2 CFR § 300 codified in 45 CFR part 75 and gives regulatory effect to the Department of Health and Human Services 2 CFR § 200; while 2 CFR § 400 gives regulatory effect to the Department of Agriculture for 2 CFR § 200. 2 CFR § 200.302(b)(6) states the financial management system of each non-Federal entity must provide for written procedures to implement the requirements of 2 CFR § 200.305 for Payment. 2 CFR 200.302(b)(7) requires written procedures for determining the allowability of costs in accordance with Subpart E-Cost Principles of this part and the terms and conditions of the Federal award. 2 CFR 200.430 states that costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable. 2 CFR 200.431 requires established written leave policies if the entity intends to pay fringe benefits. 2 CFR 200.464(a)(2) requires reimbursement of relocation costs to employees be in accordance with an established written policy must be consistently followed by the employer. 2 CFR 200.475 requires reimbursement and/or charges to be consistent with those normally allowed in like circumstances in the non-Federal entity's non-federally-funded activities and in accordance with non-Federal entity's written travel reimbursement policies. Additionally, for Federal awards, the Uniform Guidance requires a written policy for the procurement requirements outlined in 2 CFR § 200.318(c)(1), 2 CFR § 200.318(c)(2), and 2 CFR § 200.320(B). The Board of Health did not have written policies as required by the Uniform Guidance as they were not aware of the requirements. The failure to implement written policies as required by the Uniform Guidance could result in noncompliance with the District’s federal programs. The Board of Health should adopt written policies in accordance with the Uniform Guidance to help improve internal controls over federal compliance.
2 CFR § 300 codified in 45 CFR part 75 and gives regulatory effect to the Department of Health and Human Services 2 CFR § 200; while 2 CFR § 400 gives regulatory effect to the Department of Agriculture for 2 CFR § 200. 2 CFR § 200.302(b)(6) states the financial management system of each non-Federal entity must provide for written procedures to implement the requirements of 2 CFR § 200.305 for Payment. 2 CFR 200.302(b)(7) requires written procedures for determining the allowability of costs in accordance with Subpart E-Cost Principles of this part and the terms and conditions of the Federal award. 2 CFR 200.430 states that costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable. 2 CFR 200.431 requires established written leave policies if the entity intends to pay fringe benefits. 2 CFR 200.464(a)(2) requires reimbursement of relocation costs to employees be in accordance with an established written policy must be consistently followed by the employer. 2 CFR 200.475 requires reimbursement and/or charges to be consistent with those normally allowed in like circumstances in the non-Federal entity's non-federally-funded activities and in accordance with non-Federal entity's written travel reimbursement policies. Additionally, for Federal awards, the Uniform Guidance requires a written policy for the procurement requirements outlined in 2 CFR § 200.318(c)(1), 2 CFR § 200.318(c)(2), and 2 CFR § 200.320(B). The Board of Health did not have written policies as required by the Uniform Guidance as they were not aware of the requirements. The failure to implement written policies as required by the Uniform Guidance could result in noncompliance with the District’s federal programs. The Board of Health should adopt written policies in accordance with the Uniform Guidance to help improve internal controls over federal compliance.
2 CFR § 300 codified in 45 CFR part 75 and gives regulatory effect to the Department of Health and Human Services 2 CFR § 200; while 2 CFR § 400 gives regulatory effect to the Department of Agriculture for 2 CFR § 200. 2 CFR § 200.302(b)(6) states the financial management system of each non-Federal entity must provide for written procedures to implement the requirements of 2 CFR § 200.305 for Payment. 2 CFR 200.302(b)(7) requires written procedures for determining the allowability of costs in accordance with Subpart E-Cost Principles of this part and the terms and conditions of the Federal award. 2 CFR 200.430 states that costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable. 2 CFR 200.431 requires established written leave policies if the entity intends to pay fringe benefits. 2 CFR 200.464(a)(2) requires reimbursement of relocation costs to employees be in accordance with an established written policy must be consistently followed by the employer. 2 CFR 200.475 requires reimbursement and/or charges to be consistent with those normally allowed in like circumstances in the non-Federal entity's non-federally-funded activities and in accordance with non-Federal entity's written travel reimbursement policies. Additionally, for Federal awards, the Uniform Guidance requires a written policy for the procurement requirements outlined in 2 CFR § 200.318(c)(1), 2 CFR § 200.318(c)(2), and 2 CFR § 200.320(B). The Board of Health did not have written policies as required by the Uniform Guidance as they were not aware of the requirements. The failure to implement written policies as required by the Uniform Guidance could result in noncompliance with the District’s federal programs. The Board of Health should adopt written policies in accordance with the Uniform Guidance to help improve internal controls over federal compliance.
Internal control deficiency and noncompliance over procurement and suspension and debarment. Identification of the federal program: Assistance Listing Number 21.027: • COVID-19 – Coronavirus State and Local Fiscal Recovery Funds • U.S. Department of the Treasury • Federal award identification number – Not Applicable • Federal award year – March 3, 2021 to December 1, 2024 • Pass-through entity – State of Georgia Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303 Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 General procurement standards (a) the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 200.317 through 200.327; (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders; (c) (1) the non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 General procurement standards (i) the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.319 Competition (a) All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and 200.320. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 Methods of procurement to be followed. The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the simplified acquisition threshold, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate – (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price; (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 Methods of procurement to be followed. (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.324 Contract cost and price. (a) The non-Federal entity must perform a cost or price analysis in connection with every procurement action in excess of the Simplified Acquisition Threshold including contract modifications. The method and degree of analysis is dependent on the facts surrounding the particular procurement situation, but as a starting point, the non-Federal entity must make independent estimates before receiving bids or proposals. Title 2, Subtitle A, Chapter II, Part 200, Subpart C 200.214 Suspension and debarment. Non-Federal entities are subject to the non-procurement debarment and suspension regulations that restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Title 2, Subtitle A, Chapter I, Part 180, Subpart C 180.300 What must I do before I enter into a covered transaction with another person at the next lower tier? When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) checking SAM Exclusions; (b) Collecting a certification from that person; or (c) adding a clause or condition to the covered transaction with that person. Condition: During our testing over procurement, we observed management did not have documented procurement procedures that conformed to the procurement standards identified in 2 CFR section 200.318 to 200.327 and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Management did not have internal controls in place over small purchase procurements to ensure price or rate quotations were obtained from an adequate number of qualified sources, formal procurements to ensure sealed bids or proposals were obtained through public advertising, and completion of a cost or price analysis in connection with all procurement actions exceeding the simplified acquisition threshold. Management did not maintain records for procurements to document the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. In addition, during our testing over suspension and debarment, we observed management did not have documented suspension and debarment procedures and did not have internal controls in place to ensure vendors were searched for suspension and debarment at the time of vendor selection. Cause: Management did not have internal controls in place over the compliance requirements as stated in the criteria or specific requirement section above. Effect or potential effect: Procurements were not supported by internal controls and could potentially include unreasonable prices or rates. In addition, if a search for suspension and debarment is not conducted, the entity could contract with vendors that are suspended or debarred. Questioned costs: $917,218 – Assistance Listing Number 21.027 – Federal award identification number – Not Applicable Questioned costs were computed as the entire population of procurement transactions subject to small purchase, formal procurement, and suspension and debarment compliance requirements. Questioned costs means an amount, expended or received from a Federal award, that (1) is noncompliant or suspected noncompliant with Federal statutes, regulations, or the terms and conditions of the Federal award or (2) at the time of the audit, lacked adequate documentation to support compliance. Context: During our testing over procurements, we obtained a listing of expenditures that included $917,218 of procurement transactions subject to small purchase, formal procurement, and suspension and debarment compliance requirements. We observed management did not have internal controls in place to ensure the compliance requirements as stated in the criteria or specific requirement section above were performed. Identification as a repeat finding, if applicable: No. Recommendation: Management should create documented procurement procedures that conform to the procurement standards identified in 2 CFR section 200.318 through 200.327 and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Management should develop and implement internal controls over small purchase procurements to ensure price or rate quotations are obtained from an adequate number of qualified sources, formal procurements to ensure sealed bids or proposals are obtained through public advertising, and completion of a cost or price analysis in connection with all procurement actions exceeding the simplified acquisition threshold. Management should maintain records for procurements to document the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Management should create documented suspension and debarment procedures and develop and implement internal controls to ensure vendors were searched for suspension and debarment at the time of vendor selection. Management should review the procurements identified as questioned costs to identify if any improper payments were made to the entity. Views of responsible officials: We agree with the finding that internal controls were not sufficient to maintain compliance with federal procurement standards under Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 to 200.327 for a non-federal entity. However, the funds were expended for the intended purpose of the federal award. The Company is committed to implementing internal controls to ensure procurement related to federal awards follow 2 CFR section 200.318 to 200.327. The Company will update the procurement policy to ensure it complies with the requirements of 2 CFR section 200.318 through 200.327, that includes the written standards of conduct covering conflicts of interest, governing the actions of its employees who select, award and administer procurement contracts. This policy will include procedures to ensure proper procurement for small purchases to ensure sufficient price quotations are obtained from the required number of qualified sources, proper sealed bids or proposals are obtained through public advertising, an appropriate cost or price analysis is performed for procurement actions exceeding the simplified acquisition threshold, documentation is retained, and proper oversight is exercised to demonstrate compliance with 2 CFR section 200.318 through 200.327. While the Company did not perform a check of each vendor against the SAM Exclusions prior to selecting a vendor, the Company has procedures in place to ensure the vendors are approved by Corporate purchasing and in good standing, which limits the risk of conflict of interest between employees and vendors, and contracting with a vendor who is suspended or debarred from federal related contracting. Further, the Company confirmed the vendors that were contracted with were not included on the SAM Exclusions listing.
Internal control deficiency and noncompliance over procurement and suspension and debarment. Identification of the federal program: Assistance Listing Number 84.116Z: • Fund for the Improvement of Postsecondary Education • U.S. Department of Education • Federal award identification number – P116Z230323 • Federal award year – June 1, 2023 to May 31, 2026 Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303 Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 General procurement standards (a) the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 200.317 through 200.327; (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders; (c) (1) the non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 General procurement standards (i) the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.319 Competition (a) All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and 200.320. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 Methods of procurement to be followed. The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 Methods of procurement to be followed. (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Title 2, Subtitle A, Chapter II, Part 200, Subpart C 200.214 Suspension and debarment. Non-Federal entities are subject to the non-procurement debarment and suspension regulations that restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Title 2, Subtitle A, Chapter I, Part 180, Subpart C 180.300 What must I do before I enter into a covered transaction with another person at the next lower tier? When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) checking SAM Exclusions; (b) Collecting a certification from that person; or (c) adding a clause or condition to the covered transaction with that person. Condition: During our testing over procurement, we observed management did not have documented procurement procedures that conformed to the procurement standards identified in 2 CFR section 200.318 to 200.327 and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Management did not have internal controls in place over small purchase procurements to ensure price or rate quotations were obtained from an adequate number of qualified sources. Management did not maintain records for procurements to document the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. In addition, during our testing over suspension and debarment, we observed management did not have documented suspension and debarment procedures and did not have internal controls in place to ensure vendors were searched for suspension and debarment at the time of vendor selection. Cause: Management did not have internal controls in place over the compliance requirements as stated in the criteria or specific requirement section above. Effect or potential effect: Procurements were not supported by internal controls and could potentially include unreasonable prices or rates. In addition, if a search for suspension and debarment is not conducted, the entity could contract with vendors that are suspended or debarred. Questioned costs: $153,169 – Assistance Listing Number 84.116Z – Federal award identification number – P116Z230323 Questioned costs were computed as the entire population of procurement transactions subject to small purchase and suspension and debarment compliance requirements. Questioned costs means an amount, expended or received from a Federal award, that (1) is noncompliant or suspected noncompliant with Federal statutes, regulations, or the terms and conditions of the Federal award or (2) at the time of the audit, lacked adequate documentation to support compliance. Context: During our testing over procurements, we obtained a listing of expenditures that included $153,169 of procurement transactions subject to small purchase and suspension and debarment compliance requirements. We observed management did not have internal controls in place to ensure the compliance requirements as stated in the criteria or specific requirement section above were performed. Identification as a repeat finding, if applicable: No. Recommendation: Management should create documented procurement procedures that conform to the procurement standards identified in 2 CFR section 200.318 through 200.327 and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Management should develop and implement internal controls over small purchase procurements to ensure price or rate quotations are obtained from an adequate number of qualified sources. Management should maintain records for procurements to document the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Management should create documented suspension and debarment procedures and develop and implement internal controls to ensure vendors were searched for suspension and debarment at the time of vendor selection. Management should review the procurements identified as questioned costs to identify if any improper payments were made to the entity. Views of responsible officials: We agree with the finding that internal controls were not sufficient to maintain compliance with federal procurement standards under Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 to 200.327 for a non-federal entity. However, the funds were expended for the intended purpose of the federal award. The Company is committed to implementing internal controls to ensure procurement related to federal awards follow 2 CFR section 200.318 to 200.327. The Company will update the procurement policy to ensure it complies with the requirements of 2 CFR section 200.318 through 200.327, that includes the written standards of conduct covering conflicts of interest, governing the actions of its employees who select, award and administer procurement contracts. This policy will include procedures to ensure proper procurement for small purchases to ensure sufficient price quotations are obtained from the required number of qualified sources, proper sealed bids or proposals are obtained through public advertising, an appropriate cost or price analysis is performed for procurement actions exceeding the simplified acquisition threshold, documentation is retained, and proper oversight is exercised to demonstrate compliance with 2 CFR section 200.318 through 200.327. While the Company did not perform a check of each vendor against the SAM Exclusions prior to selecting a vendor, the Company has procedures in place to ensure the vendors are approved by Corporate purchasing and in good standing, which limits the risk of conflict of interest between employees and vendors, and contracting with a vendor who is suspended or debarred from federal related contracting. Further, the Company confirmed the vendors that were contracted with were not included on the SAM Exclusions listing.
2024-003 Federal Grants Management - Procurement Federal Agency: Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Pass-Through Agency: Michigan Department of Treasury Type of Finding: Material Weakness in Internal Control over Compliance and Other Matter Criteria or Specific Requirement: Per 2 CFR §200.318–§200.320, non-federal entities must use documented procurement procedures that reflect applicable local, state, and federal laws and regulations. These procedures must include methods for procurement, thresholds, and documentation requirements such as solicitation of quotes, sealed bids, and board approvals. Condition: The County has established policies and procedures in place including related controls over procurement. However, documentation is not retained to ensure compliance with requirements of Uniform Guidance. Questioned Costs: None. Context: While performing audit procedures, it was noted that the County did not follow established policies regarding procurement. Several transactions out of the selected samples lacked appropriate documentation. This was a statistically valid sample. Cause: While the County has policies over procurement, it did not consistently follow its internal procurement procedures or Uniform Guidance for documentation retention. Effect: Without sufficient documentation, the County cannot demonstrate that procurement transactions were conducted in accordance with Uniform Guidance. This increases the risk of noncompliance and potential disallowance of costs. Repeat Finding: No. Recommendation: We recommend the County review and follow their procurement policy. View of Responsible Officials: There is no disagreement with the finding.
2024-002 – Procurement Federal program information: Funding Agency: U.S. Departments of the Interior Title: Bureau of Indian Affairs Self-Governance Assistance Listing Number: 15.022 Award Periods: January 1, 2024 – December 31, 2024 Criteria: Uniform Guidance regulations section CFR 200.317 and CFR 200.320(a) state, the non-Federal entity must use its own documented procurement procedures which reflect applicable state, local, and tribal laws and regulations, provided that the procurement conform to applicable federal law and the standards identified. Procurement by micro-purchase is the acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold. During 2024, the Department’s procurement policy has a micro purchase threshold of $10,000. The Department’s policy states “Duckwater will conduct procurement in a manner that prohibits the use of statutorily or administratively imposed data, local, or tribal geographical preferences in the evaluation of bids or proposals”. Condition: We reviewed one vendor that was paid in excess of $10,000; however, we were not provided with procurement documentation for this purchase. Context: One of thirty-five expenditures tested. Questioned Costs: None. Cause: The Department’s procurement policies and procedures were not enforced during the year. Effect: The Department is not always ensuring that all goods and services are obtained at a fair price and the Department is not in compliance with their procurement policy. Auditors’ Recommendation: Enforce procurement policies and procedures at all times. Management Response: Management believes that the procurement process has improved considerably. Managers are following the procurement policy by making price comparisons and submitting quotes when required. Approvals for larger purchases are obtained by Resolution from Council. The Finance Manager and the Accounts Payable Clerk monitor the documents submitted with purchase requests to ensure that the required documents have been submitted. Management believes that it is an isolated instance where a transaction lacked procurement documents.
Type of Finding: Significant Deficiency in Internal Control over Compliance and Instance of Noncompliance Federal Agency: U.S. Department of Defense Federal Program Name: Conservation and Rehabilitation of Natural Resources on Military Installations Assistance Listing Number: 12.005 Federal Award Identification Number and Year: H79TI083313 - 2020 Award Period: September 28, 2020 through September 27, 2025 Criteria or specific requirement: 2 CFR 200.320 requires non-federal entities to have and use documented procurement procedures. 2 CFR 200.318(i) states that "the non-Federal entity must maintain a record sufficient to detail the history of procurement”. Condition: A formal procurement policy was not adopted until partway through FY24. One procurement lacked adequate documentation to support the history and reasoning behind the procurement. Questioned costs: $3,729 known questioned costs. Context: Internal procurement policies were updated to match UG requirements after FY23 audit procedures identified deficiencies. The new policies were adopted on April 8, 2024, and then amended further on August 1, 2024, which was approximately two months before the final audit report was issued. One of seven procurements tested lacked adequate supporting documentation to support the history and reasoning behind the procurement and one additional selected procurement did not have adequate evidence of internal controls to support the procurement. These procurements were both small purchases that were procured in February and March 2024, respectively, prior to the adoption of the final procurement policies. Cause: Prior to completing the prior year’s audit, staff were not aware of the specific compliance requirements and procedures for procurement. Effect: Purchases may occur that do not follow the procurement standards as required by Uniform Guidance and could lead to expenditure of federal funds that are not suitable or preferrable to the federal program. Repeat finding: The finding is a repeat of a finding immediately in the prior year. The prior year finding number was 2023-002. Recommendation: CLA recommends regular review of the Organization's procurement policies to ensure they continue to meet procurement standards, as set by Uniform Guidance, and they continue to be consistently implemented. CLA also recommends reviewing internal controls surrounding procurements to ensure they are sufficient to prevent noncompliance. Views of responsible officials: There is no disagreement with the audit finding.
Finding 2024-006 I. Procurement, Suspension and Debarment Identification of the federal program: Federal Agency: U.S. Department of Housing and Urban Development (HUD) Federal Assistance Listing Number: 14.881 Federal Program Name: Moving to Work (MTW) Demonstration Program Public and Indian Housing (Public Housing) Program Year: January 1, 2024 through December 31, 2024 Program No.: IL002-01-00024D Criteria or specific requirement (including statutory, regulatory or other citation): The Uniform Guidance 2 CFR section 200.303 states, “The Non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” The Uniform Guidance 2 CFR section 200.318, general procurement standards states “(a) Documented procurement procedures. The recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services.” The Uniform Guidance 2 CFR section 200.319 states that “all procurement transactions under the Federal award must be conducted in a manner that provides for full and open competition and is consistent with the standards of this section and §200.320.” The Authority’s procurement policy for a cooperative (“piggyback”) procurement requires an agency contract and amendments. The Authority’s internal control procedures require procurements of more than $500,000 to have Board of Commissioners' approval. Condition: For one of nine (11.1%) procurement transactions sampled to test the Authority’s internal controls to ensure procurements are executed and documented in accordance with the Uniform Guidance procurement standards, we noted that the procurement was not approved by the Board of Commissioners and there was no executed agreement or amendment that covered fiscal year 2024. Cause: The Authority’s internal control over the review and approval of procurement transactions was not operating effectively. Effect or Potential Effect: Procurements may not be following Uniform Guidance procurement standards. Questioned Costs: A total of $3,500,000 related to Assistance Listing No. 14.881, representing the one procurement that was not approved by the Board and did not have an agreement or amendment in place that covered fiscal year 2024. Context: The one procurement totaled $3,500,000 out of nine procurement transactions sampled totaling $4,983,902. Public Housing expenditures reported in the schedule of expenditures of federal awards were $171,219,053 for the year ended December 31, 2024, representing 15.1% of total federal expenditures under Assistance Listing No. 14.881 of $1,106,629,432. Identification as a Repeat Finding, if Applicable: This finding is not a repeat finding from the prior year. Recommendation: The Authority should follow its established internal control over the review and approval of procurement transactions. Views of Responsible Officials: Management concurs with the finding and has developed a plan to correct the finding.
FINDING 2024-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): SLFRP1096 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Each entity that accepts federal money must comply with 2 CFR 300.318, which requires each entity to have their own documented procurement procedures. The City provided a procurement policy from Title II of an employee manual that did not fully satisfy the standards of 2 CFR 200.318. The employee manual was adopted in 2004. The COVID-19 - Coronavirus State and Local Fiscal Recovery Funds were used to pay for engineering services in the amount of $301,000. These services were not publicly bid even though the dollar amount of the services exceeds the simplified acquisition threshold. Prior to entering into subawards and covered transactions with the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is done by checking the Excluded Parties List System (EPLS), collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. INDIANA STATE BOARD OF ACCOUNTS 16 CITY OF ANDERSON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The City included suspension and debarment certifications with the agreements with many of the vendors who participated in the activities funded by the SLFRF funds. The City also checked the EPLS for some vendors. Evidence of compliance with the suspension and debarment verification requirements was not provided for two of four vendors selected for suspension and debarment testing. The lack of internal controls and noncompliance was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (c) (1) The non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of the contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. . . . INDIANA STATE BOARD OF ACCOUNTS 17 CITY OF ANDERSON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. . . ." INDIANA STATE BOARD OF ACCOUNTS 18 CITY OF ANDERSON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause The City did not have adequate internal controls over procurement and suspension and debarment. The City had not adopted a formal or informal policy for procurement that meets the requirements of 2 CFR 300.318. The City did not apply its procedures over suspension and debarment uniformly with one vendor not tested for suspension and debarment due to the specific aspects of the City's grant plan that the vendor was assigned to. Effect Without establishing effective internal controls over procurement and suspension and debarment, the City cannot ensure free and open competition or that the vendors paid with federal funds are eligible to participate in federal programs and might allow for payments to suspended or debarred parties that would be unallowable. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could potentially result in the loss of future funding to the City. Recommendation We recommended that management of the City establish a formal policy on procurement that meets the standards of 2 CFR 200.318 and develop effective internal controls and procedures to ensure that all vendors in which expenditures exceed $25,000 are not suspended, debarred, or otherwise excluded prior to entering into contracts or subawards.
Assistance Listing, Federal Agency, and Program Name 20.500, 20.507, 20.525, 20.526, U.S. Department of Transportation, Federal Transit Cluster Federal Award Identification Number and Year All Pass through Entity Not applicable Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding Yes 2023-005 Criteria 2 CFR 200.320 provides standards for acceptable methods of procurement, which includes the following required support for the contract price: Informal procurement methods (micro purchases) may be awarded without submitting competitive price or rate quotations if the non federal entity considers the price to be reasonable based on research, experience, purchase history, or other information and documents in files accordingly. Small purchases require that price or rate quotations be obtained and documented to support the procurement decisions. Formal procurement methods require documentation of sealed bids, proposals, or rationale for the use of non competitive procurements, such as single source and emergency procurements Condition During our testing, we identified two contracts that did not have adequate documentation to support the basis for the contract price. Questioned Costs $222,703 Identification of How Questioned Costs Were Computed The sum of the expenditures incurred under the contracts for the two exceptions identified in our testing was used to calculate questioned costs. Context Of the 33 procurements selected for testing, there were two contracts subject to formal procurement methods that had no evidence to support whether sealed bids, proposals, or noncompetitive procurements were used to support the contract price, one of which was a sole source contract. Cause and Effect The Authority experienced turnover in personnel that resulted in it being unable to locate documentation to support compliance for the two exceptions identified in our testing. Recommendation We recommend that internal controls be put in place to ensure that all procurements adhere to 2 CFR 200.320 and maintain documentation to support compliance and supervisory review. Views of Responsible Officials and Corrective Action Plan Effective 6/1/2025, TARTA implemented a new ERP system that will allow us to electronically control and verify all purchases in accordance with 2 CFR 200.32 standards for acceptable methods of procurement going forward.
Assistance Listing, Federal Agency, and Program Name 20.500, 20.507, 20.525, 20.526, U.S. Department of Transportation, Federal Transit Cluster Federal Award Identification Number and Year All Pass through Entity Not applicable Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding Yes 2023-005 Criteria 2 CFR 200.320 provides standards for acceptable methods of procurement, which includes the following required support for the contract price: Informal procurement methods (micro purchases) may be awarded without submitting competitive price or rate quotations if the non federal entity considers the price to be reasonable based on research, experience, purchase history, or other information and documents in files accordingly. Small purchases require that price or rate quotations be obtained and documented to support the procurement decisions. Formal procurement methods require documentation of sealed bids, proposals, or rationale for the use of non competitive procurements, such as single source and emergency procurements Condition During our testing, we identified two contracts that did not have adequate documentation to support the basis for the contract price. Questioned Costs $222,703 Identification of How Questioned Costs Were Computed The sum of the expenditures incurred under the contracts for the two exceptions identified in our testing was used to calculate questioned costs. Context Of the 33 procurements selected for testing, there were two contracts subject to formal procurement methods that had no evidence to support whether sealed bids, proposals, or noncompetitive procurements were used to support the contract price, one of which was a sole source contract. Cause and Effect The Authority experienced turnover in personnel that resulted in it being unable to locate documentation to support compliance for the two exceptions identified in our testing. Recommendation We recommend that internal controls be put in place to ensure that all procurements adhere to 2 CFR 200.320 and maintain documentation to support compliance and supervisory review. Views of Responsible Officials and Corrective Action Plan Effective 6/1/2025, TARTA implemented a new ERP system that will allow us to electronically control and verify all purchases in accordance with 2 CFR 200.32 standards for acceptable methods of procurement going forward.
FINDING 2024-004 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): SWIF224568 Pass-Through Entity: Indiana Finance Authority Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context As part of sound management of the federal award, the Town was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The Town had not properly designed or implemented such a system, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. INDIANA STATE BOARD OF ACCOUNTS 19 TOWN OF RIDGEVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. One vendor was identified that fell within the small purchase threshold. Purchases from the vendor totaled $38,225. As such, price or rate quotations from an adequate number of qualified sources should have been obtained. However, the Town did not obtain price or rate quotations for the purchases, nor was full and open competition provided for the vendor. Additionally, there was no documentation available to support the rationale to limit competition. Suspension and Debarment Prior to entering into subawards and covered transactions with the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The Town did not have policies or procedures in place for verifying that an entity with which it planned to enter into a covered transaction was not suspended, debarred, or otherwise excluded. Two of the three vendors selected for testing, with covered transactions, were not verified to ensure that the vendor was not suspended, debarred, or otherwise excluded. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 20 TOWN OF RIDGEVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause The Town did not have policies or procedures in place to document the process performed to ensure each vendor related to the SLFRF program was not suspended or debarred from participation in federal awards. The Town was not aware of the requirements for specific federal procurement policies or the need to verify covered transactions for suspension and debarment. Effect Without the proper implementation of an effectively designed system of internal controls and procedures, the Town could not ensure the vendors paid with federal funds were eligible to participate in federal programs. Any program funds the Town used to pay vendors that have been suspended or debarred would be unallowable and the funding agency could potentially recover the funds. Questioned Costs No questioned costs noted. INDIANA STATE BOARD OF ACCOUNTS 21 TOWN OF RIDGEVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended the Town implement procurement policies to ensure compliance with state and federal laws and regulations for procuring goods and services paid with federal funds. We also recommended that management of the Town adopt internal controls to ensure that all contractors that are expected to be paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into covered transactions. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Highway Planning and Construction - Procurement Federal Agency: Department of Transportation Federal Program: Highway Planning and Construction Assistance Listings Number: 20.205 Federal Award Number and Year (or Other Identifying Number): DES 2300096 Pass-Through Entity: Indiana Department of Transportation Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The County had not properly designed or implemented a system of internal controls that would be effective in preventing, or detecting and correcting, noncompliance to ensure that the Local Public Agency (LPA) followed all federal requirements related to engineering and design services. In addition, the County did not have documented procurement procedures or policies used to procure engineering and design services. For consultant contracting (engineering and design related services), the LPA was to create and send a Request for Proposal (RFP) to the Indiana Department of Transportation (INDOT), who would review and advertise them. Consultants could then respond to those RFPs by completing and submitting a Letter of Interest (LOI). After all LOIs were received and ranked, the County was to report the number of LOIs received on the LPA Selection Review Checklist. The County did not maintain the LOIs as reported to the INDOT on the LPA Selection Review Checklist. As a result, the number of LOIs documented on the checklist provided to the INDOT could not be verified or audited. In addition, we were unable to ensure the minimum number of LOIs were received to meet the procurement competition standards. The lack of internal controls and noncompliance was isolated to DES 2300096. The lack of written procedures or policies was a systemic issue throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 18 CRAWFORD COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320(b) states in part: "Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance awards exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: . . . (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; INDIANA STATE BOARD OF ACCOUNTS 19 CRAWFORD COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and (iv) The non-Federal entity may use competitive proposal procedures for qualifications based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. Cause Management did not develop effective internal controls to maintain records sufficient to detail the history of a procurement as required by retaining the LOIs. The County was unaware that it needed to maintain documented procurement procedures or policies. Effect The failure to establish and maintain an effective internal control system for procurement placed the County at risk of noncompliance with the federal requirements. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Due to the lack of retention of the LOIs, compliance with the procurement process could not be determined. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the County establish and implement written policies and procedures for the procurement of engineering and design services. We further recommended that the County ensure it retains all LOIs and other procurement documentation to ensure compliance with federal regulations. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
CONDITION 2024-1 THE ORGANIZATION USED CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS (SLFRF) TO PARTIALLY FUND A MULTI-MILLION DOLLAR CONSTRUCTION PROJECT. HOWEVER, THE GENERAL CONTRACTOR WAS SELECTED WITHOUT A COMPETITIVE PROCUREMENT PROCESS, AS REQUIRED UNDER UNIFORM GUIDANCE. THE ORGANIZATION DID NOT DOCUMENT A PROCUREMENT PROCESS, JUSTIFICATION FOR NON-COMPETITIVE SELECTION, OR A COST OR PRICE ANALYSIS. CRITERIA UNDER 2 CFR SECTION 200.320, RECIPIENTS OF FEDERAL FUNDS MUST FOLLOW FEDERAL PROCUREMENT STANDARDS, INCLUDING COMPETITIVE BIDDING FOR CONSTRUCTION PROJECTS THAT EXCEED THE SIMPLIFIED ACQUISITION THRESHOLD (CURRENTLY $250,000). THESE PROCEDURES HELP ENSURE FULL AND OPEN COMPETITION AND PROPER STEWARDSHIP OF FEDERAL FUNDS. CAUSE AT THE TIME THE GENERAL CONTRACTOR WAS SELECTED, THE ORGANIZATION INTENDED TO FUND THE CONSTRUCTION PROJECT USING INTERNAL RESOURCES OR PRIVATE DONATIONS AND DID NOT ANTICIPATE RECEIVING FEDERAL FUNDS. AS A RESULT, MANAGEMENT DID NOT INITIATE A FEDERAL PROCUREMENT PROCESS. WHEN SLFRF FUNDS BECAME AVAILABLE LATER IN THE PROJECT, THE ORGANIZATION APPLIED THEM TO COSTS ALREADY INCURRED OR COMMITTED UNDER THE EXISTING ARRANGEMENT, WITHOUT REASSESSING COMPLIANCE WITH FEDERAL PROCUREMENT REQUIREMENTS. WHILE THE ORGANIZATION HAS A WRITTEN PROCUREMENT POLICY THAT ALIGNS WITH FEDERAL STANDARDS, IT WAS NOT FOLLOWED IN THIS INSTANCE DUE TO THE INITIAL FUNDING ASSUMPTIONS. EFFECT APPLYING FEDERAL FUNDS TO EXPENDITURES THAT WERE NOT PROCURED IN ACCORDANCE WITH 2 CFR PART 200 RESULTED IN NONCOMPLIANCE WITH FEDERAL PROCUREMENT REQUIREMENTS. EVEN THOUGH THE ORIGINAL FUNDING SOURCE WAS EXPECTED TO BE NON-FEDERAL, THE USE OF FEDERAL FUNDS ON A NON-COMPLIANT PROCUREMENT INCREASED THE RISK OF UNALLOWABLE COSTS AND REFLECTS A MATERIAL WEAKNESS IN INTERNAL CONTROLS OVER COMPLIANCE WITH FEDERAL AWARD REQUIREMENTS. CONTEXT THE CONSTRUCTION PROJECT HAD ALREADY COMMENCED PRIOR TO THE ORGANIZATION'S RECEIPT OF SLFRF FUNDS. THE GENERAL CONTRACTOR WAS SELECTED BASED ON PRIOR EXPERIENCE WITH THE ORGANIZATION AND WITHOUT COMPETITIVE BIDDING. THE ORGANIZATION DID NOT REASSESS THE PROCUREMENT ONCE IT BECAME CLEAR THAT FEDERAL FUNDS WOULD BE USED. RECOMMENDATION WE RECOMMEND THAT THE ORGANIZATION IMPLEMENT ADDITIONAL CONTROLS TO ASSESS FEDERAL COMPLIANCE REQUIREMENTS WHEN FUNDING SOURCES CHANGE OR ARE SUPPLEMENTED. MANAGEMENT SHOULD ENSURE THAT ANY EXPENDITURES REIMBURSED OR FUNDED WITH FEDERAL DOLLARS MEET APPLICABLE UNIFORM GUIDANCE REQUIREMENTS, INCLUDING PROCUREMENT. STAFF INVOLVED IN FINANCIAL PLANNING AND GRANT ADMINISTRATION SHOULD BE TRAINED TO EVALUATE COMPLIANCE RISKS WHEN ALLOCATING FEDERAL RESOURCES TO PRE-EXISTING OBLIGATIONS. VIEWS OF RESPONSIBLE OFFICIALS THE ORGANIZATION CONCURS WITH THE CONDITION.
FINDING 2024-001 Material Weakness in Internal Controls Over Compliance, Material Noncompliance – Procurement Federal Agency: U.S. Department of Agriculture Pass through Grantor: University of Georgia Research Foundation, Inc. Federal Program: Agriculture and Food Research Initiative Assistance Listing Number: 10.310 Federal Agency: U.S. Department of Agriculture Pass through Grantor: Not Applicable – Direct Award Federal Program: Soil and Water Conservation Assistance Listing Number: 10.902 Federal Award Identification Number: NR243A750023C002 Federal Agency: U.S. Department of Agriculture Pass through Grantor: University of Arizona Federal Program: Soil and Water Conservation Assistance Listing Number: 10.902 Federal Agency: U.S. Department of Agriculture Pass through Grantor: Flint River Soil and Water Conservation District Federal Program: Feral Swine Eradication and Control Pilot Program Assistance Listing Number: 10.934 Federal Agency: U.S. Department of Interior Pass through Grantor: Board of Regents of the University System of Georgia Federal Program: Wildlife Restoration and Basic Hunter Education and Safety Assistance Listing Number: 15.611 Criteria: Per 2 CFR Part 200, Subpart D, 200.320, if the aggregate dollar amount of the procurement transaction is higher than the micro-purchase threshold ($10,000) but does not exceed the simplified acquisition threshold ($250,000), price or rate quotations must be obtained from an adequate number of qualified sources. Condition/Context: Through Procurement testing, we identified 3 vendors which exceeded the micro-purchase threshold but did not exceed the simplified acquisition threshold. The total amount of federal expenditures for the year ended December 31, 2024 for these 3 vendors was $52,327. For all 3 vendors, we determined that the procurement methodology followed did not align with federal simplified acquisition procurement requirements. Cause: Management has not updated their procurement policy for federal awards to ensure it aligns with federal requirements. Effect: Contracts could be awarded to vendors that are not evaluated as required by federal procurement requirements. Questioned Costs: None. Recommendation: Management should develop and implement procurement policies that align with federal requirements. Views of Responsible Officials: See Corrective Action Plan.
FINDING 2024-001 Material Weakness in Internal Controls Over Compliance, Material Noncompliance – Procurement Federal Agency: U.S. Department of Agriculture Pass through Grantor: University of Georgia Research Foundation, Inc. Federal Program: Agriculture and Food Research Initiative Assistance Listing Number: 10.310 Federal Agency: U.S. Department of Agriculture Pass through Grantor: Not Applicable – Direct Award Federal Program: Soil and Water Conservation Assistance Listing Number: 10.902 Federal Award Identification Number: NR243A750023C002 Federal Agency: U.S. Department of Agriculture Pass through Grantor: University of Arizona Federal Program: Soil and Water Conservation Assistance Listing Number: 10.902 Federal Agency: U.S. Department of Agriculture Pass through Grantor: Flint River Soil and Water Conservation District Federal Program: Feral Swine Eradication and Control Pilot Program Assistance Listing Number: 10.934 Federal Agency: U.S. Department of Interior Pass through Grantor: Board of Regents of the University System of Georgia Federal Program: Wildlife Restoration and Basic Hunter Education and Safety Assistance Listing Number: 15.611 Criteria: Per 2 CFR Part 200, Subpart D, 200.320, if the aggregate dollar amount of the procurement transaction is higher than the micro-purchase threshold ($10,000) but does not exceed the simplified acquisition threshold ($250,000), price or rate quotations must be obtained from an adequate number of qualified sources. Condition/Context: Through Procurement testing, we identified 3 vendors which exceeded the micro-purchase threshold but did not exceed the simplified acquisition threshold. The total amount of federal expenditures for the year ended December 31, 2024 for these 3 vendors was $52,327. For all 3 vendors, we determined that the procurement methodology followed did not align with federal simplified acquisition procurement requirements. Cause: Management has not updated their procurement policy for federal awards to ensure it aligns with federal requirements. Effect: Contracts could be awarded to vendors that are not evaluated as required by federal procurement requirements. Questioned Costs: None. Recommendation: Management should develop and implement procurement policies that align with federal requirements. Views of Responsible Officials: See Corrective Action Plan.
FINDING 2024-001 Material Weakness in Internal Controls Over Compliance, Material Noncompliance – Procurement Federal Agency: U.S. Department of Agriculture Pass through Grantor: University of Georgia Research Foundation, Inc. Federal Program: Agriculture and Food Research Initiative Assistance Listing Number: 10.310 Federal Agency: U.S. Department of Agriculture Pass through Grantor: Not Applicable – Direct Award Federal Program: Soil and Water Conservation Assistance Listing Number: 10.902 Federal Award Identification Number: NR243A750023C002 Federal Agency: U.S. Department of Agriculture Pass through Grantor: University of Arizona Federal Program: Soil and Water Conservation Assistance Listing Number: 10.902 Federal Agency: U.S. Department of Agriculture Pass through Grantor: Flint River Soil and Water Conservation District Federal Program: Feral Swine Eradication and Control Pilot Program Assistance Listing Number: 10.934 Federal Agency: U.S. Department of Interior Pass through Grantor: Board of Regents of the University System of Georgia Federal Program: Wildlife Restoration and Basic Hunter Education and Safety Assistance Listing Number: 15.611 Criteria: Per 2 CFR Part 200, Subpart D, 200.320, if the aggregate dollar amount of the procurement transaction is higher than the micro-purchase threshold ($10,000) but does not exceed the simplified acquisition threshold ($250,000), price or rate quotations must be obtained from an adequate number of qualified sources. Condition/Context: Through Procurement testing, we identified 3 vendors which exceeded the micro-purchase threshold but did not exceed the simplified acquisition threshold. The total amount of federal expenditures for the year ended December 31, 2024 for these 3 vendors was $52,327. For all 3 vendors, we determined that the procurement methodology followed did not align with federal simplified acquisition procurement requirements. Cause: Management has not updated their procurement policy for federal awards to ensure it aligns with federal requirements. Effect: Contracts could be awarded to vendors that are not evaluated as required by federal procurement requirements. Questioned Costs: None. Recommendation: Management should develop and implement procurement policies that align with federal requirements. Views of Responsible Officials: See Corrective Action Plan.
FINDING 2024-001 Material Weakness in Internal Controls Over Compliance, Material Noncompliance – Procurement Federal Agency: U.S. Department of Agriculture Pass through Grantor: University of Georgia Research Foundation, Inc. Federal Program: Agriculture and Food Research Initiative Assistance Listing Number: 10.310 Federal Agency: U.S. Department of Agriculture Pass through Grantor: Not Applicable – Direct Award Federal Program: Soil and Water Conservation Assistance Listing Number: 10.902 Federal Award Identification Number: NR243A750023C002 Federal Agency: U.S. Department of Agriculture Pass through Grantor: University of Arizona Federal Program: Soil and Water Conservation Assistance Listing Number: 10.902 Federal Agency: U.S. Department of Agriculture Pass through Grantor: Flint River Soil and Water Conservation District Federal Program: Feral Swine Eradication and Control Pilot Program Assistance Listing Number: 10.934 Federal Agency: U.S. Department of Interior Pass through Grantor: Board of Regents of the University System of Georgia Federal Program: Wildlife Restoration and Basic Hunter Education and Safety Assistance Listing Number: 15.611 Criteria: Per 2 CFR Part 200, Subpart D, 200.320, if the aggregate dollar amount of the procurement transaction is higher than the micro-purchase threshold ($10,000) but does not exceed the simplified acquisition threshold ($250,000), price or rate quotations must be obtained from an adequate number of qualified sources. Condition/Context: Through Procurement testing, we identified 3 vendors which exceeded the micro-purchase threshold but did not exceed the simplified acquisition threshold. The total amount of federal expenditures for the year ended December 31, 2024 for these 3 vendors was $52,327. For all 3 vendors, we determined that the procurement methodology followed did not align with federal simplified acquisition procurement requirements. Cause: Management has not updated their procurement policy for federal awards to ensure it aligns with federal requirements. Effect: Contracts could be awarded to vendors that are not evaluated as required by federal procurement requirements. Questioned Costs: None. Recommendation: Management should develop and implement procurement policies that align with federal requirements. Views of Responsible Officials: See Corrective Action Plan.
FINDING 2024-001 Material Weakness in Internal Controls Over Compliance, Material Noncompliance – Procurement Federal Agency: U.S. Department of Agriculture Pass through Grantor: University of Georgia Research Foundation, Inc. Federal Program: Agriculture and Food Research Initiative Assistance Listing Number: 10.310 Federal Agency: U.S. Department of Agriculture Pass through Grantor: Not Applicable – Direct Award Federal Program: Soil and Water Conservation Assistance Listing Number: 10.902 Federal Award Identification Number: NR243A750023C002 Federal Agency: U.S. Department of Agriculture Pass through Grantor: University of Arizona Federal Program: Soil and Water Conservation Assistance Listing Number: 10.902 Federal Agency: U.S. Department of Agriculture Pass through Grantor: Flint River Soil and Water Conservation District Federal Program: Feral Swine Eradication and Control Pilot Program Assistance Listing Number: 10.934 Federal Agency: U.S. Department of Interior Pass through Grantor: Board of Regents of the University System of Georgia Federal Program: Wildlife Restoration and Basic Hunter Education and Safety Assistance Listing Number: 15.611 Criteria: Per 2 CFR Part 200, Subpart D, 200.320, if the aggregate dollar amount of the procurement transaction is higher than the micro-purchase threshold ($10,000) but does not exceed the simplified acquisition threshold ($250,000), price or rate quotations must be obtained from an adequate number of qualified sources. Condition/Context: Through Procurement testing, we identified 3 vendors which exceeded the micro-purchase threshold but did not exceed the simplified acquisition threshold. The total amount of federal expenditures for the year ended December 31, 2024 for these 3 vendors was $52,327. For all 3 vendors, we determined that the procurement methodology followed did not align with federal simplified acquisition procurement requirements. Cause: Management has not updated their procurement policy for federal awards to ensure it aligns with federal requirements. Effect: Contracts could be awarded to vendors that are not evaluated as required by federal procurement requirements. Questioned Costs: None. Recommendation: Management should develop and implement procurement policies that align with federal requirements. Views of Responsible Officials: See Corrective Action Plan.
Information on Federal Programs: 45.312 – The Institute of Museum and Library Services: National Leadership Grants. Criteria or Specific Requirements: According to 2 CFR §200.303, the non-Federal entity must: establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in Standards for Internal Control in the Federal Government, issued by the Comptroller General of the United States, or the Internal Control Integrated Framework, issued by COSO. Additionally, according to 2 CFR §200.320(c), the noncompetitive procurement method may only be used if one of the following circumstances applies: 1. The aggregate amount of the procurement transaction does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); 2. The procurement transaction can only be fulfilled by a single source; 3. The public exigency or emergency for the requirement will not permit a delay resulting from providing public notice of a competitive solicitation; 4. The recipient or subrecipient requests in writing to use a noncompetitive procurement method, and the Federal agency or pass-through entity provides written approval; or 5. After soliciting several sources, competition is determined inadequate. Condition: During the testing of the procurement compliance requirement related to the major programs, it was determined that AAM used the noncompetitive procurement method without meeting any one of the criteria applicable for use of this method. Cause: Management did not have internal control procedures in place to ensure that procurement requirements were adequately followed, documented and retained when Federal awards were obtained. Effect: Failure to use documented procurement policies and procedures could have resulted in noncompliance with the Criteria or Specific Requirements section above. Perspective: While AAM did have documented procurement policies and procedures compliant with 2 CFR §200.320, AAM issued contracts under noncompetitive procurement method without meeting the applicable requirements for use of this method. Within a random sample of 10 procurement contracts, 4 were selected based on the noncompetitive method. Questioned Costs: Questioned costs were not identified. Repeat Finding: Not applicable. Recommendation: AAM should strengthen its internal controls for procurement of property or services required under a Federal award or subaward to ensure compliance with the Uniform Guidance
2024 001 Reporting and Procurement U.S. Department of the Treasury: Passed-through State of New Jersey Department of Community Affairs: COVID 19 Coronavirus State and Local Fiscal Recovery Funds (ALN 21.027) Contract Number and Years: G2022 09 (03/02/2021 – 12/31/2026) Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample Repeat Finding: Yes (2023-001) Finding Type: Material Weakness, Material Noncompliance Criteria Reporting Per 2 CFR 200.502, the determination of when a Federal award is expended must be based on when the activity related to the Federal award occurs. Generally, the activity pertains to events that require the non Federal statutes, regulations and the terms and conditions of Federal awards, such as: expenditures/expense transactions associated with awards including grants. Further, the Uniform Guidance compliance supplement notes, each recipient must report program outlays and program income on a cash or accrual basis, as prescribed by the Federal awarding agency. In accordance with the grant agreement and the reporting requirements for the State of New Jersey Department of Community Affairs, direct grants and pass through funds are fulfilled utilizing an advanced payment method and tracking reports. The grantee shall submit quarterly financial reports, in a format to be provided by the Department, and including the number of government full time employees responding to COVID 19 as supported by this funding. The reports are prepared and submitted to allow for relevant and reliable information to be provided to the Federal government or State of New Jersey for tracking purposes. The reports are the source documents for the grantee to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the grantee’s financial statements in accordance with 2 CFR 200.502, Basis for determining Federal awards expended, for the SEFA. Procurement Non Federal entities other than states, including those operating Federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR Part 200. A non Federal entity must: 1. Meet the general procurement standards in 2 CFR section 200.318, which include oversight of contractors’ performance, maintaining written standards of conduct for employees involved in contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurements. 2. Conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR section 200.319. 3. Use the micro purchase and small purchase methods only for procurements that meet the applicable criteria under 2 CFR sections 200.320(a) (1) and (2). Under the micro purchase method, the aggregate dollar amount does not exceed $10,000 ($2,000 in the case of acquisition for construction subject to the Wage Rate Requirements (Davis Bacon Act)). Small purchase procedures are used for purchases that exceed the micro purchase amount but do not exceed the simplified acquisition threshold ($250,000). Micro purchases may be awarded without soliciting competitive quotations if the non Federal entity considers the price to be reasonable (2 CFR section 200.320(a)). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR section 200.320(b)). In accordance with the grant agreement and the reporting requirements for the State of New Jersey Department of Community Affairs, recipients may use award funds to enter into contracts to procure goods and services necessary to implement one or more of the eligible purposes outlined in sections 602(c) and 603(c) of the Act and Treasury’s Interim Final Rule and Final Rule. As such, recipients are expected to have procurement policies and procedures in place that comply with the procurement standards outlined in the Uniform Guidance. Under the program, St. Joseph’s Health, Inc. must follow the procurement standards in 2 CFR sections 200.318 through 200.327, including ensuring that the procurement method used for the contracts are appropriate based on the dollar amount and conditions specified in 2 CFR section 200.320. Internal Control Additionally, in accordance with Federal requirements, a non Federal entity shall maintain internal controls over Federal programs designed to provide reasonable assurance that transactions are executed in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award that could have a direct and material effect on a Federal program. Condition and Context Reporting On a quarterly basis, St. Joseph’s Health, Inc. (the System) prepares and reports to New Jersey Department of Community Affairs (the Department) the program expenditures for Federal funding amounts on the tracking report of expenditures, which are then used to prepare the annual SEFA in conjunction with the general ledger detail at the end of the fiscal year. While expenditures per the SEFA as prepared by the System were accurate and the quarterly reporting was accepted by the State, the System’s expenditures per the report of expenditures continue to be based upon purchase order amounts, which include expenditures that were incurred subsequent to year end. Procurement Further, the System engaged multiple vendors for several projects under the G2022 09 grant that were above the $10K micro purchase threshold, but below the simplified acquisition threshold. However, the System did not obtain multiple quotes from different vendors to encourage fair competition in the market. The System’s policies and procedures to ensure compliance with the above compliance requirements did not include certain internal controls that were designed properly and operating effectively to ensure that the System properly reported costs on the report of expenditures or obtained the necessary quotes from potential bidders for procurements over the micro purchase threshold. Cause Management’s review of the submitted quarterly report of expenditures continuing not to be identified the need for a reconciliation of incurred expenditures and purchase order balances reported to the Department and as such, as there is a variance between the amounts reported on the SEFA and the amounts reported to the Department on the quarterly reports of approximately $2.1 million. We noted, however, that this variance did not represent any unallowable costs. Additionally, Management did not retain or obtain the required documentation indicating quotes from multiple vendors were obtained for the ongoing construction projects under the grant. Effect The System had a material variance in the amount of expenditures reported to the Department as compared to the SEFA and did not obtain multiple quotations from vendors when making selections for various projects ongoing under the Federal program. Questioned Costs None Recommendation Reporting We recommend that the System strengthen its processes and internal controls to ensure the tracking of each report of expenditures provided to the Department has a reconciliation of the amount of expenditures incurred in the period based upon the general ledger and accounting records, used to prepare the annual SEFA, as compared to the purchase order balances. Procurement We recommend that the System strengthen its processes and internal controls to ensure that all procurement related transactions are supported by the appropriate bidding documentation as required by the Uniform Guidance for each respective bidding threshold. View of Responsible Official Management agrees with the auditor’s recommendations and will strengthen its processes and internal controls to ensure the report of expenditures provided to the Department has a reconciliation of the amount of expenditures incurred in the period compared to the purchase order balances and all procurement transactions contain the required bidding documentation for each bidding threshold in accordance with the Uniform Guidance.
Internal control deficiency and noncompliance over procurement. Identification of the federal program: Assistance Listing Number 21.027: • COVID-19 – Coronavirus State and Local Fiscal Recovery Funds • U.S. Department of the Treasury • Federal award identification number – Not Applicable • Federal award year – March 3, 2021 to December 31, 2024 • Pass-through entity – State of Colorado Department of Human Services Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303 Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 General procurement standards (a) the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 200.317 through 200.327; (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders; (c) (1) the non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 General procurement standards (i) the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.319 Competition (a) All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and 200.320. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 Methods of procurement to be followed. The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the simplified acquisition threshold, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate – (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price; (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 Methods of procurement to be followed. (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.324 Contract cost and price. (a) The non-Federal entity must perform a cost or price analysis in connection with every procurement action in excess of the Simplified Acquisition Threshold including contract modifications. The method and degree of analysis is dependent on the facts surrounding the particular procurement situation, but as a starting point, the non-Federal entity must make independent estimates before receiving bids or proposals. Condition: During our testing over procurement, we observed management did not have documented procurement procedures that conformed to the procurement standards identified in 2 CFR section 200.318 to 200.327 and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Management did not have internal controls in place over small purchase procurements to ensure price or rate quotations were obtained from an adequate number of qualified sources, formal procurements to ensure sealed bids or proposals were obtained through public advertising, and completion of a cost or price analysis in connection with all procurement actions exceeding the simplified acquisition threshold. Management did not maintain records for procurements to document the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Cause: Management did not have effective internal controls in place over the compliance requirements as stated in the criteria or specific requirement section above. Effect or potential effect: Procurements were not supported by internal controls and could potentially include unreasonable prices or rates. Questioned costs: $1,306,305 – Assistance Listing Number 21.027 – Federal award identification number – Not Applicable Questioned costs were computed by taking the total small purchase and formal procurement samples not in compliance with the compliance requirements as stated in the criteria or specific requirement section above. Questioned costs means an amount, expended or received from a Federal award, that (1) is noncompliant or suspected noncompliant with Federal statutes, regulations, or the terms and conditions of the Federal award or (2) at the time of the audit, lacked adequate documentation to support compliance. Context: During our testing over procurements, we obtained a listing of 12 small purchase procurements and 1 formal procurement. We selected a sample of 5 small purchase procurements and 1 formal procurement. There were 4 ($131,790) out of 5 ($170,634) small purchase procurements and 1 ($1,174,515) out of 1 ($1,174,515) formal procurements where we observed management did not have internal controls in place to ensure the compliance requirements as stated in the criteria or specific requirement section above were performed. Identification as a repeat finding, if applicable: No. Recommendation: Management should create documented procurement procedures that conform to the procurement standards identified in 2 CFR section 200.318 through 200.327 and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Management should develop and implement internal controls over small purchase procurements to ensure price or rate quotations are obtained from an adequate number of qualified sources, formal procurements to ensure sealed bids or proposals are obtained through public advertising, and completion of a cost or price analysis in connection with all procurement actions exceeding the simplified acquisition threshold. Management should maintain records for procurements to document the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Management should review the procurements identified as questioned costs to identify if any improper payments were made to the entity. Views of responsible officials: We agree with the finding that internal controls were not sufficient to maintain compliance with federal procurement standards under Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 to 200.327 for a non-federal entity. However, the funds were expended for the intended purpose of the federal award. The Health System is committed to implementing internal controls to ensure procurement related to federal awards follow 2 CFR section 200.318 to 200.327. The Health System will create a procurement policy to ensure it complies with the requirements of 2 CFR section 200.318 through 200.327, that includes the written standards of conduct covering conflicts of interest, governing the actions of its employees who select, award and administer procurement contracts. This policy will include procedures to ensure proper procurement for small purchases to ensure sufficient price quotations are obtained from the required number of qualified sources, proper sealed bids or proposals are obtained through public advertising, an appropriate cost or price analysis is performed for procurement actions exceeding the simplified acquisition threshold, documentation is retained, and proper oversight is exercised to demonstrate compliance with 2 CFR section 200.318 through 200.327.
Internal control deficiency and noncompliance over procurement. Identification of the federal program: Assistance Listing Number 21.027: • COVID-19 – Coronavirus State and Local Fiscal Recovery Funds • U.S. Department of the Treasury • Federal award identification number – Not Applicable • Federal award year – March 3, 2021 to December 31, 2024 • Pass-through entity – State of Colorado Department of Human Services Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303 Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 General procurement standards (a) the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 200.317 through 200.327; (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders; (c) (1) the non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 General procurement standards (i) the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.319 Competition (a) All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and 200.320. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 Methods of procurement to be followed. The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the simplified acquisition threshold, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate – (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price; (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 Methods of procurement to be followed. (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.324 Contract cost and price. (a) The non-Federal entity must perform a cost or price analysis in connection with every procurement action in excess of the Simplified Acquisition Threshold including contract modifications. The method and degree of analysis is dependent on the facts surrounding the particular procurement situation, but as a starting point, the non-Federal entity must make independent estimates before receiving bids or proposals. Condition: During our testing over procurement, we observed management did not have documented procurement procedures that conformed to the procurement standards identified in 2 CFR section 200.318 to 200.327 and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Management did not have internal controls in place over small purchase procurements to ensure price or rate quotations were obtained from an adequate number of qualified sources, formal procurements to ensure sealed bids or proposals were obtained through public advertising, and completion of a cost or price analysis in connection with all procurement actions exceeding the simplified acquisition threshold. Management did not maintain records for procurements to document the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Cause: Management did not have effective internal controls in place over the compliance requirements as stated in the criteria or specific requirement section above. Effect or potential effect: Procurements were not supported by internal controls and could potentially include unreasonable prices or rates. Questioned costs: $1,306,305 – Assistance Listing Number 21.027 – Federal award identification number – Not Applicable Questioned costs were computed by taking the total small purchase and formal procurement samples not in compliance with the compliance requirements as stated in the criteria or specific requirement section above. Questioned costs means an amount, expended or received from a Federal award, that (1) is noncompliant or suspected noncompliant with Federal statutes, regulations, or the terms and conditions of the Federal award or (2) at the time of the audit, lacked adequate documentation to support compliance. Context: During our testing over procurements, we obtained a listing of 12 small purchase procurements and 1 formal procurement. We selected a sample of 5 small purchase procurements and 1 formal procurement. There were 4 ($131,790) out of 5 ($170,634) small purchase procurements and 1 ($1,174,515) out of 1 ($1,174,515) formal procurements where we observed management did not have internal controls in place to ensure the compliance requirements as stated in the criteria or specific requirement section above were performed. Identification as a repeat finding, if applicable: No. Recommendation: Management should create documented procurement procedures that conform to the procurement standards identified in 2 CFR section 200.318 through 200.327 and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Management should develop and implement internal controls over small purchase procurements to ensure price or rate quotations are obtained from an adequate number of qualified sources, formal procurements to ensure sealed bids or proposals are obtained through public advertising, and completion of a cost or price analysis in connection with all procurement actions exceeding the simplified acquisition threshold. Management should maintain records for procurements to document the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Management should review the procurements identified as questioned costs to identify if any improper payments were made to the entity. Views of responsible officials: We agree with the finding that internal controls were not sufficient to maintain compliance with federal procurement standards under Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 to 200.327 for a non-federal entity. However, the funds were expended for the intended purpose of the federal award. The Health System is committed to implementing internal controls to ensure procurement related to federal awards follow 2 CFR section 200.318 to 200.327. The Health System will create a procurement policy to ensure it complies with the requirements of 2 CFR section 200.318 through 200.327, that includes the written standards of conduct covering conflicts of interest, governing the actions of its employees who select, award and administer procurement contracts. This policy will include procedures to ensure proper procurement for small purchases to ensure sufficient price quotations are obtained from the required number of qualified sources, proper sealed bids or proposals are obtained through public advertising, an appropriate cost or price analysis is performed for procurement actions exceeding the simplified acquisition threshold, documentation is retained, and proper oversight is exercised to demonstrate compliance with 2 CFR section 200.318 through 200.327.
Internal control deficiency and noncompliance over procurement. Identification of the federal program: Assistance Listing Number 21.027: • COVID-19 – Coronavirus State and Local Fiscal Recovery Funds • U.S. Department of the Treasury • Federal award identification number – Not Applicable • Federal award year – March 3, 2021 to December 31, 2024 • Pass-through entity – State of Colorado Department of Human Services Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303 Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 General procurement standards (a) the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 200.317 through 200.327; (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders; (c) (1) the non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 General procurement standards (i) the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.319 Competition (a) All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and 200.320. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 Methods of procurement to be followed. The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the simplified acquisition threshold, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate – (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price; (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 Methods of procurement to be followed. (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.324 Contract cost and price. (a) The non-Federal entity must perform a cost or price analysis in connection with every procurement action in excess of the Simplified Acquisition Threshold including contract modifications. The method and degree of analysis is dependent on the facts surrounding the particular procurement situation, but as a starting point, the non-Federal entity must make independent estimates before receiving bids or proposals. Condition: During our testing over procurement, we observed management did not have documented procurement procedures that conformed to the procurement standards identified in 2 CFR section 200.318 to 200.327 and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Management did not have internal controls in place over small purchase procurements to ensure price or rate quotations were obtained from an adequate number of qualified sources, formal procurements to ensure sealed bids or proposals were obtained through public advertising, and completion of a cost or price analysis in connection with all procurement actions exceeding the simplified acquisition threshold. Management did not maintain records for procurements to document the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Cause: Management did not have effective internal controls in place over the compliance requirements as stated in the criteria or specific requirement section above. Effect or potential effect: Procurements were not supported by internal controls and could potentially include unreasonable prices or rates. Questioned costs: $1,306,305 – Assistance Listing Number 21.027 – Federal award identification number – Not Applicable Questioned costs were computed by taking the total small purchase and formal procurement samples not in compliance with the compliance requirements as stated in the criteria or specific requirement section above. Questioned costs means an amount, expended or received from a Federal award, that (1) is noncompliant or suspected noncompliant with Federal statutes, regulations, or the terms and conditions of the Federal award or (2) at the time of the audit, lacked adequate documentation to support compliance. Context: During our testing over procurements, we obtained a listing of 12 small purchase procurements and 1 formal procurement. We selected a sample of 5 small purchase procurements and 1 formal procurement. There were 4 ($131,790) out of 5 ($170,634) small purchase procurements and 1 ($1,174,515) out of 1 ($1,174,515) formal procurements where we observed management did not have internal controls in place to ensure the compliance requirements as stated in the criteria or specific requirement section above were performed. Identification as a repeat finding, if applicable: No. Recommendation: Management should create documented procurement procedures that conform to the procurement standards identified in 2 CFR section 200.318 through 200.327 and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Management should develop and implement internal controls over small purchase procurements to ensure price or rate quotations are obtained from an adequate number of qualified sources, formal procurements to ensure sealed bids or proposals are obtained through public advertising, and completion of a cost or price analysis in connection with all procurement actions exceeding the simplified acquisition threshold. Management should maintain records for procurements to document the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Management should review the procurements identified as questioned costs to identify if any improper payments were made to the entity. Views of responsible officials: We agree with the finding that internal controls were not sufficient to maintain compliance with federal procurement standards under Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 to 200.327 for a non-federal entity. However, the funds were expended for the intended purpose of the federal award. The Health System is committed to implementing internal controls to ensure procurement related to federal awards follow 2 CFR section 200.318 to 200.327. The Health System will create a procurement policy to ensure it complies with the requirements of 2 CFR section 200.318 through 200.327, that includes the written standards of conduct covering conflicts of interest, governing the actions of its employees who select, award and administer procurement contracts. This policy will include procedures to ensure proper procurement for small purchases to ensure sufficient price quotations are obtained from the required number of qualified sources, proper sealed bids or proposals are obtained through public advertising, an appropriate cost or price analysis is performed for procurement actions exceeding the simplified acquisition threshold, documentation is retained, and proper oversight is exercised to demonstrate compliance with 2 CFR section 200.318 through 200.327.
Internal control deficiency and noncompliance over procurement. Identification of the federal program: Assistance Listing Number 21.027: • COVID-19 – Coronavirus State and Local Fiscal Recovery Funds • U.S. Department of the Treasury • Federal award identification number – Not Applicable • Federal award year – March 3, 2021 to December 31, 2024 • Pass-through entity – State of Colorado Department of Human Services Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303 Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 General procurement standards (a) the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 200.317 through 200.327; (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders; (c) (1) the non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 General procurement standards (i) the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.319 Competition (a) All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and 200.320. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 Methods of procurement to be followed. The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the simplified acquisition threshold, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate – (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price; (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 Methods of procurement to be followed. (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.324 Contract cost and price. (a) The non-Federal entity must perform a cost or price analysis in connection with every procurement action in excess of the Simplified Acquisition Threshold including contract modifications. The method and degree of analysis is dependent on the facts surrounding the particular procurement situation, but as a starting point, the non-Federal entity must make independent estimates before receiving bids or proposals. Condition: During our testing over procurement, we observed management did not have documented procurement procedures that conformed to the procurement standards identified in 2 CFR section 200.318 to 200.327 and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Management did not have internal controls in place over small purchase procurements to ensure price or rate quotations were obtained from an adequate number of qualified sources, formal procurements to ensure sealed bids or proposals were obtained through public advertising, and completion of a cost or price analysis in connection with all procurement actions exceeding the simplified acquisition threshold. Management did not maintain records for procurements to document the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Cause: Management did not have effective internal controls in place over the compliance requirements as stated in the criteria or specific requirement section above. Effect or potential effect: Procurements were not supported by internal controls and could potentially include unreasonable prices or rates. Questioned costs: $1,306,305 – Assistance Listing Number 21.027 – Federal award identification number – Not Applicable Questioned costs were computed by taking the total small purchase and formal procurement samples not in compliance with the compliance requirements as stated in the criteria or specific requirement section above. Questioned costs means an amount, expended or received from a Federal award, that (1) is noncompliant or suspected noncompliant with Federal statutes, regulations, or the terms and conditions of the Federal award or (2) at the time of the audit, lacked adequate documentation to support compliance. Context: During our testing over procurements, we obtained a listing of 12 small purchase procurements and 1 formal procurement. We selected a sample of 5 small purchase procurements and 1 formal procurement. There were 4 ($131,790) out of 5 ($170,634) small purchase procurements and 1 ($1,174,515) out of 1 ($1,174,515) formal procurements where we observed management did not have internal controls in place to ensure the compliance requirements as stated in the criteria or specific requirement section above were performed. Identification as a repeat finding, if applicable: No. Recommendation: Management should create documented procurement procedures that conform to the procurement standards identified in 2 CFR section 200.318 through 200.327 and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Management should develop and implement internal controls over small purchase procurements to ensure price or rate quotations are obtained from an adequate number of qualified sources, formal procurements to ensure sealed bids or proposals are obtained through public advertising, and completion of a cost or price analysis in connection with all procurement actions exceeding the simplified acquisition threshold. Management should maintain records for procurements to document the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Management should review the procurements identified as questioned costs to identify if any improper payments were made to the entity. Views of responsible officials: We agree with the finding that internal controls were not sufficient to maintain compliance with federal procurement standards under Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 to 200.327 for a non-federal entity. However, the funds were expended for the intended purpose of the federal award. The Health System is committed to implementing internal controls to ensure procurement related to federal awards follow 2 CFR section 200.318 to 200.327. The Health System will create a procurement policy to ensure it complies with the requirements of 2 CFR section 200.318 through 200.327, that includes the written standards of conduct covering conflicts of interest, governing the actions of its employees who select, award and administer procurement contracts. This policy will include procedures to ensure proper procurement for small purchases to ensure sufficient price quotations are obtained from the required number of qualified sources, proper sealed bids or proposals are obtained through public advertising, an appropriate cost or price analysis is performed for procurement actions exceeding the simplified acquisition threshold, documentation is retained, and proper oversight is exercised to demonstrate compliance with 2 CFR section 200.318 through 200.327.
Internal control deficiency and noncompliance over procurement. Identification of the federal program: Assistance Listing Number 21.027: • COVID-19 – Coronavirus State and Local Fiscal Recovery Funds • U.S. Department of the Treasury • Federal award identification number – Not Applicable • Federal award year – March 3, 2021 to December 31, 2024 • Pass-through entity – State of Colorado Department of Human Services Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303 Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 General procurement standards (a) the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 200.317 through 200.327; (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders; (c) (1) the non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 General procurement standards (i) the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.319 Competition (a) All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and 200.320. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 Methods of procurement to be followed. The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the simplified acquisition threshold, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate – (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price; (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 Methods of procurement to be followed. (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.324 Contract cost and price. (a) The non-Federal entity must perform a cost or price analysis in connection with every procurement action in excess of the Simplified Acquisition Threshold including contract modifications. The method and degree of analysis is dependent on the facts surrounding the particular procurement situation, but as a starting point, the non-Federal entity must make independent estimates before receiving bids or proposals. Condition: During our testing over procurement, we observed management did not have documented procurement procedures that conformed to the procurement standards identified in 2 CFR section 200.318 to 200.327 and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Management did not have internal controls in place over small purchase procurements to ensure price or rate quotations were obtained from an adequate number of qualified sources, formal procurements to ensure sealed bids or proposals were obtained through public advertising, and completion of a cost or price analysis in connection with all procurement actions exceeding the simplified acquisition threshold. Management did not maintain records for procurements to document the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Cause: Management did not have effective internal controls in place over the compliance requirements as stated in the criteria or specific requirement section above. Effect or potential effect: Procurements were not supported by internal controls and could potentially include unreasonable prices or rates. Questioned costs: $1,306,305 – Assistance Listing Number 21.027 – Federal award identification number – Not Applicable Questioned costs were computed by taking the total small purchase and formal procurement samples not in compliance with the compliance requirements as stated in the criteria or specific requirement section above. Questioned costs means an amount, expended or received from a Federal award, that (1) is noncompliant or suspected noncompliant with Federal statutes, regulations, or the terms and conditions of the Federal award or (2) at the time of the audit, lacked adequate documentation to support compliance. Context: During our testing over procurements, we obtained a listing of 12 small purchase procurements and 1 formal procurement. We selected a sample of 5 small purchase procurements and 1 formal procurement. There were 4 ($131,790) out of 5 ($170,634) small purchase procurements and 1 ($1,174,515) out of 1 ($1,174,515) formal procurements where we observed management did not have internal controls in place to ensure the compliance requirements as stated in the criteria or specific requirement section above were performed. Identification as a repeat finding, if applicable: No. Recommendation: Management should create documented procurement procedures that conform to the procurement standards identified in 2 CFR section 200.318 through 200.327 and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Management should develop and implement internal controls over small purchase procurements to ensure price or rate quotations are obtained from an adequate number of qualified sources, formal procurements to ensure sealed bids or proposals are obtained through public advertising, and completion of a cost or price analysis in connection with all procurement actions exceeding the simplified acquisition threshold. Management should maintain records for procurements to document the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Management should review the procurements identified as questioned costs to identify if any improper payments were made to the entity. Views of responsible officials: We agree with the finding that internal controls were not sufficient to maintain compliance with federal procurement standards under Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 to 200.327 for a non-federal entity. However, the funds were expended for the intended purpose of the federal award. The Health System is committed to implementing internal controls to ensure procurement related to federal awards follow 2 CFR section 200.318 to 200.327. The Health System will create a procurement policy to ensure it complies with the requirements of 2 CFR section 200.318 through 200.327, that includes the written standards of conduct covering conflicts of interest, governing the actions of its employees who select, award and administer procurement contracts. This policy will include procedures to ensure proper procurement for small purchases to ensure sufficient price quotations are obtained from the required number of qualified sources, proper sealed bids or proposals are obtained through public advertising, an appropriate cost or price analysis is performed for procurement actions exceeding the simplified acquisition threshold, documentation is retained, and proper oversight is exercised to demonstrate compliance with 2 CFR section 200.318 through 200.327.
Internal control deficiency and noncompliance over procurement. Identification of the federal program: Assistance Listing Number 21.027: • COVID-19 – Coronavirus State and Local Fiscal Recovery Funds • U.S. Department of the Treasury • Federal award identification number – Not Applicable • Federal award year – March 3, 2021 to December 31, 2024 • Pass-through entity – State of Colorado Department of Human Services Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303 Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 General procurement standards (a) the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 200.317 through 200.327; (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders; (c) (1) the non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 General procurement standards (i) the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.319 Competition (a) All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and 200.320. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 Methods of procurement to be followed. The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the simplified acquisition threshold, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate – (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price; (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 Methods of procurement to be followed. (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.324 Contract cost and price. (a) The non-Federal entity must perform a cost or price analysis in connection with every procurement action in excess of the Simplified Acquisition Threshold including contract modifications. The method and degree of analysis is dependent on the facts surrounding the particular procurement situation, but as a starting point, the non-Federal entity must make independent estimates before receiving bids or proposals. Condition: During our testing over procurement, we observed management did not have documented procurement procedures that conformed to the procurement standards identified in 2 CFR section 200.318 to 200.327 and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Management did not have internal controls in place over small purchase procurements to ensure price or rate quotations were obtained from an adequate number of qualified sources, formal procurements to ensure sealed bids or proposals were obtained through public advertising, and completion of a cost or price analysis in connection with all procurement actions exceeding the simplified acquisition threshold. Management did not maintain records for procurements to document the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Cause: Management did not have effective internal controls in place over the compliance requirements as stated in the criteria or specific requirement section above. Effect or potential effect: Procurements were not supported by internal controls and could potentially include unreasonable prices or rates. Questioned costs: $1,306,305 – Assistance Listing Number 21.027 – Federal award identification number – Not Applicable Questioned costs were computed by taking the total small purchase and formal procurement samples not in compliance with the compliance requirements as stated in the criteria or specific requirement section above. Questioned costs means an amount, expended or received from a Federal award, that (1) is noncompliant or suspected noncompliant with Federal statutes, regulations, or the terms and conditions of the Federal award or (2) at the time of the audit, lacked adequate documentation to support compliance. Context: During our testing over procurements, we obtained a listing of 12 small purchase procurements and 1 formal procurement. We selected a sample of 5 small purchase procurements and 1 formal procurement. There were 4 ($131,790) out of 5 ($170,634) small purchase procurements and 1 ($1,174,515) out of 1 ($1,174,515) formal procurements where we observed management did not have internal controls in place to ensure the compliance requirements as stated in the criteria or specific requirement section above were performed. Identification as a repeat finding, if applicable: No. Recommendation: Management should create documented procurement procedures that conform to the procurement standards identified in 2 CFR section 200.318 through 200.327 and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Management should develop and implement internal controls over small purchase procurements to ensure price or rate quotations are obtained from an adequate number of qualified sources, formal procurements to ensure sealed bids or proposals are obtained through public advertising, and completion of a cost or price analysis in connection with all procurement actions exceeding the simplified acquisition threshold. Management should maintain records for procurements to document the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Management should review the procurements identified as questioned costs to identify if any improper payments were made to the entity. Views of responsible officials: We agree with the finding that internal controls were not sufficient to maintain compliance with federal procurement standards under Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 to 200.327 for a non-federal entity. However, the funds were expended for the intended purpose of the federal award. The Health System is committed to implementing internal controls to ensure procurement related to federal awards follow 2 CFR section 200.318 to 200.327. The Health System will create a procurement policy to ensure it complies with the requirements of 2 CFR section 200.318 through 200.327, that includes the written standards of conduct covering conflicts of interest, governing the actions of its employees who select, award and administer procurement contracts. This policy will include procedures to ensure proper procurement for small purchases to ensure sufficient price quotations are obtained from the required number of qualified sources, proper sealed bids or proposals are obtained through public advertising, an appropriate cost or price analysis is performed for procurement actions exceeding the simplified acquisition threshold, documentation is retained, and proper oversight is exercised to demonstrate compliance with 2 CFR section 200.318 through 200.327.
2024-001 – Coronavirus Capital Projects Fund - Assistance Listing No. 21.029; Grant Period - For the year ended December 31, 2024 Condition: The Organization did not comply with the approved procurement policy for expenses that were claimed under the federal program. Criteria: The Organization’s procurement policy states that the Organization will follow 2 CFR 200.320 for federal procurement methods. Cause: The Organization did not have the necessary procedures in place to comply with the federal procurement methods for 2 of 8 invoices selected for testing. Effect of Condition: The Organization was unable to provide documentation that the federal procurement methods were followed for 2 of 8 invoices selected for testing. Questioned Cost: None. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendation: The Organization's should adopt procedures to ensure federal procurement methods are followed for all purchases under a federal contract. Views of Responsible Officials and Planned Corrective Actions: At the time of the transactions in question, the Organization operated under the understanding that multiple bids were required only for costs exceeding $50,000. The Organization was then provided updated guidance from our audit firm indicating that the correct threshold was $10,000. This shift demonstrates the complexity of interpreting and applying procurement rules. Since the beginning of the grant, the Organization has actively researched and sought clarification on the applicable purchasing and contracting requirements. Unfortunately, different sources provided conflicting thresholds and requirements. Based on the information available at the time, the Organization made a deliberate and well-reasoned decision not to seek multiple bids for certain expenditures. The grant funding source received full documentation for these costs, did not raise concerns, and reimbursed the expenses without issue. The Organization acted in good faith and in alignment with the guidance it had at the time of these purchases. To address this finding the Organization has implemented a revised procurement policy requiring multiple bids or sole source rationale for any purchases exceeding $10,000. Staff have been made aware of this threshold, and procedures are in place to ensure compliance moving forward.
Finding: Item 2024-001 – General Procurement Standards Material Weakness Federal Program – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number – 21.027 Federal Award Number – PJ1350-ARP35-CMF 20220466 and 2159FR0357 Federal Agency – U.S. Department of the Treasury Pass-Through Entities – Board of County Commissioners of Tulsa County and City of Tulsa Criteria: Per 2 CFR §200.318(a), non-Federal entities must use documented procurement procedures consistent with applicable laws and regulations, and the standards set forth in the Uniform Guidance. Condition/context: The Organization did not have written procurement policies in place during the audit period. The Organization has an informal procurement process. We tested the two vendors for which expenditures exceeded the micro-purchases limit, as defined by 2 CFR §200.320(a)(1). For one of the vendors, expenditures totaled $52,477, and there was no documentation that price or rate quotations were obtained from an adequate number of qualified sources. Cause: The Organization had not developed or adopted written procurement policies. Effect: Without written procurement policies, there is an increased risk of noncompliance with Federal procurement standards, inconsistent procurement practices, and potential misuse of federal funds. Questioned cost: $52,477 Repeat finding: This is not a repeat finding. Recommendation: We recommend the Organization develop and implement written procurement policies that comply with 2 CFR §200.318, 2 CFR §200.318(c) and other applicable procurement standards. These policies should be communicated to relevant staff and incorporated into procurement practices. View of responsible officials: Management's response is reported in "Corrective Action Plan" at the end of this report.
#2024-006 – Major Federal Award Finding – Procurement and Suspension and Debarment Nature of Finding: Administrative Requirements – Procurement Policy/Documentation Compliance Finding and Material Weakness in Internal Control over Compliance Criteria/Condition: The Organization did not have a formal procurement policy as required by 2 CFR 200.320 until June 2024. Six out of thirteen vendor contracts were in place before the policy was formalized. Documentation supporting various procurement decisions was not retained. Cause/Context: Documentation was lacking for the following contracts as required by the procurement standards of 2 CFR 200.320: • Evidence of price quotations was not retained for one contract tested above the micro-purchase threshold (but below the simplified acquisition threshold). Such evidence would be required under the Organization’s current procurement policy (in place June 2024). • Evidence of procurement rationale was not retained for three contractor selections above the micro-purchase threshold (but below the simplified acquisition threshold). Management provided memorandums documenting vendor selection process and rationale during the audit. • Evidence of public solicitation for bid/proposal was not retained for one contract that was above the simplified acquisition threshold (currently $250,000) in accordance with 2 CFR 200.320(b). Management provided a memorandum documenting the assessment and solicitation of various providers, the selection process and rationale during the audit. Effect: Contracts executed prior to the enacted procurement policy could have been created without ensuring full and open competition in compliance with 2 CFR 200.320. Recommendation: We recommend that TalentFirst, Inc. follow procurement standards that comply with the requirements of Uniform Guidance and 2 CFR 200.320, including the retention of documentation to support purchasing decisions. Views of Responsible Officials and Planned Corrective Actions: All procurement following the adoption of the procurement policy have been done in alignment with the policy. We also introduced procurement “kickoff meetings’ for new grants to review each budget line, determine the correct procurement method and plan documentation.
Finding 2024-002 – Procurement and Suspension and Debarment Identification of the federal program: U.S. Department of Health and Human Services U.S. Department of Defense Research and Development Cluster Assistance Listing Numbers: 12.910 – Research and Technology Development 93.279 – Drug Use and Addiction Research Programs 93.351 – Research Infrastructure Programs 93.855 – Allergy and Infectious Diseases Research Federal Award Numbers Award Period Pass-Through Entity, if Applicable HR00112420365 7/23/2024-1/22/2026 Texas A&M Engineering Experiment Station (M2404608) U19AI135972-07 1/1/2024-12/31/2024 Icahn School of Medicine at Mount Sinai P51OD011133-26 5/1/2024-4/30/2025 N/A R01DA052845-04 7/1/2023-6/30/2024 N/A Criteria or specific requirement (including statutory, regulatory, or other citation) 2 CFR 200.303(a) requires that a 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 and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 200.318 General procurement standards. (i) Procurement records. The recipient or subrecipient must maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price. 200.319 Competition. (a) All procurement transactions under the Federal award must be conducted in a manner that provides full and open competition and is consistent with the standards of this section and § 200.320. 200.320 Procurement Methods There are three types of procurement methods described in this section: informal procurement methods (for micro-purchases and simplified acquisitions); formal procurement methods (through sealed bids or proposals); and noncompetitive procurement methods. For any of these methods, the recipient or subrecipient must maintain and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319. (a) Informal procurement methods for small purchases. These procurement methods expedite the completion of transactions, minimize administrative burdens, and reduce costs. Informal procurement methods may be used when the value of the procurement transaction under the Federal award does not exceed the simplified acquisition threshold as defined in § 200.1. Recipients and subrecipients may also establish a lower threshold. Informal procurement methods include: (1) Micro-purchases — (i) Distribution. The aggregate amount of the procurement transaction does not exceed the micro-purchase threshold defined in § 200.1. To the extent practicable, the recipient or subrecipient should distribute micro-purchases equitably among qualified suppliers. (ii) Micro-purchase awards. Micro-purchases may be awarded without soliciting competitive price or rate quotations if the recipient or subrecipient considers the price reasonable based on research, experience, purchase history, or other information; and maintains documents to support its conclusion. Purchase cards may be used as a method of payment for micro-purchases. (iii) Micro-purchase thresholds. The recipient or subrecipient is responsible for determining and documenting an appropriate micro-purchase threshold based on internal controls, an evaluation of risk, and its documented procurement procedures. The micro-purchase threshold used by the recipient or subrecipient must be authorized or not prohibited under State, local, or tribal laws or regulations. (2) Simplified acquisitions — (i) Simplified acquisition procedures. The aggregate dollar amount of the procurement transaction is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If simplified acquisition procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. Unless specified by the Federal agency, the recipient or subrecipient may exercise judgment in determining what number is adequate. (ii) Simplified acquisition thresholds. The recipient or subrecipient is responsible for determining an appropriate simplified acquisition threshold based on internal controls, an evaluation of risk, and its documented procurement procedures, which may be lower than, but must not exceed, the threshold established in the FAR. (b) Formal procurement methods. Formal procurement methods are required when the value of the procurement transaction under a Federal award exceeds the simplified acquisition threshold of the recipient or subrecipient. Formal procurement methods are competitive and require public notice. The following formal methods of procurement are used for procurement transactions above the simplified acquisition threshold determined by the recipient or subrecipient in accordance with paragraph (a)(2)(ii) of this section: (1) Sealed bids. This is a procurement method in which bids are publicly solicited through an invitation and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid conforms with all the material terms and conditions of the invitation and is the lowest in price. The sealed bids procurement method is preferred for procuring construction services. (i) For sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders have been identified as willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm-fixed-price contract, and the selection of the successful bidder can be made principally based on price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them with sufficient response time prior to the date set for opening the bids. Unless specified by the Federal agency, the recipient or subrecipient may exercise judgment in determining what number is adequate. For local governments, the invitation for bids must be publicly advertised. (B) The invitation for bids must define the items or services with specific information, including any required specifications, for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids. For local governments, the bids must be opened publicly. (D) A firm-fixed-price contract is awarded in writing to the lowest responsive bid and responsible bidder. When specified in the invitation for bids, factors such as discounts, transportation cost, and life-cycle costs must be considered in determining which bid is the lowest. Payment discounts must only be used to determine the low bid when the recipient or subrecipient determines they are a valid factor based on prior experience. (E) The recipient or subrecipient must document and provide a justification for all bids it rejects. (2) Proposals. This is a procurement method used when conditions are not appropriate for using sealed bids. This procurement method may result in either a fixed-price or cost-reimbursement contract. They are awarded in accordance with the following requirements: (i) Requests for proposals require public notice, and all evaluation factors and their relative importance must be identified. Proposals must be solicited from multiple qualified entities. To the maximum extent practicable, any proposals submitted in response to the public notice must be considered. (ii) The recipient or subrecipient must have written procedures for conducting technical evaluations and making selections. (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the recipient or subrecipient considering price and other factors; and (iv) The recipient or subrecipient may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby the offeror’s qualifications are evaluated, and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where the price is not used as a selection factor, can only be used to procure architectural/engineering (A/E) professional services. The method may not be used to purchase other services provided by A/E firms that are a potential source to perform the proposed effort. (c) Noncompetitive procurement. There are specific circumstances in which the recipient or subrecipient may use a noncompetitive procurement method. The noncompetitive procurement method may only be used if one of the following circumstances applies: (1) The aggregate amount of the procurement transaction does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The procurement transaction can only be fulfilled by a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from providing public notice of a competitive solicitation; (4) The recipient or subrecipient requests in writing to use a noncompetitive procurement method, and the Federal agency or pass-through entity provides written approval; or (5) After soliciting several sources, competition is determined inadequate of single-use plastic products. See Executive Order 14057, section 101, Policy. 200.324 Contract cost and price. (a) The recipient or subrecipient must perform a cost or price analysis for every procurement transaction, including contract modifications, in excess of the simplified acquisition threshold. The method and degree of analysis conducted depend on the facts surrounding the particular procurement transaction. For example, the recipient or subrecipient should consider potential workforce impacts in their analysis if the procurement transaction will displace public sector employees. However, as a starting point, the recipient or subrecipient must make independent estimates before receiving bids or proposals. (b) Costs or prices based on estimated costs for contracts under the Federal award are allowable only to the extent that the costs incurred or cost estimates included in negotiated prices would be allowable for the recipient or subrecipient under subpart E of this part. The recipient or subrecipient may reference its own cost principles as long as they comply with subpart E of this part. (c) The recipient or subrecipient must not use the “cost plus a percentage of cost” and “percentage of construction costs” methods of contracting. Condition Texas Biomed did not comply with procurement requirements per the Uniform Guidance. Specifically, Texas Biomed did not comply with informal procurement methods for small purchases and noncompetitive procurement requirements. Texas Biomed also did not comply with its own procurement policy in relation to procurements of small purchases and noncompetitive procurements. Additionally, Texas Biomed did not maintain records for certain procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, the basis for the contract price, and the performance of a cost or price analysis, when required. Cause Texas Biomed did not have effective internal controls and procedures in place to ensure Texas Biomed complied with federal procurement requirements and Texas Biomed’s procurement policy and also maintained records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement and other required elements, including a cost or price analysis, when required. Effect or potential effect Texas Biomed did not comply with the general procurement standards, methods of procurement, and cost or price analysis requirements, according to the Uniform Guidance. Questioned costs $270,923 in total as follows: $29,438 – Assistance Listing Number 12.910, Award Identification Number – HR00112420365 $149,500 – Assistance Listing Number 93.351, Award Identification Number – P51OD011133-26 $11,295 – Assistance Listing Number 93.855, Award Identification Number – U19AI135972-07 $80,690 – Assistance Listing Number 93.279, Award Identification Number – R01DA052845-04 Questioned costs were computed by using the total procurements over $10,000 that did not adhere to procurement methods per the Uniform Guidance or were not supported by adequate documentation regarding the history of the procurement, including the rationale of the procurement and the performance of a cost or price analysis, when required. Per 2 CFR 200.1, questioned cost means an amount, expended or received from a Federal award, that in the auditor’s judgment: (1) Is noncompliant or suspected noncompliant with Federal statutes, regulations, or the terms and conditions of the Federal award; (2) At the time of the audit, lacked adequate documentation to support compliance; or (3) Appeared unreasonable and did not reflect the actions a prudent person would take in the circumstances. Context EY issued a material weakness for Texas Biomed related to internal control over procurement in the prior year. Based upon the implementation date for the corrective action provided by management, the finding related to this internal control had not been remediated for the full period under audit. As such, we did not test the operating effectiveness of this control and are issuing a material weakness consistent with the prior year finding. EY tested 12 procurements over the micro-purchase threshold of $10,000, with expenditures totaling $2,148,830 from a population of 48 procurements over $10,000 with expenditures totaling $3,629,769 during the year ended December 31, 2024. For 1 procurement with expenditures in the amount of $29,438 for supplies, Texas Biomed obtained only 2 quotes rather than 3 quotes, as required by Texas Biomed’s procurement policy in effect at the time of the procurement. Documentation of the history of the procurement did not include a reason for obtaining 2 quotes instead of 3 quotes. For 1 procurement with expenditures in the amount of $149,500, related to a total purchase order of $980,500, for animal food, Texas Biomed did not contemporaneously document sole source justification at the time of the procurement. Additionally, since the total purchase order for this procurement exceeded $250,000, the simplified acquisition threshold, a cost or price analysis was required but was not performed. For 2 procurements with expenditures in the amounts of $11,295 for supplies and $80,690 for animal purchases, Texas Biomed did not obtain quotes or document sole source justification or the history of the procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. We consider the expenditures related to these procurements to be questioned costs due to Texas Biomed not adhering to federal procurement requirements per the Uniform Guidance and also Texas Biomed’s procurement policy. Identification as a repeat finding, if applicable This is a repeat finding – Finding 2023-002. Recommendation Texas Biomed should comply with federal procurement requirements, as well as Texas Biomed’s procurement policy with regards to obtaining quotes for small purchases and documentation of sole source justification at the time of the procurement, as applicable. Texas Biomed should retain written documentation for procurements, documenting the history of the procurement prior to the procurement of goods or services including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, the basis for the contract price, and the performance of a cost or price analysis, when required. Views of responsible officials Management agrees with the finding and will implement corrective action to ensure controls are in place to retain the required written documentation for procurements.
FINDING 2024-003 Subject: Drinking Water State Revolving Fund - Procurement and Suspension and Debarment Federal Agency: Environmental Protection Agency Federal Programs: Drinking Water State Revolving Fund Assistance Listing Number: 66.468 Federal Award Numbers (or Other Identifying numbers): DW23150901, DW24660904 Pass-Through Entity: Indiana Finance Authority Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-004. Condition and Context An effective internal control system was not designed or implemented at the City to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement - Policy The City had not established a purchasing policy that reflected applicable state laws and regulations, including procedures to avoid the acquisition of unnecessary or duplicative items and procedures to ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Additionally, the City did not maintain a policy that prohibits the use of statutorily or administratively imposed state, local, or tribal geographical preferences in evaluation of bids or proposals. Procurement The City expended federal funds to pay ten separate vendors to provide goods and services for the duration of the City's Lead Service Line Replacement project. A population of seven vendors were tested that had aggregated expenditures for the audit period that were less than the simplified acquisition threshold of $150,000, but exceeded the $10,000 micro-purchase threshold. All seven of the vendors were tested; for four of the seven vendors, the City was unable to provide any documentation that the procurement method used was appropriate or that the procurement provided full and open competition or rationale to support the determination to limit competition. The history of the procurement, including rationale for the method of procurement, selection of the vendor, and the basis for the price, was not adequately documented. Additionally, a population of three vendors were identified with contract amount or aggregated total of expenditures that exceeded the simplified acquisition threshold of $150,000. All three vendors were tested; for one of these vendors, the procurement method used was not appropriate as the City relied on quotes obtained, rather than a formal procurement method as required for purchases that exceed the simplified acquisition threshold. Suspension and Debarment Prior to entering into sub-awards and covered transactions with award funds, recipients are required to verify that vendors are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Due to the agreement with the Indiana Finance Authority (IFA), the City was not required to perform testing over suspension and debarment for a majority of the vendors used; however, several drawdowns from the State Revolving Funds (SRF) program were used to reimburse the City for payments made to specific vendors. The vendors paid directly by the City were not included in IFA's procedures for checking suspension and debarment; therefore, the City was obligated to meet the requirement. The City did not maintain a set of procedures for checking suspension and debarment status of vendors for expenditures related to the SRF awards. A total of three vendors paid directly by the City exceeded the S&D threshold of $25,000 and were subject to testing. No documentation to show that suspension and debarment was verified prior to entering into the contract could be provided for any vendor. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases– (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or costreimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and (iv) The non-Federal entity may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." 2 CFR 200.214 states: "Non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The nonfederal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 200.318(d) states: "The non-Federal entity's procedures must avoid acquisition of unnecessary or duplicative items. Consideration should be given to consolidating or breaking out procurements to obtain a more economical purchase. Where appropriate, an analysis will be made of lease versus purchase alternatives, and any other appropriate analysis to determine the most economical approach." 2 CFR 200.319(c) states: "The non-Federal entity must conduct procurements in a manner that prohibits the use of statutorily or administratively imposed state, local, or tribal geographical preferences in the evaluation of bids or proposals, except in those cases where applicable Federal statutes expressly mandate or encourage geographic preference. Nothing in this section preempts state licensing laws. When contracting for architectural and engineering (A/E) services, geographic location may be a selection criterion provided its application leaves an appropriate number of qualified firms, given the nature and size of the project, to compete for the contract." 2 CFR 200.319(d) states: "The non-Federal entity must have written procedures for procurement transactions. These procedures must ensure that all solicitations: (1) Incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Such description must not, in competitive procurements, contain features which unduly restrict competition. The description may include a statement of the qualitative nature of the material, product or service to be procured and, when necessary, must set forth those minimum essential characteristics and standards to which it must conform if it is to satisfy its intended use. Detailed product specifications should be avoided if at all possible. When it is impractical or uneconomical to make a clear and accurate description of the technical requirements, a 'brand name or equivalent' description may be used as a means to define the performance or other salient requirements of procurement. The specific features of the named brand which must be met by offers must be clearly stated; and (2) Identify all requirements which the offerors must fulfill and all other factors to be used in evaluating bids or proposals." Cause The City did not maintain a procurement policy that would demonstrate the appropriate procedures to be followed when procuring with federal funding and were not aware of the need to follow federal guidelines for procurement or suspension and debarment for expenditures associated with the SRF awards. Effect Without a proper system of internal controls in place that operated effectively, noncompliance remained undetected. As a result, proper procurement procedures were not adhered to for all vendors. Without following the required methods for procurement, the City could be overpaying for services, or providing federal funds to an entity that is suspended or debarred. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funds to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the City's management establish a proper system of internal controls to ensure expenditures made from federal awards use the appropriate procurement method and retain the documentation to support the procurement methods used in order to ensure compliance with the terms and conditions of the federal award and ensure that vendors paid from federal funds are neither suspended nor debarred. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding No. 2024-001: Procurement Policy Program: AL# 59.059 – Congressional Grants Federal Grantor: U.S. Small Business Administration Criteria – Non-Federal entities must maintain documented procurement procedures that conform to applicable Federal statutes and the procurement standards identified in the Uniform Guidance, including thresholds, procurement methods, standards of conduct, and contract provisions. Citation – 2 CFR 200.319 & 2 CFR 200.320 Condition – The Organization has adopted both a grant-specific procurement policy and entity-wide procurement procedures included in its overall financial policy manual. However, neither policy is fully compliant with the federal procurement requirements. The following outlines the specific deficiencies in the policies: 1. Standard of Conduct for Conflicts of Interest (§200.318(c)): The policies do not contain written standards of conduct covering personal and organizational conflicts of interest in procurement. 2. Full and Open Competition (§200.319): While the policy in the financial manual requires three bids for purchases of $20,000 and greater, there is no overarching requirement that all procurements be conducted to provide full and open competition. 3. Procurement Methods (§200.320): The policies do not address all five procurement methods (micro-purchases, small purchases, sealed bids, competitive proposals, noncompetitive proposals). Additionally, micro-purchase and small purchase thresholds are not aligned with Uniform Guidance (the financial manual sets approval thresholds at $250 and $20,000 but does not incorporate the federal $10,000 micro-purchase threshold or $250,000 simplified acquisition threshold) 4. Noncompetitive Proposals (§200.320(f)): The policies do not identify circumstances where noncompetitive (sole-source) procurements are allowable or require documentation of justification Cause – The Organization’s procurement policies were originally designed around internal approval structures. Upon receiving federal funds for the first time in 2024, a grant specific policy was implemented to meet the grant requirements but neither policy was updated to reflect the detailed procurement requirements under Uniform Guidance. Effect – Since the procurement policies are not fully compliant with federal requirements, there is increased risk that procurements made under federal awards may not be conducted in an appropriate manner. If there were additional contracts with federal funds, this could result in potential questioned costs or disallowed expenditures. Questioned Costs – None. The finding is about deficiencies in written policies and procedures (compliance framework), not about an actual procurement transaction that violated the rules.
Finding 2024-002 Material weakness in internal controls over procurement and material noncompliance related to procurement compliance requirements. Federal Agency: U.S. Department of Treasury Program Title: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Awards Number: SLFRP0152 Award Period: 1/1/2024 – 12/31/2025 Criteria 2 U.S. Code of Federal Regulations (CFR) 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requires a non-Federal entity that has expended Federal awards to have written policies to its federal grants for procurement and that the history of each procurement is documented in accordance with 2 CFR section 200.318 to 200.320. Further, the regulations in 2 CFR part 180 restrict making Federal awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal awards. Condition/Context During our testing, for three out of three procurement transactions tested in excess of the micro purchase threshold, the Organization did not maintain documentation sufficient to detail the history of the procurement transaction. The Organization did not maintain contemporaneous documentation identifying the procurement method, contract type selection, contract selection, basis of contract price, and consideration of vendor suspension and debarment. For one selection over the simplified acquisition threshold, the Organization received three proposals based upon a request for proposal process. For two selections above the micro-purchase threshold there was insufficient document to determine if price or rate quotations were obtained from an adequate number of qualified sources and no noncompetitive proposal process was documented in accordance with the Organizations procurement policy. Effect/Potential Effect Procurements were entered into that did not meet the minimum Uniform Guidance procurement standards. Questioned Costs N/A Repeat Finding Not applicable Recommendation We recommend that the Organization maintain records to support that any procurement entered into with federal funds was done so in accordance with its policies and procedures for procuring goods and services with the proceeds of a federal award. We further recommend that a control is implemented to ensure that the organization does not contract with parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal awards. Views of Responsible Officials Management agrees with the finding and has provided the corrective action plan following the Single Audit Report.
FINDING 2024-002 Subject: Drinking Water State Revolving Fund - Procurement Federal Agency: Environmental Protection Agency Federal Program: Drinking Water State Revolving Fund Assistance Listings Number: 66.468 Federal Award Number and Year (or Other Identifying Number): DW23332501 Pass-Through Entity: Indiana Finance Authority Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The Town had not established an effective internal control system related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. The Town was not in compliance with the Procurement and Suspension and Debarment compliance requirement. Purchasing Policy The Town's purchasing policy did not reflect applicable state laws and regulations. In addition, the policy did not include procedures to avoid acquisition of unnecessary or duplicative items, procedures to ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured, or procedures that prohibits the use of statutorily or administratively imposed state, local, or tribal geographical preferences in the evaluation of bids or proposals. Additionally, the Town's policy did not contain written standards of conduct covering conflicts of interest and governing the performance of its employees engaged in the selection, award, and administration of contracts. Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. Micro-purchases are typically for those purchases $10,000 or under, and small purchase procedures are for those purchases above the micro-purchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. INDIANA STATE BOARD OF ACCOUNTS 16 TOWN OF KEWANNA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Two vendors were identified that fell within the small purchase threshold. Purchases from the vendors totaled $34,414 and $92,437. As such, price or rate quotations from an adequate number of qualified sources should have been obtained. However, the Town did not obtain price or rate quotations for the purchases nor was full and open competition provided for the vendors. Additionally, the history of each procurement was not adequately documented, including rationale for the method of procurement, selection of vendor, and basis for price. The lack of internal controls and noncompliance were isolated to the purchasing policy and to small purchases procured during the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The nonfederal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 200.318(c)(1) states: "The non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. No employee, officer, or agent may participate in the selection, award, or administration of a contract supported by a Federal award if he or she has a real or apparent conflict of interest. Such a conflict of interest would arise when the employee, officer, or agent, any member of his or her immediate family, his or her partner, or an organization which employs or is about to employ any of the parties indicated herein, has a financial or other interest in or a tangible personal benefit from a firm considered for a contract. The officers, employees, and agents of the non-Federal entity may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. However, non-Federal entities may set standards for situations in which the financial interest is not substantial or the gift is an unsolicited item of nominal value. The standards of conduct must provide for disciplinary actions to be applied for violations of such standards by officers, employees, or agents of the non-Federal entity." INDIANA STATE BOARD OF ACCOUNTS 17 TOWN OF KEWANNA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.318(d) states: "The non-Federal entity's procedures must avoid acquisition of unnecessary or duplicative items. Consideration should be given to consolidating or breaking out procurements to obtain a more economical purchase. Where appropriate, an analysis will be made of lease versus purchase alternatives, and any other appropriate analysis to determine the most economical approach." 2 CFR 200.319(c) states: "The non-Federal entity must conduct procurements in a manner that prohibits the use of statutorily or administratively imposed state, local, or tribal geographical preferences in the evaluation of bids or proposals, except in those cases where applicable Federal statutes expressly mandate or encourage geographic preference. Nothing in this section preempts state licensing laws. When contracting for architectural and engineering (A/E) services, geographic location may be a selection criterion provided its application leaves an appropriate number of qualified firms, given the nature and size of the project, to compete for the contract." 2 CFR 200.319(d) states: "The non-Federal entity must have written procedures for procurement transactions. These procedures must ensure that all solicitations: (1) Incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Such description must not, in competitive procurements, contain features which unduly restrict competition. The description may include a statement of the qualitative nature of the material, product or service to be procured and, when necessary, must set forth those minimum essential characteristics and standards to which it must conform if it is to satisfy its intended use. Detailed product specifications should be avoided if at all possible. When it is impractical or uneconomical to make a clear and accurate description of the technical requirements, a 'brand name or equivalent' description may be used as a means to define the performance or other salient requirements of procurement. The specific features of the named brand which must be met by offers must be clearly stated; and (2) Identify all requirements which the offerors must fulfill and all other factors to be used in evaluating bids or proposals." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . INDIANA STATE BOARD OF ACCOUNTS 18 TOWN OF KEWANNA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) Small purchases– (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause The Town was unable to provide documentation to demonstrate it had policies or procedures in place to comply with the Procurement and Suspension and Debarment compliance requirement. Effect Without the proper implementation of an effectively designed system of internal controls, the Town cannot demonstrate it obtained an adequate number of price or rate quotations prior to selecting a vendor. Therefore, the Town could have overpaid for the services obtained. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Town's management design and implement a system of internal controls to ensure that a purchasing policy is in place and that quotes are obtained for all small purchases. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Federal Program: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number 21.027 Federal Agency: U.S. Department of Treasury Pass-through Entity: Illinois Department of Human Services Condition: The Organization does not have documented procurement policies that address all required federal standards, including conflict-of-interest disclosures, thresholds for competitive bidding, and vendor suspension/debarment checks. Criteria: 2 CFR §§200.318–200.320 require non-federal entities to use documented procurement procedures consistent with federal standards, including conflict of interest, competitive procurement thresholds, and vendor responsibility checks. Cause: Lack of awareness of Uniform Guidance procurement standards and incomplete written policies. Effect: SCC risks awarding contracts that are not allowable or are subject to disallowance under federal regulations. Questioned Costs: None noted during audit testing. Auditor’s Recommendation: The Organization should revise and implement procurement policies and procedures that meet all requirements of 2 CFR 200 and train staff accordingly.
2024-001: Procurement – Material Weakness Federal Program Information: Funding Agency: U.S Department of Transportation FALN: 20.942 Thriving Communities Program Award Year: 2023-2025 Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, under 2 CFR Section 200.320, the Foundation must have and use documented procurement procedures for acquisition of goods and services under a federal award or a sub‐award. Condition: 2 CFR Section 200.320, the Foundation is required to have and use documented procurement procedures for acquisition of goods and services under a federal award. The Foundation does not have approved policies and procedures over procurement. The Foundation was unable to identify any controls to ensure that transactions weren’t had between ineligible parties. Effect: Not having a procurement policy may result in funds to be returned back to grantor and/or impact future funding. Cause: Supporting procurement documentation for the acquisition of goods and services were not properly established largely due to overall limited number of personnel for certain functions and lack of board oversight. Questioned Costs: None Recommendation: We recommend the Foundation strengthen its policies and procedures to ensure procurement is adequately documented for that goods and services purchased in accordance with Uniform Guidance and other federal guidelines.
2024-004 Federal Grants Management - Procurement Policy Federal Agency: Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: N/A Pass-Through Agency: N/A Award Period: March 1, 2021 – December 31, 2024 Type of Finding: Significant deficiency in internal control over compliance. Criteria or Specific Requirement 2 CFR 200 requires that 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 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. Further, the method of procurement, whether informal or formal, must follow the County’s written procurement policy on approval thresholds and controls. Condition The County did not follow controls related to ensuring procurement procedures were followed. Questioned Costs None Context While performing compliance procedures, it was noted that the County did not follow adopted policies for procurement. Cause The County did not follow controls related to ensuring procurement procedures were followed. Effect The County is not in compliance with procurement or suspension and debarment requirements. Contracts for construction, nonconstruction-related procurements, and those over the simplified acquisition threshold may not be in compliance with the Uniform Guidance. Vendors may be paid with federal funds that are suspended and debarred entities which would not be in compliance with the Uniform Guidance. Repeat Finding The finding is not a repeat finding in the immediately prior year. Section III – Findings and Questioned Costs – Major Federal and State Programs (Continued) 2024-004 (Continued) Recommendation We recommend the County follow their procurement policy and maintaining this documentation. Views of Responsible Officials and Planned Corrective Actions There is no disagreement with the audit finding.
Finding 2024-01 United States Department of Treasury Federal Assistance Listing No. 21.027 American Rescue Plan Act (ARPA) Type of Finding: Internal Control and Compliance Compliance and Material Weakness Deficiency over Procurement and Suspension and Debarment Repeat Finding: No Condition: During our testing and review of the Organization’s procurement policy, we were unable to obtain documentation to support that the Organization entered into contractual agreements with vendors who had gone through a competitive bidding or procurement process, as required under applicable procurement standards. Criteria: The Uniform Guidance and 45 CF Part 75 require that non-Federal entities receiving Federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. The characteristics of internal controls are presented in the context of the components of internal controls discussed in the Internal Control-Integrated Framework (COSO Report), published by the Committee of Sponsoring Organizations of the Treadway Commission. The COSO Report provides a framework for organizations to design, implement, and evaluate controls that will facilitate compliance with the requirements of Federal laws, regulations, and program compliance requirements. Per 2 CFR 200.320 General procurement states: (a) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold .(2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation;(4) The federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Per 2 CFR 200.318 General procurement states: (b) The non-federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable federal law and the standards identified in this part. Per Uniform Guidance, non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. When a non-federal entity enters into a covered transaction with an entity at a lower tier, the nonfederal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA) and available at SAM.gov Home (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Cause: The Organization did not maintain adequate documentation or controls to ensure compliance with federal procurement requirements of the use of competitive bidding procedures. Effect: Failure to verify vendor eligibility and follow competitive procurement procedures increases the risk of noncompliance with federal regulations, including potential use of federal funds for unallowable costs. This may also expose the Organization to audit findings, questioned costs, or repayment of grant funds. Questioned Costs: $370,461 Recommendation: We recommend the Organization update and follow their documented procurement policies to identify vendors that should go through the procurement process for federal funds at time of award and to document those procedures. Auditee Response and Corrective Action Plan: Management agrees with the finding. Refer to the Corrective Action Plan. Auditor’s Conclusion: Finding remains as stated.
Program name: State and Local Fiscal Recover Funds Assistance Listing: 21.027 Federal award Identification number: 43210256 Federal award year: All Federal awarding agency: U.S. Department of Treasury Criteria: Under 2 CFR § 200.318(a), recipients and subrecipients must “maintain and use documented procedures for procurement transactions under a Federal award or subaward.” Additionally, 2 CFR § 200.318(i) requires that “the recipient or subrecipient must maintain records sufficient to detail the history of each procurement transaction,” including: Rationale for the method of procurement, Selection of contract type, Contractor selection or rejection, and Basis for the contract price. Condition: During our audit of procurement activities under Federal award 21.027, we noted that the Organization did not follow its documented procurement procedures. Specifically: The procurement plan lacked evidence of adherence to competitive procurement methods as required under 2 CFR § 200.320. No documentation was maintained to support when or how procurement decisions were made, including missing records of contractor selection, price justification, and procurement method rationale. Cause: The Organization did not implement adequate internal controls to ensure compliance with federal procurement standards. Procurement activities were conducted informally without sufficient oversight or documentation, and staff were not adequately trained on Uniform Guidance requirements. Effect or Potential Effect: Failure to follow documented procurement procedures and maintain required records increases the risk of: Noncompliance with federal regulations, Unfair or noncompetitive procurement practices, Inability to justify expenditures to federal agencies or auditors, Disallowed costs or questioned costs during federal review. Repeat finding: This is not a repeat finding. Questioned costs: None identified for this transaction. However, the breakdown in controls presents a broader compliance risk. Perspective: This finding pertains to 3 purchases under AL 21.027 and reflects a broader issue in control enforcement that may affect other procurements under the same or other federal programs. -20- HEARTS FOR THE INVISIBLE CHARLOTTE COALITION SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED DECEMBER 31, 2024 Recommendation: We recommend that the organization: Update and enforce its procurement policies to align with 2 CFR Part 200 standards. Train staff on federal procurement requirements. Implement a checklist or control mechanism to ensure all required documentation is retained for each procurement transaction. Management’s response and corrective action plan (unaudited): See corrective action plan.
Assistance Listing, Federal Agency, and Program Name 21.027 U.S Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year HB 33 336648 ARPA 2024 Pass through Entity The Ohio Department of Mental Health and Addiction Services Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria Per 2 CFR 200.302(a)(2)(ii), Uniform Guidance establishes that the recipient is responsible for determining and documenting in procurement procedures an appropriate Simplified Acquisition Threshold, based on internal controls and evaluation of risk, which may be lower than, but must not exceed, the threshold established in the FAR. Additionally, per 2 CFR 200.320(a)(2), if simplified acquisition procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. Condition Controls in place were not adequate to ensure the policy included a well defined Simplified Acquisition Threshold and related procurement method. Additionally, controls were not adequate to ensure price or rate quotations were obtained from an adequate number of qualified sources for contracts above the Simplified Acquisition Threshold. Questioned Costs $136,910 If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported N/A Identification of How Questioned Costs Were Computed Questioned costs represent all costs reported on the SEFA for the contracts in question. Context During testing of contracts procured above the micro purchase threshold, but below the Simplified Acquisition Threshold, we noted management did not obtain price or rate quotations from an adequate number of qualified sources, as required by Uniform Guidance. Cause and Effect Not defining the Simplified Acquisition Threshold within the System's written policies and procedures, nor establishing the minimum number of required prcie and rate quotations needed could lead to noncompliance with Uniform Guidance and questioned costs. Recommendation Management should implement controls to ensure all procurement policies include specific thresholds for procurement methods in line with Uniform Guidance and that appropriate procurement methods are used for each contract entered into. Views of Responsible Officials and Corrective Action Plan Management understands the importance of adhering to procurement thresholds and methods. Procurement policies and grant policies will be updated to include federal thresholds and methods to reflect federal Uniform Guidance. Additionally, the procurement procedures will be amended to include additional review and sign-off from Grant and Purchasing leadership prior to purchases being made with federal funds to ensure price and rate quotations were obtained for contracts above the Simplified Acquisition Threshold.
U.S. Department of the Treasury Finding: Procurement Policy & Procurement Action Documentation Reference Number: 2024-004 Program: 21.027 COVID-19 State and Local Fiscal Recovery Funds Program Identifying Number: SLFRP0139 Type of Finding: Significant Deficiency Compliance Requirement: Procurement and Suspension and Debarment Condition: The Land Bank did not retain supporting documentation for procurements entered during the year ended December 31, 2024. The Land Bank adopted a written procurement policy on September 11, 2024. The Land Bank entered contracts after the adoption of its new procurement policy during the period from September 11, 2024 through December 31, 2024 without performing the required procurement actions. A similar finding was reported in the 2023 audit. Context: The Land Bank represented that contractors were evaluated by analyzing City of Wilmington permit information prior to the implementation of the procurement policy in September 2024. The Land Bank did not retain documentation of this analysis to support its procurement actions. Criteria: CFR § 200.318, General Procurement Standards and § 200.320 Methods of Procurement to be Followed, of the Uniform Guidance apply to the State and Local Fiscal Recovery Funds Program and require the following: i. The Land Bank must adopt documented procurement procedures that are consistent with the applicable State, local, and federal regulations. ii. The Land Bank’s documented procurement procedures must include the following elements at a minimum: a. Micro-purposes - purchases up to $50,000 may be made without soliciting competitive price or rate quotations if the price is considered reasonable. b. Small Purchases - purchases between $50,000 and $250,000 may be made with soliciting competitive price or rate quotations from an adequate number of qualified sources. c. Formal Procedures - purchases over $250,000 must be made by sealed bid or competitive proposal. The Land Bank’s procurement policy requires the following: Method of Purchase: Selection of contracts for goods and services shall be made only on a competitive basis except as otherwise set forth herein. The following method of purchase shall be used when required by this Policy in order to achieve the highest quality and lowest cost: i. Micro-purposes ($0-$49,999) - Designated staff may procure goods and services on behalf of the Land Bank without obtaining three quotations and without approval of the Board. Vendor selection and pricing should be reviewed at least annually for convenience and cost savings. ii. Small Purchases ($50,000-$249,999) - At least three written quotations will be obtained whenever possible. The Land Bank shall solicit informal quotations utilizing sources most likely to identify the highest quality and lowest price of a particular good or service, including newspaper and magazine advertisements, internet searches, chamber of commerce recommendations, and prior experience of the Land Bank. The Land Bank shall create and maintain a written or digital record of the quotations solicited and received for such purchases. At its discretion, Land Bank staff may decide to utilize the RFP process in lieu of the quotation process for any contract even when it is not required. iii. Large Purchases ($250,000+)- A request for proposals (RFP) issued by the Land Bank shall be required. Any large purchase contract entered into by the Land Bank shall require the approval of the Board. Cause: The Land Bank did not adopt a written procurement policy until September 2024. The Land Bank did not retain evidence to support its assertion that procurement actions were performed during the year ended December 31, 2024. Questioned Costs: None Effect: The Land Bank did not comply with the Uniform Guidance requirement to adopt a procurement policy until September 2024 and did not fully document its procurement actions. Recommendation: We recommend Land Bank adhere to the adopted procurement policy and prepare and retain documentation for each procurement action.
2024-001 – Internal Controls over Compliance and Compliance with Procurement Standards Identification of the Federal Program - U.S. Department of the Treasury, Passed through Whitman-Walker Health System, Inc. 21.029 - COVID-19 – Coronavirus Capital Projects Fund Criteria – 2 CFR Section §200.318(i) states, “The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price.” Per 2 CFR Section §200.319, “All procurement transactions for the acquisition of property or services 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 Section §200.324 stipulates that a non-Federal entity must perform a cost or price analysis for each procurement in excess of a minimum threshold. Additionally, 2 CFR Section §200.320(c) states in part, “There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of [the defined] circumstances apply”. Condition – We noted there was insufficient documentation retained to support adherence to the required procurement policy and standards. Documentation was unable to be provided to support that cost or price analyses were performed and were conducted providing full and open competition. Additionally, for one procurement deemed noncompetitive by WWH, none of the circumstances allowing noncompetitive procurement were met. Cause – WWH did not maintain all required aspects of formal documentation as required by the applicable 2 CFR standards, was unable to provide evidence of full and open competition, and in one instance improperly elected noncompetitive procurement. Effect – We were unable to determine whether the value of procurements for goods or services that exceeded the micro-purchase threshold followed a proper formal procurement method in accordance with 2 CFR Sections §200.319, 320, and 324. Questioned costs – Not determinable Context – We selected a sample of 7 procurements by non-statistical methods, out of a population of 8 procurements. All procurements related to eligible pre-award costs. WWH was unable to provide sufficient formal procurement documentation to support full and open competition and performance of cost or price analysis for 4 out of 7 selected procurements. One of those samples was deemed noncompetitive by WWH but did not meet the circumstances allowing noncompetitive procurement. Repeat finding – This is not a repeat finding. Recommendation – We recommend WWH designate a responsible and qualified individual within the organization to oversee the procurement policy and ensure compliance. Additionally, we recommend WWH explore alternative organizational and tracking methods to ensure all procurements are properly tracked for workflow purposes and adequately maintained for retention. View of Responsible Officials - WWH has internal controls for the procurement process for federal funds and did not follow those practices as clearly with these investments. The utilization of team members with multiple responsibilities, without stronger controls, led to document retention challenges.
Information on the federal program – 21.027 – Coronavirus State and Local Fiscal Recovery Funds; U.S. Department of Treasury; Dallas County; Program years 2023-2024, 2024-2025 16.575 – Crime Victim Assistance; U.S. Department of Justice; Texas Office of the Governor – Criminal Justice Division; Program years 2023-2024, 2024-2025 Type of Finding – Significant deficiency in internal control over compliance and other instance of noncompliance Criteria or specific requirement – The Uniform Guidance requires auditees to maintain internal controls to prevent or identify and correct noncompliance with direct and material compliance requirements in a timely fashion, specifically in regard to Procurement (2 CFR 200.320) and Suspension and Debarment (2 CFR 200.214). Condition – The Family Place was unable to provide evidence supporting procurement for a particular vendor, as well as evidence supporting verification of a lessor not having been suspended or debarred occurred during the year. Cause – The auditee's controls did not properly identify necessary procurement and suspension and debarment processes to undertake as required by policy and Uniform Guidance. Effect or potential effect – Procurement did not occur for one vendor relationship selected. Evidence of verification of vendor status of one lessor selected was not available. Questioned costs – $10,837 (ALN 21.027) Context – Procurement: Of three covered procurement transactions identified for ALN 21.027, 100% were selected for testing, the total of which was $58,517. One transaction did not have documented procurement procedures having taken place. The total of the transaction resulting in questioned costs was $10,837. Suspension and Debarment: Of two lessors with expenditures greater than $25,000 for ALN 16.575, one was selected for testing of suspension and debarment. While the lessor was not listed as having been suspended or debarred on SAM.gov, evidence of review occurring was not available. Identification as a repeat finding, if applicable – Not applicable Recommendation – We recommend management review all contracts with vendors and review the procurement policy to ensure compliance with the procurement and suspension and debarment standards within their policy and the Uniform Guidance. Views of responsible officials and planned corrective actions – See accompanying corrective action plan.
Information on the federal program – 16.575 – Crime Victim Assistance; U.S. Department of Justice; Texas Office of the Governor – Criminal Justice Division; Program years 2023-2024, 2024-2025 Type of Finding – Other instance of noncompliance Criteria or specific requirement - The Uniform Guidance requires auditees to maintain internal controls to prevent or identify and correct noncompliance with direct and material compliance requirements in a timely fashion, specifically in regard to Reporting (2CFR 200.320). Condition – The Family Place was unable to provide original financial records used to prepare the financial reports submitted. The general ledger for the program did not agree to the financial reports submitted for the corresponding period. Cause – The auditee's controls did not properly retain documentation evidencing accurate financial report submissions. Refer to finding 2024-002. Effect or potential effect – The financial reports submitted for all four quarters of the 2023-2024 program year were unable to be traced back to the general ledger and there was no support maintained for what was originally submitted. Questioned costs – None noted. Context – Of a population of four financial reports submitted during the year, four were selected for testing. Total expenditures recorded in the general ledger for each period did not agree to the financial report. Identification as a repeat finding, if applicable – Not applicable Recommendation – We recommend management implement internal controls to ensure financial reports are submitted accurately, with supporting documentation retained. Views of responsible officials and planned corrective actions – See accompanying corrective action plan.
Assistance Listing Number, Federal Agency, and Program Name 59.059, U.S. Small Business Administration, Congressional Grants Federal Award Identification Number and Year - SBAHQ24I0024, 2024 Pass through Entity - Not applicable Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 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 nonfederal entity. Condition - The Organization did not have controls to retain documentation that the procurement process was followed to ensure more than one vendor was reviewed for pricing before selecting the vendor chosen (as required under 2 CFR 320(a)(2)(i)). Questioned Costs - The Organization charged a total of $107,795 to grant SBAHQ24I0024 during 2024 for covered transactions for which there was no supporting documentation to indicate that the services were procured under the requirements above. If Questioned Costs are not Determinable, Description of Why Known Questioned Costs Were Undetermined or Otherwise Could not be Reported - Not applicable Identification of How Questioned Costs Were Computed - The amount of the covered transactions charged against grant advances during 2024 Context - Four covered transactions with total expenditures charged to the grants totaling $107,795 were reviewed. The population subject to testing included a total of five covered transactions. Cause and Effect - The Organization's internal controls did not ensure written documentation of procurement procedures or decisions were retained, which resulted in a lack of evidence to support that the procurement policies were followed. Recommendation - The Organization 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 Corrective Action Plan - Management agrees that documentation of the procurement process was not adequately retained. Management will implement controls to ensure proper support of the procurement process is retained. Although the procurement process was not fully documented, management believes its procurement policies were appropriately followed when entering these four covered transactions.
FINDING 2024-003 Subject: Water and Waste Disposal Systems for Rural Communities - Procurement Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal Systems for Rural Communities Assistance Listings Number: 10.760 Federal Award Numbers and Years (or Other Identifying Numbers): 92-02, 92-03, 92-04, 92-05 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context As part of sound management of the federal award, the City was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The City had not properly designed or implemented such a system, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. 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. The State of Indiana has established a more restrictive threshold of $150,000 for informal procurement methods. 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. Small purchase procedures require that price or rate quotations must be obtained from an adequate number of qualified sources or documented reasoning to support a single source provider. Two vendors were identified that were paid $10,500 and $59,408, respectively, during the audit period using federal funds under the award, thereby requiring small purchase procedures for both procurements. Both vendors were selected for testing. The City was unable to provide any documentation for either vendor that the procurement method used was appropriate or that the procurement provided full and open competition or rationale to support the determination to limit competition. Additionally, the history of the procurement, including the rationale for the method of procurement, selection of the vendor, and the basis for the price, was not adequately documented for either vendor. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (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. . . . (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate." Cause The vendors in question had been utilized by the City for various services over the course of multiple years, including for several years under this award with the ongoing multi-year project. For continuity purposes, the City chose to limit competition when procuring the services. The City included the requirements for limiting competition in its purchasing policy but did not follow the established policy. Effect Without a proper system of internal controls in place that operated effectively, noncompliance remained undetected. As a result, proper procurement procedures were not adhered to for all vendors. Without following the required methods for procurement, the City could be overpaying for services by not receiving the most competitive pricing. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the City's management establish a proper system of internal controls to ensure expenditures made from federal awards use the appropriate procurement method and retain the documentation to support the procurement methods used in order to ensure compliance with the terms and conditions of the federal award. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2024-002 Failure to Follow Procurement Policy Type of Finding Noncompliance and Significant Deficiency in Internal Control over Compliance Condition The Organization maintains a procurement policy that establishes spending thresholds and outlines the requirements for obtaining rate quotations at each of these levels. During audit procedures, it was noted that the Organization did not follow the policy’s requirements for obtaining and documenting rate quotations for two of the transactions reviewed. The Organization explained that the vendor was considered a unique partner, and competition was intentionally limited based on the specialized nature of the services provided. However, no documentation was retained to justify this decision to limit competition, as required by federal procurement standards. The absence of such documentation resulted in questioned costs for these transactions. Criteria: Federal regulations require non-federal entities to maintain written procurement procedures that are consistent with applicable laws and standards, including the requirement to conduct procurement transactions in a manner that provides full and open competition, except in limited circumstances, as specifically defined in 2 CFR 200.320. When competition is restricted, entities are required to document the basis for their determination, including the rationale for selecting a particular vendor. Additionally, entities must maintain documentation to support procurement actions and decisions to ensure compliance with applicable requirements. Cause This issue appears to stem from a lack of adherence to the Organization’s procurement policy and an underdeveloped process for documenting exceptions to competitive procurement requirements. While management considered the vendor relationship justified, there was no formal documentation of the rationale, resulting in noncompliance with both internal policy and federal procurement requirements. Possible of Known Effect As a result of this deficiency, the Organization cannot demonstrate that the procurement process complied with the federal requirements under 2 CFR 200.320, nor can it substantiate its rationale for limiting competition. This lack of documentation increases the risk of unsupported or inappropriate expenditures, and in this instance, led to questioned costs related to the two transactions tested. Questioned Costs Known questioned costs of $29,164 were identified. Repeat Finding This is not a repeat finding. Recommendation We recommend that the Organization strengthen its procurement practices by ensuring that all procurements, including those where competition is intentionally limited, are fully documented in accordance with federal requirements and the Organization’s procurement policy. Documentation should include the rationale for limiting competition and evidence of compliance with the applicable procurement threshold requirements. Implementing a review process to ensure procurement files are complete prior to payment or grant charging would further reduce the risk of noncompliance. Views of Responsible Officials Prior to the award of ARPA grant funding in 2023, the Organization did not have a formal procurement policy in place. Implementation of such a policy was required to receive the award. At the time of implementation, however, partnerships had already been established and were identified in the original grant proposal. With respect to legal services, the Organization engaged the two primary organizations in Indianapolis that provide expungement assistance. Indiana Legal Services ("ILS") was the first entity contacted, but after multiple attempts, no response was received from the designated point of contact. Subsequently, the Organization engaged with another nonprofit organization, which responded promptly and agreed to serve as a partner under the grant. For grant compliance services, the Organization engaged a third party. This decision was based on recommendations from community partners, as well as her demonstrated work quality, professional reliability, and commitment to serving the target population.
Compliance Requirement Procurement Type of Finding Material Weakness in Internal Control over Compliance, Material Noncompliance Program Port Security Grant Program ALN# 97.056 Federal Agency Department of Homeland Security – Direct Award Federal Award Year 2020, 2021, 2022 and 2023 Grant Number EMW-2020-PU-00079 – IJ#1, IJ#3, IJ #4 EMW-2021-PU-00030 – IJ#1, IJ#3 EMW-2022-PU-00022 – IJ#1, IJ#2, EMW-2023-PU-00164 – IJ#1, IJ#2, IJ#3, IJ#4 EMW-2024-PU-05541 – IJ#4 Questioned Costs $463,460 Criteria - Federal rules require grant recipients to follow strict purchasing standards. This includes seeking fair and open competition when buying goods or services, obtaining bids or quotes once purchases reach certain dollar thresholds, and verifying that vendors are not suspended or barred from receiving federal funds through the SAM.gov system. Federal rules set strict procurement standards that the District must follow: • 2 CFR 200.318 – Requires non-federal entities to maintain oversight to ensure contractors perform in accordance with the terms, conditions, and specifications of their contracts. • 2 CFR 200.319 – Requires full and open competition in all procurement transactions. • 2 CFR 200.320 – Establishes methods of procurement, including micro-purchases, small purchases, sealed bids, competitive proposals, and noncompetitive proposals. • 2 CFR 200.323 – Requires cost or price analysis for procurements above the Simplified Acquisition Threshold. • 2 CFR 200.213 – Requires checks for suspension and debarment (SAM.gov).Under Louisiana law, political subdivisions such as ports are also subject to state purchasing thresholds: (a) $0 – $9,999: Purchases may be made directly but must be reasonable and properly documented. (b) $10,000 – $60,000: At least three (3) telephone or written quotations are required, with documentation kept on file. (c) Over $60,000: A formal advertised public bid process is required in compliance with Louisiana Public Bid Law. For professional services, the District is required to follow competitive selection processes consistent with their policies, Louisiana state law and federal guidance, ensuring fair opportunity, transparency, and reasonable pricing. Condition - The District failed to comply with federal procurement standards in multiple areas, indicating a pervasive breakdown in procurement controls and noncompliance with 2 CFR 200.318–.327. a) The District did not obtain competitive bids for the camera purchases and installation, resulting in questioned costs of $234,217 b) For professional services contracts funded by the PSGP, relating the IT services, engineering and consulting services, and GIS implantation services, the District did not maintain records documenting requests for price quotes or maintain records demonstrating the reasonableness of costs. Resulting in questioned costs of $305,657. c) For all ten (10) vendors tested under the Port Security Grant Program, the District did not retain documentation demonstrating that SAM.gov suspension and debarment verifications were performed prior to award or payment. Cause - The District failed to enforce federally required procurement standards and did not maintain sufficient documentation to demonstrate compliance. This deficiency reflects a significant weakness in procurement oversight and a lack of management attention to ensuring adherence with federal regulations governing competition, cost reasonableness, and vendor selection. Effect - Because the District did not obtain the required bids, quotes, or suspension and debarment checks, it cannot demonstrate compliance with federal procurement standards. This failure increases the risk of waste, favoritism, or contracting with ineligible vendors, and resulted in questioned costs as calculated by the auditor.Recommendation - The District must consistently apply written procurement policies that require competitive bids or price quotes for all purchases and professional services. Documentation of price reasonableness must be retained for every procurement action to ensure compliance with 2 CFR 200.318–.327 The District must document SAM.gov suspension and debarment verification for all vendors and contractors prior to contract execution or payment. This documentation must be maintained in the procurement file. The District must consult with FEMA regarding the allowability of identified questioned costs.