendor is checked against the suspension and debarment database electronically before completion of the vendor setup. Subsequent to vendor setup, Sanford also monitors the status of its vendors to ensure the vendor’s status has not changed. We selected 25 new vendors to verify that the suspension and debarment screening was performed and performed timely. We noted for 3 of the 25 vendors, the suspension and debarment screening was not performed prior to setting up the vendor in the system and for 1 of these vendors, Sanford had entered into a transaction prior to performing the suspension and debarment screening. We selected 8 procurement transactions that exceeded the small purchase threshold. Of the 8 transactions, 4 transactions did not follow the federal procurement standards and Sanford’s procurement policy which requires sole source documentation be completed prior to procuring the items. Additionally, for 2 of these 4 transactions, Sanford did not have sufficient documentation maintained to support the cost/price analysis performed or justification to support the sole source selection of the vendors. Total federal expenditures subject to suspension and debarment is $2,870,421, and federal expenditures exceeding the micro purchase threshold is $2,298,733. Total federal expenditures under the program, as reported on the SEFA, is $2,870,421. Identification as a repeat finding, if applicable: This finding is a repeat of Finding 2022-001 in the prior year. Recommendation: Management should ensure that the suspension and debarment screening is performed prior to entering into the transaction with the vendor and also ensure that it follows the procurement policy to verify suspension and debarment of the vendor prior to setting up the vendor in the system. In addition, Management should ensure that any sole sourced purchases or when quotes are obtained, that those be documented prior to entering into the procurement transaction. Views of responsible officials: Sanford continues to document periodic validation of the suspension and debarment search results performed by the third-party vendor for vendor searches that yield no suspension and debarment match. Additionally, as part of the periodic validation, Sanford will include a validation to ensure a suspension and debarment search is completed prior to setting the vendor up in the system. Sanford will re-educate appropriate staff regarding the process to verify a suspension and debarment search is completed prior to setting up the vendor in the system. Sanford’s preventative and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being paid to vendors that are suspended or debarred. Sanford’s preventive and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being utilized for items that do not adhere to the procurement standards. Sanford will re-educate applicable parties and enhance its procedural documentation regarding procurement. Sanford will implement a monthly review process of federal funds utilized for procurement.

Identification of the federal program: Federal Agency: United States Department of Health and Human Services, Health Resources and Services Administration (HRSA) Pass-Through Entities: North Dakota Department of Health, South Dakota Department of Health and Minnesota Department of Health Assistance Listing: 93.155; COVID-19 Rural Health Research Centers Award Numbers: Various Award Year: FY 2021 – 2023 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “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 200.213 states, “Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR Part 180. These regulations 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”.   In addition, Uniform Guidance 2 CFR Section 200.320 (c) states: “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.” Further, Uniform Guidance 2 CFR Section 200.320(a)(2) states: Small purchases – “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.” Condition: We noted the following matters during our testing of Procurement and Suspension and Debarment compliance requirements: • A third-party vendor performed the suspension and debarment validation process for Sanford. The third-party vendor does not have a SOC 1 (System and Organization Controls) Report. For a portion of the year, Sanford relied on the suspension and debarment checks performed by the third-party vendor for results concluding no match without completing a validation control to ensure the results provided by the third-party vendor were accurate. • We noted instances where the vendor screening for suspension and debarment was not performed prior to setting up the vendor in the System and procuring the goods/services. Section III—Federal Award Findings and Questioned Costs (continued) • For certain procurement transactions tested, we noted Sanford did not adhere to the compliance requirements and did not follow its procurement policy by maintaining documentation related to cost/price analysis or sole-source procurement and completing the sole-source justification forms timely. Cause: Sanford utilizes a third-party vendor to perform suspension and debarment checks on its vendors, both during the vendor setup process as well as ongoing monitoring of active vendors. Sanford did not add an additional validation control until August 2023 to ensure that the suspension and debarment checks performed by the third-party vendor aligned with the governmental suspension and debarment database when the search resulted in no match. In addition, Sanford did not follow its procurement policy and perform the vendor screening for suspension and debarment prior to setting up the vendor in the system and transacting with the vendors. Furthermore, Sanford, prior to entering into the procurement transaction, did not complete the sole-source justification forms, or maintain documentation to support the sole-sourced procurements for those procurement transactions that exceeded the small purchase threshold. Effect or potential effect: Sanford’s screening for suspension and debarment through the third-party vendor results may not be accurate for the period January 1, 2023 through July 31, 2023. Further, by not performing the vendor screening for suspension and debarment prior to transacting with the vendor, Sanford could have potentially entered into a business transaction with suspended or debarred parties. Sanford did not comply with the federal procurement requirements and its procurement policy by not maintaining adequate documentation to support the cost/price analysis or sole sourced vendor selections in addition to not timely completing the sole source justification forms.   Section III—Federal Award Findings and Questioned Costs (continued) Questioned costs: $307,249 determined as the amount of the procurement expenditures included in the Schedule of Expenditures of Federal Awards for two procurement transactions that had inadequate documentation to justify sole source selection. Context: To ensure compliance with 2 CFR Section 200.213, Sanford conducts both preventive and detective controls in its vendor setup and monitoring process to ensure new vendors and active vendors are not suspended or debarred. A consistent vendor setup process is followed for each new vendor that Sanford transacts with, regardless of whether the vendor transactions are funded through federal grant funding or through other sources. To prevent a suspended or debarred vendor from being added as a new vendor, the vendor is checked against the suspension and debarment database electronically before completion of the vendor setup. Subsequent to vendor setup, Sanford also monitors the status of its vendors to ensure the vendor’s status has not changed. We selected 25 new vendors to verify that the suspension and debarment screening was performed and performed timely. We noted for 3 of the 25 vendors, the suspension and debarment screening was not performed prior to setting up the vendor in the system and for 1 of these vendors, Sanford had entered into a transaction prior to performing the suspension and debarment screening. We selected 8 procurement transactions that exceeded the small purchase threshold. Of the 8 transactions, 4 transactions did not follow the federal procurement standards and Sanford’s procurement policy which requires sole source documentation be completed prior to procuring the items. Additionally, for 2 of these 4 transactions, Sanford did not have sufficient documentation maintained to support the cost/price analysis performed or justification to support the sole source selection of the vendors. Total federal expenditures subject to suspension and debarment is $2,870,421, and federal expenditures exceeding the micro purchase threshold is $2,298,733. Total federal expenditures under the program, as reported on the SEFA, is $2,870,421. Identification as a repeat finding, if applicable: This finding is a repeat of Finding 2022-001 in the prior year. Recommendation: Management should ensure that the suspension and debarment screening is performed prior to entering into the transaction with the vendor and also ensure that it follows the procurement policy to verify suspension and debarment of the vendor prior to setting up the vendor in the system. In addition, Management should ensure that any sole sourced purchases or when quotes are obtained, that those be documented prior to entering into the procurement transaction. Views of responsible officials: Sanford continues to document periodic validation of the suspension and debarment search results performed by the third-party vendor for vendor searches that yield no suspension and debarment match. Additionally, as part of the periodic validation, Sanford will include a validation to ensure a suspension and debarment search is completed prior to setting the vendor up in the system. Sanford will re-educate appropriate staff regarding the process to verify a suspension and debarment search is completed prior to setting up the vendor in the system. Sanford’s preventative and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being paid to vendors that are suspended or debarred. Sanford’s preventive and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being utilized for items that do not adhere to the procurement standards. Sanford will re-educate applicable parties and enhance its procedural documentation regarding procurement. Sanford will implement a monthly review process of federal funds utilized for procurement.

Identification of the federal program: Federal Agency: United States Department of Health and Human Services, Health Resources and Services Administration (HRSA) Pass-Through Entities: North Dakota Department of Health, South Dakota Department of Health and Minnesota Department of Health Assistance Listing: 93.155; COVID-19 Rural Health Research Centers Award Numbers: Various Award Year: FY 2021 – 2023 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “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 200.213 states, “Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR Part 180. These regulations 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”.   In addition, Uniform Guidance 2 CFR Section 200.320 (c) states: “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.” Further, Uniform Guidance 2 CFR Section 200.320(a)(2) states: Small purchases – “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.” Condition: We noted the following matters during our testing of Procurement and Suspension and Debarment compliance requirements: • A third-party vendor performed the suspension and debarment validation process for Sanford. The third-party vendor does not have a SOC 1 (System and Organization Controls) Report. For a portion of the year, Sanford relied on the suspension and debarment checks performed by the third-party vendor for results concluding no match without completing a validation control to ensure the results provided by the third-party vendor were accurate. • We noted instances where the vendor screening for suspension and debarment was not performed prior to setting up the vendor in the System and procuring the goods/services. Section III—Federal Award Findings and Questioned Costs (continued) • For certain procurement transactions tested, we noted Sanford did not adhere to the compliance requirements and did not follow its procurement policy by maintaining documentation related to cost/price analysis or sole-source procurement and completing the sole-source justification forms timely. Cause: Sanford utilizes a third-party vendor to perform suspension and debarment checks on its vendors, both during the vendor setup process as well as ongoing monitoring of active vendors. Sanford did not add an additional validation control until August 2023 to ensure that the suspension and debarment checks performed by the third-party vendor aligned with the governmental suspension and debarment database when the search resulted in no match. In addition, Sanford did not follow its procurement policy and perform the vendor screening for suspension and debarment prior to setting up the vendor in the system and transacting with the vendors. Furthermore, Sanford, prior to entering into the procurement transaction, did not complete the sole-source justification forms, or maintain documentation to support the sole-sourced procurements for those procurement transactions that exceeded the small purchase threshold. Effect or potential effect: Sanford’s screening for suspension and debarment through the third-party vendor results may not be accurate for the period January 1, 2023 through July 31, 2023. Further, by not performing the vendor screening for suspension and debarment prior to transacting with the vendor, Sanford could have potentially entered into a business transaction with suspended or debarred parties. Sanford did not comply with the federal procurement requirements and its procurement policy by not maintaining adequate documentation to support the cost/price analysis or sole sourced vendor selections in addition to not timely completing the sole source justification forms.   Section III—Federal Award Findings and Questioned Costs (continued) Questioned costs: $307,249 determined as the amount of the procurement expenditures included in the Schedule of Expenditures of Federal Awards for two procurement transactions that had inadequate documentation to justify sole source selection. Context: To ensure compliance with 2 CFR Section 200.213, Sanford conducts both preventive and detective controls in its vendor setup and monitoring process to ensure new vendors and active vendors are not suspended or debarred. A consistent vendor setup process is followed for each new vendor that Sanford transacts with, regardless of whether the vendor transactions are funded through federal grant funding or through other sources. To prevent a suspended or debarred vendor from being added as a new vendor, the vendor is checked against the suspension and debarment database electronically before completion of the vendor setup. Subsequent to vendor setup, Sanford also monitors the status of its vendors to ensure the vendor’s status has not changed. We selected 25 new vendors to verify that the suspension and debarment screening was performed and performed timely. We noted for 3 of the 25 vendors, the suspension and debarment screening was not performed prior to setting up the vendor in the system and for 1 of these vendors, Sanford had entered into a transaction prior to performing the suspension and debarment screening. We selected 8 procurement transactions that exceeded the small purchase threshold. Of the 8 transactions, 4 transactions did not follow the federal procurement standards and Sanford’s procurement policy which requires sole source documentation be completed prior to procuring the items. Additionally, for 2 of these 4 transactions, Sanford did not have sufficient documentation maintained to support the cost/price analysis performed or justification to support the sole source selection of the vendors. Total federal expenditures subject to suspension and debarment is $2,870,421, and federal expenditures exceeding the micro purchase threshold is $2,298,733. Total federal expenditures under the program, as reported on the SEFA, is $2,870,421. Identification as a repeat finding, if applicable: This finding is a repeat of Finding 2022-001 in the prior year. Recommendation: Management should ensure that the suspension and debarment screening is performed prior to entering into the transaction with the vendor and also ensure that it follows the procurement policy to verify suspension and debarment of the vendor prior to setting up the vendor in the system. In addition, Management should ensure that any sole sourced purchases or when quotes are obtained, that those be documented prior to entering into the procurement transaction. Views of responsible officials: Sanford continues to document periodic validation of the suspension and debarment search results performed by the third-party vendor for vendor searches that yield no suspension and debarment match. Additionally, as part of the periodic validation, Sanford will include a validation to ensure a suspension and debarment search is completed prior to setting the vendor up in the system. Sanford will re-educate appropriate staff regarding the process to verify a suspension and debarment search is completed prior to setting up the vendor in the system. Sanford’s preventative and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being paid to vendors that are suspended or debarred. Sanford’s preventive and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being utilized for items that do not adhere to the procurement standards. Sanford will re-educate applicable parties and enhance its procedural documentation regarding procurement. Sanford will implement a monthly review process of federal funds utilized for procurement.

Identification of the federal program: Federal Agency: United States Department of Health and Human Services, Health Resources and Services Administration (HRSA) Pass-Through Entities: North Dakota Department of Health, South Dakota Department of Health and Minnesota Department of Health Assistance Listing: 93.155; COVID-19 Rural Health Research Centers Award Numbers: Various Award Year: FY 2021 – 2023 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “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 200.213 states, “Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR Part 180. These regulations 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”.   In addition, Uniform Guidance 2 CFR Section 200.320 (c) states: “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.” Further, Uniform Guidance 2 CFR Section 200.320(a)(2) states: Small purchases – “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.” Condition: We noted the following matters during our testing of Procurement and Suspension and Debarment compliance requirements: • A third-party vendor performed the suspension and debarment validation process for Sanford. The third-party vendor does not have a SOC 1 (System and Organization Controls) Report. For a portion of the year, Sanford relied on the suspension and debarment checks performed by the third-party vendor for results concluding no match without completing a validation control to ensure the results provided by the third-party vendor were accurate. • We noted instances where the vendor screening for suspension and debarment was not performed prior to setting up the vendor in the System and procuring the goods/services. Section III—Federal Award Findings and Questioned Costs (continued) • For certain procurement transactions tested, we noted Sanford did not adhere to the compliance requirements and did not follow its procurement policy by maintaining documentation related to cost/price analysis or sole-source procurement and completing the sole-source justification forms timely. Cause: Sanford utilizes a third-party vendor to perform suspension and debarment checks on its vendors, both during the vendor setup process as well as ongoing monitoring of active vendors. Sanford did not add an additional validation control until August 2023 to ensure that the suspension and debarment checks performed by the third-party vendor aligned with the governmental suspension and debarment database when the search resulted in no match. In addition, Sanford did not follow its procurement policy and perform the vendor screening for suspension and debarment prior to setting up the vendor in the system and transacting with the vendors. Furthermore, Sanford, prior to entering into the procurement transaction, did not complete the sole-source justification forms, or maintain documentation to support the sole-sourced procurements for those procurement transactions that exceeded the small purchase threshold. Effect or potential effect: Sanford’s screening for suspension and debarment through the third-party vendor results may not be accurate for the period January 1, 2023 through July 31, 2023. Further, by not performing the vendor screening for suspension and debarment prior to transacting with the vendor, Sanford could have potentially entered into a business transaction with suspended or debarred parties. Sanford did not comply with the federal procurement requirements and its procurement policy by not maintaining adequate documentation to support the cost/price analysis or sole sourced vendor selections in addition to not timely completing the sole source justification forms.   Section III—Federal Award Findings and Questioned Costs (continued) Questioned costs: $307,249 determined as the amount of the procurement expenditures included in the Schedule of Expenditures of Federal Awards for two procurement transactions that had inadequate documentation to justify sole source selection. Context: To ensure compliance with 2 CFR Section 200.213, Sanford conducts both preventive and detective controls in its vendor setup and monitoring process to ensure new vendors and active vendors are not suspended or debarred. A consistent vendor setup process is followed for each new vendor that Sanford transacts with, regardless of whether the vendor transactions are funded through federal grant funding or through other sources. To prevent a suspended or debarred vendor from being added as a new vendor, the vendor is checked against the suspension and debarment database electronically before completion of the vendor setup. Subsequent to vendor setup, Sanford also monitors the status of its vendors to ensure the vendor’s status has not changed. We selected 25 new vendors to verify that the suspension and debarment screening was performed and performed timely. We noted for 3 of the 25 vendors, the suspension and debarment screening was not performed prior to setting up the vendor in the system and for 1 of these vendors, Sanford had entered into a transaction prior to performing the suspension and debarment screening. We selected 8 procurement transactions that exceeded the small purchase threshold. Of the 8 transactions, 4 transactions did not follow the federal procurement standards and Sanford’s procurement policy which requires sole source documentation be completed prior to procuring the items. Additionally, for 2 of these 4 transactions, Sanford did not have sufficient documentation maintained to support the cost/price analysis performed or justification to support the sole source selection of the vendors. Total federal expenditures subject to suspension and debarment is $2,870,421, and federal expenditures exceeding the micro purchase threshold is $2,298,733. Total federal expenditures under the program, as reported on the SEFA, is $2,870,421. Identification as a repeat finding, if applicable: This finding is a repeat of Finding 2022-001 in the prior year. Recommendation: Management should ensure that the suspension and debarment screening is performed prior to entering into the transaction with the vendor and also ensure that it follows the procurement policy to verify suspension and debarment of the vendor prior to setting up the vendor in the system. In addition, Management should ensure that any sole sourced purchases or when quotes are obtained, that those be documented prior to entering into the procurement transaction. Views of responsible officials: Sanford continues to document periodic validation of the suspension and debarment search results performed by the third-party vendor for vendor searches that yield no suspension and debarment match. Additionally, as part of the periodic validation, Sanford will include a validation to ensure a suspension and debarment search is completed prior to setting the vendor up in the system. Sanford will re-educate appropriate staff regarding the process to verify a suspension and debarment search is completed prior to setting up the vendor in the system. Sanford’s preventative and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being paid to vendors that are suspended or debarred. Sanford’s preventive and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being utilized for items that do not adhere to the procurement standards. Sanford will re-educate applicable parties and enhance its procedural documentation regarding procurement. Sanford will implement a monthly review process of federal funds utilized for procurement.

Identification of the federal program: Federal Agency: United States Department of Health and Human Services, Health Resources and Services Administration (HRSA) Pass-Through Entities: North Dakota Department of Health, South Dakota Department of Health and Minnesota Department of Health Assistance Listing: 93.155; COVID-19 Rural Health Research Centers Award Numbers: Various Award Year: FY 2021 – 2023 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “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 200.213 states, “Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR Part 180. These regulations 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”.   In addition, Uniform Guidance 2 CFR Section 200.320 (c) states: “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.” Further, Uniform Guidance 2 CFR Section 200.320(a)(2) states: Small purchases – “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.” Condition: We noted the following matters during our testing of Procurement and Suspension and Debarment compliance requirements: • A third-party vendor performed the suspension and debarment validation process for Sanford. The third-party vendor does not have a SOC 1 (System and Organization Controls) Report. For a portion of the year, Sanford relied on the suspension and debarment checks performed by the third-party vendor for results concluding no match without completing a validation control to ensure the results provided by the third-party vendor were accurate. • We noted instances where the vendor screening for suspension and debarment was not performed prior to setting up the vendor in the System and procuring the goods/services. Section III—Federal Award Findings and Questioned Costs (continued) • For certain procurement transactions tested, we noted Sanford did not adhere to the compliance requirements and did not follow its procurement policy by maintaining documentation related to cost/price analysis or sole-source procurement and completing the sole-source justification forms timely. Cause: Sanford utilizes a third-party vendor to perform suspension and debarment checks on its vendors, both during the vendor setup process as well as ongoing monitoring of active vendors. Sanford did not add an additional validation control until August 2023 to ensure that the suspension and debarment checks performed by the third-party vendor aligned with the governmental suspension and debarment database when the search resulted in no match. In addition, Sanford did not follow its procurement policy and perform the vendor screening for suspension and debarment prior to setting up the vendor in the system and transacting with the vendors. Furthermore, Sanford, prior to entering into the procurement transaction, did not complete the sole-source justification forms, or maintain documentation to support the sole-sourced procurements for those procurement transactions that exceeded the small purchase threshold. Effect or potential effect: Sanford’s screening for suspension and debarment through the third-party vendor results may not be accurate for the period January 1, 2023 through July 31, 2023. Further, by not performing the vendor screening for suspension and debarment prior to transacting with the vendor, Sanford could have potentially entered into a business transaction with suspended or debarred parties. Sanford did not comply with the federal procurement requirements and its procurement policy by not maintaining adequate documentation to support the cost/price analysis or sole sourced vendor selections in addition to not timely completing the sole source justification forms.   Section III—Federal Award Findings and Questioned Costs (continued) Questioned costs: $307,249 determined as the amount of the procurement expenditures included in the Schedule of Expenditures of Federal Awards for two procurement transactions that had inadequate documentation to justify sole source selection. Context: To ensure compliance with 2 CFR Section 200.213, Sanford conducts both preventive and detective controls in its vendor setup and monitoring process to ensure new vendors and active vendors are not suspended or debarred. A consistent vendor setup process is followed for each new vendor that Sanford transacts with, regardless of whether the vendor transactions are funded through federal grant funding or through other sources. To prevent a suspended or debarred vendor from being added as a new vendor, the vendor is checked against the suspension and debarment database electronically before completion of the vendor setup. Subsequent to vendor setup, Sanford also monitors the status of its vendors to ensure the vendor’s status has not changed. We selected 25 new vendors to verify that the suspension and debarment screening was performed and performed timely. We noted for 3 of the 25 vendors, the suspension and debarment screening was not performed prior to setting up the vendor in the system and for 1 of these vendors, Sanford had entered into a transaction prior to performing the suspension and debarment screening. We selected 8 procurement transactions that exceeded the small purchase threshold. Of the 8 transactions, 4 transactions did not follow the federal procurement standards and Sanford’s procurement policy which requires sole source documentation be completed prior to procuring the items. Additionally, for 2 of these 4 transactions, Sanford did not have sufficient documentation maintained to support the cost/price analysis performed or justification to support the sole source selection of the vendors. Total federal expenditures subject to suspension and debarment is $2,870,421, and federal expenditures exceeding the micro purchase threshold is $2,298,733. Total federal expenditures under the program, as reported on the SEFA, is $2,870,421. Identification as a repeat finding, if applicable: This finding is a repeat of Finding 2022-001 in the prior year. Recommendation: Management should ensure that the suspension and debarment screening is performed prior to entering into the transaction with the vendor and also ensure that it follows the procurement policy to verify suspension and debarment of the vendor prior to setting up the vendor in the system. In addition, Management should ensure that any sole sourced purchases or when quotes are obtained, that those be documented prior to entering into the procurement transaction. Views of responsible officials: Sanford continues to document periodic validation of the suspension and debarment search results performed by the third-party vendor for vendor searches that yield no suspension and debarment match. Additionally, as part of the periodic validation, Sanford will include a validation to ensure a suspension and debarment search is completed prior to setting the vendor up in the system. Sanford will re-educate appropriate staff regarding the process to verify a suspension and debarment search is completed prior to setting up the vendor in the system. Sanford’s preventative and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being paid to vendors that are suspended or debarred. Sanford’s preventive and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being utilized for items that do not adhere to the procurement standards. Sanford will re-educate applicable parties and enhance its procedural documentation regarding procurement. Sanford will implement a monthly review process of federal funds utilized for procurement.

Identification of the federal program: Federal Agency: United States Department of Health and Human Services, Health Resources and Services Administration (HRSA) Pass-Through Entities: North Dakota Department of Health, South Dakota Department of Health and Minnesota Department of Health Assistance Listing: 93.155; COVID-19 Rural Health Research Centers Award Numbers: Various Award Year: FY 2021 – 2023 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “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 200.213 states, “Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR Part 180. These regulations 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”.   In addition, Uniform Guidance 2 CFR Section 200.320 (c) states: “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.” Further, Uniform Guidance 2 CFR Section 200.320(a)(2) states: Small purchases – “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.” Condition: We noted the following matters during our testing of Procurement and Suspension and Debarment compliance requirements: • A third-party vendor performed the suspension and debarment validation process for Sanford. The third-party vendor does not have a SOC 1 (System and Organization Controls) Report. For a portion of the year, Sanford relied on the suspension and debarment checks performed by the third-party vendor for results concluding no match without completing a validation control to ensure the results provided by the third-party vendor were accurate. • We noted instances where the vendor screening for suspension and debarment was not performed prior to setting up the vendor in the System and procuring the goods/services. Section III—Federal Award Findings and Questioned Costs (continued) • For certain procurement transactions tested, we noted Sanford did not adhere to the compliance requirements and did not follow its procurement policy by maintaining documentation related to cost/price analysis or sole-source procurement and completing the sole-source justification forms timely. Cause: Sanford utilizes a third-party vendor to perform suspension and debarment checks on its vendors, both during the vendor setup process as well as ongoing monitoring of active vendors. Sanford did not add an additional validation control until August 2023 to ensure that the suspension and debarment checks performed by the third-party vendor aligned with the governmental suspension and debarment database when the search resulted in no match. In addition, Sanford did not follow its procurement policy and perform the vendor screening for suspension and debarment prior to setting up the vendor in the system and transacting with the vendors. Furthermore, Sanford, prior to entering into the procurement transaction, did not complete the sole-source justification forms, or maintain documentation to support the sole-sourced procurements for those procurement transactions that exceeded the small purchase threshold. Effect or potential effect: Sanford’s screening for suspension and debarment through the third-party vendor results may not be accurate for the period January 1, 2023 through July 31, 2023. Further, by not performing the vendor screening for suspension and debarment prior to transacting with the vendor, Sanford could have potentially entered into a business transaction with suspended or debarred parties. Sanford did not comply with the federal procurement requirements and its procurement policy by not maintaining adequate documentation to support the cost/price analysis or sole sourced vendor selections in addition to not timely completing the sole source justification forms.   Section III—Federal Award Findings and Questioned Costs (continued) Questioned costs: $307,249 determined as the amount of the procurement expenditures included in the Schedule of Expenditures of Federal Awards for two procurement transactions that had inadequate documentation to justify sole source selection. Context: To ensure compliance with 2 CFR Section 200.213, Sanford conducts both preventive and detective controls in its vendor setup and monitoring process to ensure new vendors and active vendors are not suspended or debarred. A consistent vendor setup process is followed for each new vendor that Sanford transacts with, regardless of whether the vendor transactions are funded through federal grant funding or through other sources. To prevent a suspended or debarred vendor from being added as a new vendor, the vendor is checked against the suspension and debarment database electronically before completion of the vendor setup. Subsequent to vendor setup, Sanford also monitors the status of its vendors to ensure the vendor’s status has not changed. We selected 25 new vendors to verify that the suspension and debarment screening was performed and performed timely. We noted for 3 of the 25 vendors, the suspension and debarment screening was not performed prior to setting up the vendor in the system and for 1 of these vendors, Sanford had entered into a transaction prior to performing the suspension and debarment screening. We selected 8 procurement transactions that exceeded the small purchase threshold. Of the 8 transactions, 4 transactions did not follow the federal procurement standards and Sanford’s procurement policy which requires sole source documentation be completed prior to procuring the items. Additionally, for 2 of these 4 transactions, Sanford did not have sufficient documentation maintained to support the cost/price analysis performed or justification to support the sole source selection of the vendors. Total federal expenditures subject to suspension and debarment is $2,870,421, and federal expenditures exceeding the micro purchase threshold is $2,298,733. Total federal expenditures under the program, as reported on the SEFA, is $2,870,421. Identification as a repeat finding, if applicable: This finding is a repeat of Finding 2022-001 in the prior year. Recommendation: Management should ensure that the suspension and debarment screening is performed prior to entering into the transaction with the vendor and also ensure that it follows the procurement policy to verify suspension and debarment of the vendor prior to setting up the vendor in the system. In addition, Management should ensure that any sole sourced purchases or when quotes are obtained, that those be documented prior to entering into the procurement transaction. Views of responsible officials: Sanford continues to document periodic validation of the suspension and debarment search results performed by the third-party vendor for vendor searches that yield no suspension and debarment match. Additionally, as part of the periodic validation, Sanford will include a validation to ensure a suspension and debarment search is completed prior to setting the vendor up in the system. Sanford will re-educate appropriate staff regarding the process to verify a suspension and debarment search is completed prior to setting up the vendor in the system. Sanford’s preventative and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being paid to vendors that are suspended or debarred. Sanford’s preventive and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being utilized for items that do not adhere to the procurement standards. Sanford will re-educate applicable parties and enhance its procedural documentation regarding procurement. Sanford will implement a monthly review process of federal funds utilized for procurement.

Identification of the federal program: Federal Agency: United States Department of Health and Human Services, Health Resources and Services Administration (HRSA) Pass-Through Entities: North Dakota Department of Health, South Dakota Department of Health and Minnesota Department of Health Assistance Listing: 93.155; COVID-19 Rural Health Research Centers Award Numbers: Various Award Year: FY 2021 – 2023 Criteria or specific requirement (including statutory, regulatory or other citation): 2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control: “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 200.213 states, “Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR Part 180. These regulations 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”.   In addition, Uniform Guidance 2 CFR Section 200.320 (c) states: “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.” Further, Uniform Guidance 2 CFR Section 200.320(a)(2) states: Small purchases – “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.” Condition: We noted the following matters during our testing of Procurement and Suspension and Debarment compliance requirements: • A third-party vendor performed the suspension and debarment validation process for Sanford. The third-party vendor does not have a SOC 1 (System and Organization Controls) Report. For a portion of the year, Sanford relied on the suspension and debarment checks performed by the third-party vendor for results concluding no match without completing a validation control to ensure the results provided by the third-party vendor were accurate. • We noted instances where the vendor screening for suspension and debarment was not performed prior to setting up the vendor in the System and procuring the goods/services. Section III—Federal Award Findings and Questioned Costs (continued) • For certain procurement transactions tested, we noted Sanford did not adhere to the compliance requirements and did not follow its procurement policy by maintaining documentation related to cost/price analysis or sole-source procurement and completing the sole-source justification forms timely. Cause: Sanford utilizes a third-party vendor to perform suspension and debarment checks on its vendors, both during the vendor setup process as well as ongoing monitoring of active vendors. Sanford did not add an additional validation control until August 2023 to ensure that the suspension and debarment checks performed by the third-party vendor aligned with the governmental suspension and debarment database when the search resulted in no match. In addition, Sanford did not follow its procurement policy and perform the vendor screening for suspension and debarment prior to setting up the vendor in the system and transacting with the vendors. Furthermore, Sanford, prior to entering into the procurement transaction, did not complete the sole-source justification forms, or maintain documentation to support the sole-sourced procurements for those procurement transactions that exceeded the small purchase threshold. Effect or potential effect: Sanford’s screening for suspension and debarment through the third-party vendor results may not be accurate for the period January 1, 2023 through July 31, 2023. Further, by not performing the vendor screening for suspension and debarment prior to transacting with the vendor, Sanford could have potentially entered into a business transaction with suspended or debarred parties. Sanford did not comply with the federal procurement requirements and its procurement policy by not maintaining adequate documentation to support the cost/price analysis or sole sourced vendor selections in addition to not timely completing the sole source justification forms.   Section III—Federal Award Findings and Questioned Costs (continued) Questioned costs: $307,249 determined as the amount of the procurement expenditures included in the Schedule of Expenditures of Federal Awards for two procurement transactions that had inadequate documentation to justify sole source selection. Context: To ensure compliance with 2 CFR Section 200.213, Sanford conducts both preventive and detective controls in its vendor setup and monitoring process to ensure new vendors and active vendors are not suspended or debarred. A consistent vendor setup process is followed for each new vendor that Sanford transacts with, regardless of whether the vendor transactions are funded through federal grant funding or through other sources. To prevent a suspended or debarred vendor from being added as a new vendor, the vendor is checked against the suspension and debarment database electronically before completion of the vendor setup. Subsequent to vendor setup, Sanford also monitors the status of its vendors to ensure the vendor’s status has not changed. We selected 25 new vendors to verify that the suspension and debarment screening was performed and performed timely. We noted for 3 of the 25 vendors, the suspension and debarment screening was not performed prior to setting up the vendor in the system and for 1 of these vendors, Sanford had entered into a transaction prior to performing the suspension and debarment screening. We selected 8 procurement transactions that exceeded the small purchase threshold. Of the 8 transactions, 4 transactions did not follow the federal procurement standards and Sanford’s procurement policy which requires sole source documentation be completed prior to procuring the items. Additionally, for 2 of these 4 transactions, Sanford did not have sufficient documentation maintained to support the cost/price analysis performed or justification to support the sole source selection of the vendors. Total federal expenditures subject to suspension and debarment is $2,870,421, and federal expenditures exceeding the micro purchase threshold is $2,298,733. Total federal expenditures under the program, as reported on the SEFA, is $2,870,421. Identification as a repeat finding, if applicable: This finding is a repeat of Finding 2022-001 in the prior year. Recommendation: Management should ensure that the suspension and debarment screening is performed prior to entering into the transaction with the vendor and also ensure that it follows the procurement policy to verify suspension and debarment of the vendor prior to setting up the vendor in the system. In addition, Management should ensure that any sole sourced purchases or when quotes are obtained, that those be documented prior to entering into the procurement transaction. Views of responsible officials: Sanford continues to document periodic validation of the suspension and debarment search results performed by the third-party vendor for vendor searches that yield no suspension and debarment match. Additionally, as part of the periodic validation, Sanford will include a validation to ensure a suspension and debarment search is completed prior to setting the vendor up in the system. Sanford will re-educate appropriate staff regarding the process to verify a suspension and debarment search is completed prior to setting up the vendor in the system. Sanford’s preventative and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being paid to vendors that are suspended or debarred. Sanford’s preventive and detective controls and operating procedures provide reasonable assurance over the effectiveness of the controls necessary to prevent the risk of federal funds being utilized for items that do not adhere to the procurement standards. Sanford will re-educate applicable parties and enhance its procedural documentation regarding procurement. Sanford will implement a monthly review process of federal funds utilized for procurement.