Finding 2023-001: Procurement Policy and Related Contract Program: 66.958 Water Infrastructure Finance and Innovation Federal Agency: U.S. Environmental Protection Agency Award No: WIFIA-N18147WI Award Year: 2023 This finding is a repeat finding of 2022-001 Criteria: 2 CFR section 200.318 - General Procurement Standards, requires non-Federal entities to have and use documented procurement procedures, consistent with State, local and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. Condition: We reviewed the water utility's procurement policy and service contracts with costs reimbursed during 2023, noting they did not contain necessary federal language related to conflicts of interest and debarment and suspension. Cause: The water utility has not received federal funding in the past and did not update their procurement policy when they sought federal funding for the Great Lakes Water Supply project. Additionally, service contracts were entered into prior to receiving federal funds. Effect: Without adequate control of contract language the water utility could enter into contracts related to the Great Lakes Water Supply project that do not qualify for federal reimbursement. Questioned Costs: None noted. Recommendation: We recommend the water utility review its procurement policy and make necessary updates to be in compliance with federal standards. Additionally, we recommend the utility enter into contract addendums related to contracts previously executed without required federal language. Management Response: Waukesha Water utility management has worked closely with WIFIA to craft contracts that include all necessary language prior to releasing RFPs for construction contracts. WIFIA was presented all service contracts to review prior to reimbursements received in fiscal year 2023. The finance department is working to update the procurement policy to ensure necessary federal language is included. The finance department will also work with service contractors to execute contract addendums.
2023 - 003 - Reporting (Material weakness in Internal Controls over Compliance) - Repeated and Modified (Prior Year Finding 2022-002) Federal program information: Funding Agency: Program Title: Federal Assistance Listing Number: U.S. Department of Housing and Urban Development (Follow-up on PY finding) Indian Housing Block Grant 14.867 U.S. Department of Treasury Coronavirus State and Local Fiscal Recovery Funds 21.027 Condition: The Governmental Department did not submit their required Federal Financial Reports (SF-425) and Project and Expenditure Report within the required three and one month's respectively after the end of fiscal year. In addition, the reporting package and data collection form for the year ended December 31, 2023, was not filed by the deadline of September 30, 2024, to the Federal Audit Clearinghouse. Criteria: Title 2 CFR 200.327 requires programs to submit financial information to the funding agency using standard financial reporting forms. These reports are to be submitted by the required due date and be accurately completed and supported by the underlying accounting records. In accordance with 2 CFR Section 200.512(a), the audit must be completed and the data collection form and reporting package must be submitted within the earlier of 30 calendar days after receipt of the auditor's report, or nine months after the end of the audit period, adjusted for any extensions permitted by the Office of management and Budget. Cause: The Governmental Department policies were not always followed or controls were not in place to ensure complete and accurate information could be provided timely. Effect: The Governmental Department was not in compliance with federal regulations and guidelines for (SF-425), Project and Expenditure Report and single audit submissions. Auditor's Recommendation: The Governmental Department should implement controls for filing the Federal Financial Reports, (SF- 425), Project and Expenditure Report, and the single audit report in a timely manner. Management’s Response: Due to delays caused by the pandemic, in conjunction with some major turnover in fiscal staff the Tribe fell behind in completing its annual audits, and other required grant reporting. In the first half 2023 the Tribe was able to hire a quarter-time CFO and fill one position in the department. Since the department had staff, they were able to complete the 2022 outstanding audit. The new staff was learning the process of grant reporting and other compliance matters, and at the time of this report have made improvements to implement internal controls to assist with the regulation of all compliance matters. 2022 - 003 - Reporting (Material weakness in Internal Controls over Compliance) - Repeated (Prior Year Finding 2021-003) - Cont'd Estimated Completion Date: March 03, 2025-Due to the newly elected Tribal Administration and restructuring of positions as well as training opportunities for fiscal and the executive committee. Responsible Party: The Tribal Administrator in collaboration with the Cahto Executive Committee is responsible to ensure the Fiscal department, the Department Directors and management are trained and adhere to existing policies and procedures.
2023 - 003 - Reporting (Material weakness in Internal Controls over Compliance) - Repeated and Modified (Prior Year Finding 2022-002) Federal program information: Funding Agency: Program Title: Federal Assistance Listing Number: U.S. Department of Housing and Urban Development (Follow-up on PY finding) Indian Housing Block Grant 14.867 U.S. Department of Treasury Coronavirus State and Local Fiscal Recovery Funds 21.027 Condition: The Governmental Department did not submit their required Federal Financial Reports (SF-425) and Project and Expenditure Report within the required three and one month's respectively after the end of fiscal year. In addition, the reporting package and data collection form for the year ended December 31, 2023, was not filed by the deadline of September 30, 2024, to the Federal Audit Clearinghouse. Criteria: Title 2 CFR 200.327 requires programs to submit financial information to the funding agency using standard financial reporting forms. These reports are to be submitted by the required due date and be accurately completed and supported by the underlying accounting records. In accordance with 2 CFR Section 200.512(a), the audit must be completed and the data collection form and reporting package must be submitted within the earlier of 30 calendar days after receipt of the auditor's report, or nine months after the end of the audit period, adjusted for any extensions permitted by the Office of management and Budget. Cause: The Governmental Department policies were not always followed or controls were not in place to ensure complete and accurate information could be provided timely. Effect: The Governmental Department was not in compliance with federal regulations and guidelines for (SF-425), Project and Expenditure Report and single audit submissions. Auditor's Recommendation: The Governmental Department should implement controls for filing the Federal Financial Reports, (SF- 425), Project and Expenditure Report, and the single audit report in a timely manner. Management’s Response: Due to delays caused by the pandemic, in conjunction with some major turnover in fiscal staff the Tribe fell behind in completing its annual audits, and other required grant reporting. In the first half 2023 the Tribe was able to hire a quarter-time CFO and fill one position in the department. Since the department had staff, they were able to complete the 2022 outstanding audit. The new staff was learning the process of grant reporting and other compliance matters, and at the time of this report have made improvements to implement internal controls to assist with the regulation of all compliance matters. 2022 - 003 - Reporting (Material weakness in Internal Controls over Compliance) - Repeated (Prior Year Finding 2021-003) - Cont'd Estimated Completion Date: March 03, 2025-Due to the newly elected Tribal Administration and restructuring of positions as well as training opportunities for fiscal and the executive committee. Responsible Party: The Tribal Administrator in collaboration with the Cahto Executive Committee is responsible to ensure the Fiscal department, the Department Directors and management are trained and adhere to existing policies and procedures.
U.S. Department of Housing and Urban Development Federal Financial Assistance Listing #14.134 Mortgage Insurance Rental Housing Project Number: 091-11022 HUD Regulatory Agreement Dated July 1, 2016 Procurement, Suspension, and Debarment Significant Deficiency in Internal Control over Compliance Criteria: 2 CRF 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 2 CFR 200.317 through 200.327 which also requires documentation to be retained to detail the history of procurements. In addition, as outlined in 2 CFR 180, recipients must not utilize any vendor which is suspended or debarred or is otherwise excluded from the central contactor registry. Condition: There was one vendor with expenditures in excess of $25,000 and the Project did not verify the vendor against the central contractor registry prior to entering into the transaction or on a periodic basis to ensure that the vendor was not suspended or debarred. Prior to adoption of a procurement policy, management entered into a transaction over the micropurchase threshold with a vendor and documentation was unable to be provided to support procurement compliance for the vendor. Cause: The Project adopted a written procurement policy which conforms to Uniform Guidance during May 2023 and therefore, the Project did not have a policy in place to follow from January through May. Management overlooked the requirement to verify the vendor against the central contractor registry for a vendor. Effect: Inadequate controls over this area of compliance result in a reasonable possibility that the Project would not have the required documentation in place and would not be able to detect and correct noncompliance in a timely manner. Questioned Costs: $23,335 Context/Sampling: A nonstatistical sample of 4 of 8 transactions applicable to procurement requirements were selected for testing, which accounted for $95,590 of $199,971 of transactions. In addition, there was one vendor in which suspension and debarment requirements were applicable and the vendor was tested. Repeat Finding from Prior Year: Yes Recommendation: Management implemented formal procedures over procurement during May 2023 and we recommend management continue following those formal procedures. In addition, we recommend management implement formal procedures over suspension and debarment and retain sufficient documentation to support the process was followed. Views of Responsible Officials: Management agrees with the finding and recommendation.
Assistance Listing Number 66.468 Drinking Water State Revolving Fund United States Environmental Protection Agency North Dakota Public Finance Authority Procurement Suspension & Debarment 2 CFR Part 200.318 Criteria 2 CFR Part 200.318 states that a non-Federal entity must have and use documented procedures, consistent with state, local, and tribal laws and regulations and the standards of 2 CFR part 200.317 through 200.327. Condition District does not have a written procurement policy in place. Cause The District has not approved a written procurement policy. Effect Non-compliance with Procurement Suspension & Debarment compliance requirements. Questioned Costs Not Applicable Repeat Finding See 2022-005. Recommendation We recommend for the board of the District to create and implement a procurement policy that adheres to state and local regulations as well as 2 CFR Part 200.317 through 200.327. Views of Responsible Officials and Planned Corrective Actions The District will create and approve a procurement policy that adheres to state and local regulations as well as 2 CFR Part 200.317 through 200.327.
Finding 2023-002: Procurement and Suspension and Debarment Identification of federal program: Program Titles: Agriculture Research Basic and Applied Research & Community Economic Adjustment Assistance for Compatible Use and Joint Land Use Studies Assistance Listing Numbers: 10.001 & 12.610 Award Identification: CA 59-8082-0-001 & W9124J2120002 Federal Agencies: U.S. Department of Agriculture, Agriculture Research Service & U.S. Department of Defense, Office of Local Defense Community Cooperation Criteria or Specific Requirement: 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 non-federal 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, (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). Condition: While the Fund adopted an updated procurement policy during 2023, testing of the Fund’s controls on compliance over procurement and suspension and debarment identified transactions under the old policy. The Fund did not have a procurement policy in place for the full year that is in compliance with prescribed standards in the Uniform Guidance; therefore, prior to the adoption of the updated procurement policy, suspension and debarment verifications were not performed prior to entering a covered transaction. Cause: While the Fund adopted an updated procurement policy, including policies over suspension and debarment that fully conforms to Uniform Guidance, the policy was adopted during 2023. Effect: The Fund was not in compliance with the procurement policy requirements of Uniform Guidance, specifically around suspension and debarment for the entirety of 2023. Questioned Costs: None Context: The Fund adopted an updated procurement policy in 2023, which fully complies with Uniform Guidance requirements addressed in Chapter 2 Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. As the policy was not in place for the full year, we are unable to adequately test compliance prior to the adoption of the new policy. Repeat finding: Yes, Finding 2022-002 Recommendation: We acknowledge the Fund adopted and documented procurement procedures, which conform to the procurement standards identified in 2 CFR section §§ 200.317 through 200.327, and also addressed suspension and debarment during 2023. We recommend management continue training to ensure all applicable personnel are familiar with the revised policy. Views of responsible individuals: Management concurs with and will implement the recommendation. See corrective action plan.
Finding 2023-002: Procurement and Suspension and Debarment Identification of federal program: Program Titles: Agriculture Research Basic and Applied Research & Community Economic Adjustment Assistance for Compatible Use and Joint Land Use Studies Assistance Listing Numbers: 10.001 & 12.610 Award Identification: CA 59-8082-0-001 & W9124J2120002 Federal Agencies: U.S. Department of Agriculture, Agriculture Research Service & U.S. Department of Defense, Office of Local Defense Community Cooperation Criteria or Specific Requirement: 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 non-federal 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, (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). Condition: While the Fund adopted an updated procurement policy during 2023, testing of the Fund’s controls on compliance over procurement and suspension and debarment identified transactions under the old policy. The Fund did not have a procurement policy in place for the full year that is in compliance with prescribed standards in the Uniform Guidance; therefore, prior to the adoption of the updated procurement policy, suspension and debarment verifications were not performed prior to entering a covered transaction. Cause: While the Fund adopted an updated procurement policy, including policies over suspension and debarment that fully conforms to Uniform Guidance, the policy was adopted during 2023. Effect: The Fund was not in compliance with the procurement policy requirements of Uniform Guidance, specifically around suspension and debarment for the entirety of 2023. Questioned Costs: None Context: The Fund adopted an updated procurement policy in 2023, which fully complies with Uniform Guidance requirements addressed in Chapter 2 Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. As the policy was not in place for the full year, we are unable to adequately test compliance prior to the adoption of the new policy. Repeat finding: Yes, Finding 2022-002 Recommendation: We acknowledge the Fund adopted and documented procurement procedures, which conform to the procurement standards identified in 2 CFR section §§ 200.317 through 200.327, and also addressed suspension and debarment during 2023. We recommend management continue training to ensure all applicable personnel are familiar with the revised policy. Views of responsible individuals: Management concurs with and will implement the recommendation. See corrective action plan.
Department of Transportation Federal Financial Assistance Listing 20.106; Awards AIP3‐46‐0050‐54, AIP3‐46‐0050‐59, AIP3‐46‐0050‐60, and AIP3‐46‐0050‐62. COVID‐19 Airport Improvement Program Reporting Significant Deficiency in Internal Control over Compliance Criteria ‐ 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal controls over the federal awards that provide assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the conditions of the federal award. 2 CFR 200.327 and 2 CFR 200.328 require the auditee to collect financial information and monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved and report these items in accordance with the program requirements. Condition ‐ The SF‐425 annual report dated September 30, 2023, for award AIP3‐46‐0050‐54 underreported the federal share of expenditures by $80,133, while the FAA Form 5100‐127 annual report dated December 31, 2022, for all awards underreported the externally restricted assets by $397,646. Cause ‐ The Authority does not have an internal control structure designed to ensure amounts reported on SF‐425 and FAA Form 5100‐127 reports are adequately reviewed and agree to underlying accounting records. Effect ‐ Lack of compliance with designed internal controls over reporting could result in the Authority reporting incorrect or incomplete information. Questioned Costs ‐ None reported. Context/Sampling ‐ A nonstatistical sample of 10 reports out of 31 reports. Repeat Finding from Prior Year – Yes, prior year finding 2022‐002 Recommendation ‐ Management should determine and formalize reporting responsibilities between the Airport and the State and establish review processes to ensure that amounts included in SF‐425 and FAA Form 5100‐127 reports agree with the underlying accounting records. Views of Responsible Officials ‐ Management agrees with the finding.
Department of Transportation Federal Financial Assistance Listing 20.106; Awards AIP3‐46‐0050‐54, AIP3‐46‐0050‐59, AIP3‐46‐0050‐60, and AIP3‐46‐0050‐62. COVID‐19 Airport Improvement Program Reporting Significant Deficiency in Internal Control over Compliance Criteria ‐ 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal controls over the federal awards that provide assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the conditions of the federal award. 2 CFR 200.327 and 2 CFR 200.328 require the auditee to collect financial information and monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved and report these items in accordance with the program requirements. Condition ‐ The SF‐425 annual report dated September 30, 2023, for award AIP3‐46‐0050‐54 underreported the federal share of expenditures by $80,133, while the FAA Form 5100‐127 annual report dated December 31, 2022, for all awards underreported the externally restricted assets by $397,646. Cause ‐ The Authority does not have an internal control structure designed to ensure amounts reported on SF‐425 and FAA Form 5100‐127 reports are adequately reviewed and agree to underlying accounting records. Effect ‐ Lack of compliance with designed internal controls over reporting could result in the Authority reporting incorrect or incomplete information. Questioned Costs ‐ None reported. Context/Sampling ‐ A nonstatistical sample of 10 reports out of 31 reports. Repeat Finding from Prior Year – Yes, prior year finding 2022‐002 Recommendation ‐ Management should determine and formalize reporting responsibilities between the Airport and the State and establish review processes to ensure that amounts included in SF‐425 and FAA Form 5100‐127 reports agree with the underlying accounting records. Views of Responsible Officials ‐ Management agrees with the finding.
Department of Transportation Federal Financial Assistance Listing 20.106; Awards AIP3‐46‐0050‐54, AIP3‐46‐0050‐59, AIP3‐46‐0050‐60, and AIP3‐46‐0050‐62. COVID‐19 Airport Improvement Program Reporting Significant Deficiency in Internal Control over Compliance Criteria ‐ 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal controls over the federal awards that provide assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the conditions of the federal award. 2 CFR 200.327 and 2 CFR 200.328 require the auditee to collect financial information and monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved and report these items in accordance with the program requirements. Condition ‐ The SF‐425 annual report dated September 30, 2023, for award AIP3‐46‐0050‐54 underreported the federal share of expenditures by $80,133, while the FAA Form 5100‐127 annual report dated December 31, 2022, for all awards underreported the externally restricted assets by $397,646. Cause ‐ The Authority does not have an internal control structure designed to ensure amounts reported on SF‐425 and FAA Form 5100‐127 reports are adequately reviewed and agree to underlying accounting records. Effect ‐ Lack of compliance with designed internal controls over reporting could result in the Authority reporting incorrect or incomplete information. Questioned Costs ‐ None reported. Context/Sampling ‐ A nonstatistical sample of 10 reports out of 31 reports. Repeat Finding from Prior Year – Yes, prior year finding 2022‐002 Recommendation ‐ Management should determine and formalize reporting responsibilities between the Airport and the State and establish review processes to ensure that amounts included in SF‐425 and FAA Form 5100‐127 reports agree with the underlying accounting records. Views of Responsible Officials ‐ Management agrees with the finding.
Department of Transportation Federal Financial Assistance Listing 20.106; Awards AIP3‐46‐0050‐54, AIP3‐46‐0050‐59, AIP3‐46‐0050‐60, and AIP3‐46‐0050‐62. COVID‐19 Airport Improvement Program Reporting Significant Deficiency in Internal Control over Compliance Criteria ‐ 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal controls over the federal awards that provide assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the conditions of the federal award. 2 CFR 200.327 and 2 CFR 200.328 require the auditee to collect financial information and monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved and report these items in accordance with the program requirements. Condition ‐ The SF‐425 annual report dated September 30, 2023, for award AIP3‐46‐0050‐54 underreported the federal share of expenditures by $80,133, while the FAA Form 5100‐127 annual report dated December 31, 2022, for all awards underreported the externally restricted assets by $397,646. Cause ‐ The Authority does not have an internal control structure designed to ensure amounts reported on SF‐425 and FAA Form 5100‐127 reports are adequately reviewed and agree to underlying accounting records. Effect ‐ Lack of compliance with designed internal controls over reporting could result in the Authority reporting incorrect or incomplete information. Questioned Costs ‐ None reported. Context/Sampling ‐ A nonstatistical sample of 10 reports out of 31 reports. Repeat Finding from Prior Year – Yes, prior year finding 2022‐002 Recommendation ‐ Management should determine and formalize reporting responsibilities between the Airport and the State and establish review processes to ensure that amounts included in SF‐425 and FAA Form 5100‐127 reports agree with the underlying accounting records. Views of Responsible Officials ‐ Management agrees with the finding.
Finding # 2023-002 Type: Immaterial noncompliance over procurement Assistance Listing: 10.937 Partnerships for Climate-Smart Commodities Criteria/Requirement The Organization’s procurement policies should incorporate the provisions of the procurement standards set out at 2 CFR sections 200.318 through 200.327. Cause: The Organization’s fiscal policies and procedures do not meet the required federal standards for procurement. Effect: Executed contracts using federal funds may be in violation of federal guidelines. Questioned Costs: None. Recommendation: The Organization's procurement policy must have documented procurement procedures, consistent with state, local, and tribal laws and regulations for the acquisition of property or services required under a federal award or subaward. The Organization should maintain records sufficient to detail the history of procurement. Management’s Response: The Organization agrees with the auditor’s recommendation. At the time of this audit’s issuance, the Organization has updated its procurement policies and procedures to be consistent with federal requirements.
Finding # 2023-002 Type: Immaterial noncompliance over procurement Assistance Listing: 10.937 Partnerships for Climate-Smart Commodities Criteria/Requirement The Organization’s procurement policies should incorporate the provisions of the procurement standards set out at 2 CFR sections 200.318 through 200.327. Cause: The Organization’s fiscal policies and procedures do not meet the required federal standards for procurement. Effect: Executed contracts using federal funds may be in violation of federal guidelines. Questioned Costs: None. Recommendation: The Organization's procurement policy must have documented procurement procedures, consistent with state, local, and tribal laws and regulations for the acquisition of property or services required under a federal award or subaward. The Organization should maintain records sufficient to detail the history of procurement. Management’s Response: The Organization agrees with the auditor’s recommendation. At the time of this audit’s issuance, the Organization has updated its procurement policies and procedures to be consistent with federal requirements.
Criteria: Under the Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requires certain elements to be part of the District's procurement standards. The general procurement standards require the District to have and use documented procurement procedures that conform to the procurement standards identified in §§ 200.317 through 200.327 of the Uniform Guidance. The details of these requirements can be found in Title 2, Part 200, CFR Section 318(a). The procurement standard also requires written documentation including criteria for when sole source solicitation may be used. The District's written sole source policy does not state that sole source may be used in a public emergency; when a pass-through entity expressly authorizes; or after solicitation of more than one, competition is determined inadequate. The details of these requirements can be found in 2 CFR Section 320(c)(2). Please refer to URL https://www.ecfr.gov/current/title-2/subtitle-A/chapter-II/part- 200#200.320. Condition/Context: The District has not formally updated their procurement policies to include the thresholds and policies required by the federal government uniform guidance Title 2, Part 200, 2 CFR Section 320 on competitive bidding. Additionally, procurement procedures, specifically required by the federal government for use in sole source solicitations, were not performed for expenses using federal awards. Effect: Major federal programs tested required procurement policies and specific competitive bidding procedures to comply with the use of awarded federal funds to the District. As of the date of this report, the District is not in compliance with those requirements. Cause: The District had not formally amended their procurement policies to conform to the federal procurement policies before spending federal funds. Additionally, the District uses a third-party grant manager (Electrical District #3, Pinal County Arizona) to perform competitive procurement on the District's behalf, in which all federal funds reimburse Electrical District #3 who had paid the vendor awarded the work through competitive means. The third-party grant manager was not awarded in conformity with sole source requirements. Recommendation: We recommend that management formally adopt amendments to their existing procurement policies to conform with U.S. Code of Federal Regulations, Title 2, Part 200, Uniform Administrative Guidance CFR Section 318(a). Additionally, we recommend management perform competitive procurement on all purchases made with federal funds and pay all vendors awarded directly from the District and not through a third-party conduit grant manager. Views of Responsible Officials and Planned Corrective Action: Management concurs with the finding, see corrective action plan.
Finding Number: 2023-001 Repeat Finding: No Program Name / Title: Special Supplemental Nutrition Program for Women, Infants, and Children and Grants for Capital Development in Health Centers Federal Assistance Listing Number: 10.557 and 93.526 Federal Agencies: United States Department of Agriculture and and U.S. Department of Health and Human Services Federal Award Number: 22-10305 and C8ECS44546 Type of Finding: Significant Deficiency Compliance Requirement: Procurement and Suspension and Debarment Questioned Cost: No Criteria: Under 2 CFR sections 180.220 and 200.318 through 200.326, 45 CFR 75.327 through 75.334 and 45 CFR 75 Part E, the Organization is required to implement certain written Procurement and Suspension and Debarment policies and procedures that adhere to the minimum Federal Procurement standards. The Organization must use its own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements outlined in Uniform Guidance and maintain sufficient records to detail the history of procurements. Condition: Although the Organization maintained a written procurement policy, the Organization did not have adequate procurement policies in place to meet the minimum federal requirements for procurement standards and did not always follow its own procurement policies. Cause: The Organization's policy did not meet all of the minimum federal requirements under Uniform Guidance. In addition, the Organization could not provide support to demonstrate that it performed all of the necessary procurement steps and did not always retain documentation demonstrating compliance with Uniform Guidance for purchases made with federal funds. Effect: The Organization was not in compliance with federal regulations or its own policies. Recommendation: The Organization should update their procurement policy to meet the minimum federal requirements and ensure procurement policies are being followed for all procurement levels with written documentation. View of Responsible Officials: Introduction United Health Centers of the San Joaquin Valley (the "Organization") vigorously protests this finding. The Organization rigorously complies with not only federal and state procurement regulations, but also WIC regulations and the requirements found in the contract between the Organization and WIC. Additionally, numerous audits have been conducted by various entities (including audits by both WIC and the Health Resources and Services Administration (HRSA)) without any findings related to the Organization’s procurement. Finally, the Organization trains all individuals participating in the procurement process and provides guidance on procurement rules. Compliance with Regulations and WIC Program Contract The Organization’s compliance efforts are top tier. It uses many checks and balances to ensure compliance across the board with not only federal and state procurement regulations, but also WIC regulations and the requirements found in the contract between the Organization and WIC. It maintains written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts, intentionally avoids acquisition of unnecessary or duplicative items and uses surplus items instead of purchasing items when feasible. It uses full and open competition and obtains prior written authorization from the appropriate CDPH Program Contract Manager as required. The Organization maintains a narrative description of the procurement system, guidelines, rules, or regulations that is used to make purchases, which is audited by WIC for compliance. The Organization’s contract with WIC even goes above and beyond the requirements of 2 CFR § 180.220 and §§ 200.318 through 200.327. For example, the contract requires the reporting, tagging and annual inventorying of all equipment and/or property that is furnished by CDPH or purchased/reimbursed with funds provided through the contract. Upon receipt of equipment and/or property, the Organization reports the receipt to the CDPH Program Contract Manager and receives property tags for the items, then tags and logs them. For all purchases, the Organization maintains copies of all paid vendor invoices, documents, bids and other information used in vendor selection, for inspection or audit. Justifications supporting the absence of bidding (i.e., sole source purchases) are also maintained on file by the Organization for inspection or audit. Finally, although training is not required under 2 CFR § 180.220 or §§ 200.318 through 200.327, the Organization trains all pertinent staff related to procurement, the Organization’s procurement policies and procedures, the WIC contract requirements, WIC’s regulations and Uniform Guidance. This is done to ensure compliance with the principles and requirements of each of these requirements. No Prior Audit Findings Most recently, in January 2024 the Organization’s procurement policies and procedures were comprehensively audited by the federal HRSA through an Operational Site Visit to verify the status of UHC’s compliance with the relevant statutory and regulatory requirements. The HRSA audit specifically reviewed the Organization’s procurement policies and procedures, as well as reviewed documentation related to procurements during the prior three years by evaluating ten elements. This assessment evaluated written procurement procedures to ensure compliance with federal procurement standards, including a process for ensuring that all procurement costs are allowable, consistent with federal cost principles found in 45 CFR 75 Subpart E: Cost Principles. Additionally, the audit reviewed records for procurement actions paid for in whole or in part under the federal award that include the rationale for method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. This review involved documentation related to noncompetitive procurements. The audit also included evaluating the Organization’s retention of final contracts and related procurement records, consistent with federal document maintenance requirements, for procurement actions paid for in whole or in part under the federal award. Another element of the audit was to ensure that all activities and reporting requirements are being carried out in accordance with the provisions and timelines of the related contract and UHC’s own policies and procedures. Following completion of the expansive audit, HRSA’s evaluation resulted in no findings related to procurement. UHC successfully met all six elements of the Operational Site Visit audit conducted by HRSA. Conclusion In conclusion, the Organization vehemently disputes the findings presented, underscoring its unwavering commitment to stringent compliance with federal and state procurement regulations, as well as the stipulations outlined in its contract with WIC. The Organization's robust compliance mechanisms, encompassing meticulous checks and balances, written standards of conduct, and adherence to full and open competition, exemplify its dedication to procurement integrity. Furthermore, the Organization's proactive measures, such as reporting, tagging, and inventorying equipment, surpass the mandated requirements, ensuring transparency and accountability. Notably, recent audits by both WIC and the Health Resources and Services Administration (HRSA) have yielded no findings pertaining to procurement, validating the efficacy of the Organization's practices. The Organization's unwavering commitment to compliance, coupled with its comprehensive procurement protocols and ongoing training efforts, unequivocally refute any assertions of impropriety. UHC will reevaluate the audit findings and may or may not adopt a Corrective Action Plan.
Finding Number: 2023-001 Repeat Finding: No Program Name / Title: Special Supplemental Nutrition Program for Women, Infants, and Children and Grants for Capital Development in Health Centers Federal Assistance Listing Number: 10.557 and 93.526 Federal Agencies: United States Department of Agriculture and and U.S. Department of Health and Human Services Federal Award Number: 22-10305 and C8ECS44546 Type of Finding: Significant Deficiency Compliance Requirement: Procurement and Suspension and Debarment Questioned Cost: No Criteria: Under 2 CFR sections 180.220 and 200.318 through 200.326, 45 CFR 75.327 through 75.334 and 45 CFR 75 Part E, the Organization is required to implement certain written Procurement and Suspension and Debarment policies and procedures that adhere to the minimum Federal Procurement standards. The Organization must use its own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements outlined in Uniform Guidance and maintain sufficient records to detail the history of procurements. Condition: Although the Organization maintained a written procurement policy, the Organization did not have adequate procurement policies in place to meet the minimum federal requirements for procurement standards and did not always follow its own procurement policies. Cause: The Organization's policy did not meet all of the minimum federal requirements under Uniform Guidance. In addition, the Organization could not provide support to demonstrate that it performed all of the necessary procurement steps and did not always retain documentation demonstrating compliance with Uniform Guidance for purchases made with federal funds. Effect: The Organization was not in compliance with federal regulations or its own policies. Recommendation: The Organization should update their procurement policy to meet the minimum federal requirements and ensure procurement policies are being followed for all procurement levels with written documentation. View of Responsible Officials: Introduction United Health Centers of the San Joaquin Valley (the "Organization") vigorously protests this finding. The Organization rigorously complies with not only federal and state procurement regulations, but also WIC regulations and the requirements found in the contract between the Organization and WIC. Additionally, numerous audits have been conducted by various entities (including audits by both WIC and the Health Resources and Services Administration (HRSA)) without any findings related to the Organization’s procurement. Finally, the Organization trains all individuals participating in the procurement process and provides guidance on procurement rules. Compliance with Regulations and WIC Program Contract The Organization’s compliance efforts are top tier. It uses many checks and balances to ensure compliance across the board with not only federal and state procurement regulations, but also WIC regulations and the requirements found in the contract between the Organization and WIC. It maintains written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts, intentionally avoids acquisition of unnecessary or duplicative items and uses surplus items instead of purchasing items when feasible. It uses full and open competition and obtains prior written authorization from the appropriate CDPH Program Contract Manager as required. The Organization maintains a narrative description of the procurement system, guidelines, rules, or regulations that is used to make purchases, which is audited by WIC for compliance. The Organization’s contract with WIC even goes above and beyond the requirements of 2 CFR § 180.220 and §§ 200.318 through 200.327. For example, the contract requires the reporting, tagging and annual inventorying of all equipment and/or property that is furnished by CDPH or purchased/reimbursed with funds provided through the contract. Upon receipt of equipment and/or property, the Organization reports the receipt to the CDPH Program Contract Manager and receives property tags for the items, then tags and logs them. For all purchases, the Organization maintains copies of all paid vendor invoices, documents, bids and other information used in vendor selection, for inspection or audit. Justifications supporting the absence of bidding (i.e., sole source purchases) are also maintained on file by the Organization for inspection or audit. Finally, although training is not required under 2 CFR § 180.220 or §§ 200.318 through 200.327, the Organization trains all pertinent staff related to procurement, the Organization’s procurement policies and procedures, the WIC contract requirements, WIC’s regulations and Uniform Guidance. This is done to ensure compliance with the principles and requirements of each of these requirements. No Prior Audit Findings Most recently, in January 2024 the Organization’s procurement policies and procedures were comprehensively audited by the federal HRSA through an Operational Site Visit to verify the status of UHC’s compliance with the relevant statutory and regulatory requirements. The HRSA audit specifically reviewed the Organization’s procurement policies and procedures, as well as reviewed documentation related to procurements during the prior three years by evaluating ten elements. This assessment evaluated written procurement procedures to ensure compliance with federal procurement standards, including a process for ensuring that all procurement costs are allowable, consistent with federal cost principles found in 45 CFR 75 Subpart E: Cost Principles. Additionally, the audit reviewed records for procurement actions paid for in whole or in part under the federal award that include the rationale for method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. This review involved documentation related to noncompetitive procurements. The audit also included evaluating the Organization’s retention of final contracts and related procurement records, consistent with federal document maintenance requirements, for procurement actions paid for in whole or in part under the federal award. Another element of the audit was to ensure that all activities and reporting requirements are being carried out in accordance with the provisions and timelines of the related contract and UHC’s own policies and procedures. Following completion of the expansive audit, HRSA’s evaluation resulted in no findings related to procurement. UHC successfully met all six elements of the Operational Site Visit audit conducted by HRSA. Conclusion In conclusion, the Organization vehemently disputes the findings presented, underscoring its unwavering commitment to stringent compliance with federal and state procurement regulations, as well as the stipulations outlined in its contract with WIC. The Organization's robust compliance mechanisms, encompassing meticulous checks and balances, written standards of conduct, and adherence to full and open competition, exemplify its dedication to procurement integrity. Furthermore, the Organization's proactive measures, such as reporting, tagging, and inventorying equipment, surpass the mandated requirements, ensuring transparency and accountability. Notably, recent audits by both WIC and the Health Resources and Services Administration (HRSA) have yielded no findings pertaining to procurement, validating the efficacy of the Organization's practices. The Organization's unwavering commitment to compliance, coupled with its comprehensive procurement protocols and ongoing training efforts, unequivocally refute any assertions of impropriety. UHC will reevaluate the audit findings and may or may not adopt a Corrective Action Plan.
2 CFR sections 200.317 - 200.327 set the procurement standards to be followed when expending federal monies. During the testing of compliance with the procurement standards, it was noted that five out of seventeen of the vendors/contracts tested were not properly procured in accordance with the procurement standards. Not following the procurement standards may result in not receiving the best prices and result in underutilizing federal monies due to paying higher prices than needed. We recommend the City review the procurement standards and establish policies and procedures in order ensure the procurement standards are followed when expending federal monies.
FINDING 2023-001 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - 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): SLFRP 3041 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 13 VERMILLION COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Nonfederal entities and contractors are subject to nonprocurement suspension and debarment regulations. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or are ineligible for participation in federal assistance programs or activities. This is done by checking the Excluded Parties List System, collecting a certification from the vendor, or adding a clause or condition to the covered transaction with the vendor. There were two vendors subject to suspension and debarment requirements during the audit period. Both vendors were selected for testing. The County did not perform procedures to ensure either vendor was not suspended, debarred, or otherwise excluded from or ineligible for participation in federal assistance programs or activities. Additionally, the County did not have a formalized procurement policy outlining its processes and procedures with regards to the procurement of goods and services using federal grant funds. The policy must conform to the procurement standards identified in 2 CFR 200.317 through 200.327 and should address ensuring vendors are not suspended or debarred prior to entering into covered transactions if the contract is expected to equal or exceed $25,000. The lack of internal controls was a systemic issue throughout the audit period and enabled material noncompliance to occur and remain undetected. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." INDIANA STATE BOARD OF ACCOUNTS 14 VERMILLION COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." Cause A proper system of internal controls was not designed by management of the County. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper design and implementation of an effectively designed system of internal controls, the County cannot ensure the vendors paid with federal funds are eligible to participate in federal programs. Any program funds the County used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Furthermore, with adequately designed and implemented policies that reflect the federal regulations as required, the County cannot ensure that goods and services paid with federal funds are properly procured. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County establish a system of internal controls to ensure that verifications are performed to determine whether each contractor has been suspended or debarred from participating in federal contracts prior to making payment. In addition, we recommended the County develop a procurement policy that addresses and adheres to the federal requirements outlined in regulations. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-002 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): FY2023 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement Federal regulations require formal procurement methods when the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), which is set at $250,000 unless a lower more restrictive threshold is set by a nonfederal entity. As Indiana Code has a more restrictive threshold of $150,000, this threshold and formal procurement methods must be used when procuring goods and services in excess of $150,000. Formal procurement methods require following documented procedures and obtaining sealed bids or proposals. The Town had a documented procurement policy; however, the Town did not follow its policy for one of the two vendors that exceeded the simplified acquisition threshold. The vendor, paid $2,419,821, was chosen without obtaining sealed bids or proposals, nor was a formal contract entered into with the vendor. Furthermore, there was no documentation detailing the history of the procurement or the Town's justification for limiting competition. The lack of effective internal controls and noncompliance were isolated to the one vendor noted above. INDIANA STATE BOARD OF ACCOUNTS 15 TOWN OF BROWNSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Suspension and Debarment Prior to entering into subawards and covered transactions with the State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a 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. The Town's policies related to the SLFRF suspension and debarment requirements included a clause or condition added to covered transactions expected to equal or exceed $25,000 with that vendor. Three vendors were identified as having transactions that equaled or exceeded $25,000. All three vendors were selected for testing. The three vendors, with total expenditures of $4,333,484, were reviewed. For all three vendors, the Town did not have documented evidence that the clause was included in the contract with the vendor nor that any other methods were employed to verify the vendor was not suspended, debarred, or other excluded prior to entering into the transactions. The lack of internal controls and noncompliance were systematic 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. . . ." INDIANA STATE BOARD OF ACCOUNTS 16 TOWN OF BROWNSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.324(a) states: "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." 2 CFR 200.320 states in part: ". . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance awards exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; INDIANA STATE BOARD OF ACCOUNTS 17 TOWN OF BROWNSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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 cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and (iv) The non-Federal entity may use competitive proposal procedures for qualifications based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate." INDIANA STATE BOARD OF ACCOUNTS 18 TOWN OF BROWNSBURG 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 Town did not adhere to its procurement policy as written. Instead, a vendor was selected based on factors other than solicited bids. In addition, the Town was unable to provide documentation to demonstrate they included a clause in contracts or otherwise verified contractors were not suspended, debarred, or otherwise excluded prior to entering into the transaction as a direct result of the Town's policy not addressing those vendors not requiring a contract and not following the policy for those vendors who had a contract. Effect Without the proper implementation of an effectively designed system of internal controls, the Town cannot ensure goods and services were properly procured. As a result, one vendor paid did not have adequate documentation to support that the appropriate bid process was followed or that nonprocurement procedures were permissible. Furthermore, without the proper implementation of an effectively designed system of internal controls, the Town cannot ensure the vendors paid with federal funds are eligible to participate in federal programs. Any program funds the Town used to pay vendors that have been suspended or debarred would be unallowable. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future funding to the Town. Questioned Costs There were no questioned costs identified. Recommendation We recommend that management of the Town establish a proper system of internal controls and develop policies and procedures to ensure contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering contracts or subawards, and document reasons for vendors that are chosen without adhering to formal procurement methods. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004 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): FY2023 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report for suspension and debarment. The prior audit finding number was 2022-003. Condition and Context Procurement - Policy The County did not have a County Council approved procurement policy that would reflect applicable state laws and regulations, including procedures to avoid 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. Procurement - Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 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. INDIANA STATE BOARD OF ACCOUNTS 25 BOONE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The County had five vendors that qualified for testing under small purchase procurement requirements (vendors paid $10,000-$150,000). Of the two chosen for testing, one was awarded a contract without the County obtaining quotes. The contract awarded was $31,000 for engineering services related to drain construction. The lack of effective internal controls and noncompliance was isolated to the small purchase identified above. Suspension and Debarment Prior to entering into subawards and covered transactions with State and Local Fiscal Recovery Funds (SLFRF), 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. Due to the U.S. Department of the Treasury's (Treasury) determination that the revenue loss eligible use category does not give rise to subawards, the County was only required to comply with suspension and debarment requirements related to covered transactions. Upon inquiry of the County, in order to review the procedures in place for verifying that an entity with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded, the County explained they were aware of the suspension and debarment requirements related to the SLFRF awards; however, the County did not retain documentation of SAMs.gov checks nor was a clause always included in a contract. A population of ten covered transactions for goods or services, totaling $2,371,047, that equaled or exceeded $25,000 paid from SLFRF funds during the audit period was identified. A sample of three transactions, totaling $1,473,295, was selected for testing. For each of the three transactions, the County did not verify the vendors' suspension and debarment status prior to payment. Due to the number and magnitude of exceptions identified, per auditor judgment, we concluded it would not be appropriate to expand the sample size or perform any additional audit procedures. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 26 BOONE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.318 states: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." 2 CFR 200.214 states: "Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are de-barred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or INDIANA STATE BOARD OF ACCOUNTS 27 BOONE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (c) Adding a clause or condition to the covered transaction with that person." Part 4 of the Treasury's Compliance and Reporting Guidance states in part: ". . . recipients are expected to have procurement policies and procedures in place that comply with the procurement standards outlined in the Uniform Guidance . . ." Cause A proper system of internal controls was not designed by the management of the County. The County was unable to provide documentation to demonstrate it checked SAM.gov to verify that contractors and vendors were not suspended or debarred. The County was also unable to provide documentation explaining the rationale behind decisions to offer contracts without obtaining an adequate number of bids or quotes. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, one small purchase did not have an adequate number of quotes. In addition, vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended the County establish documented procurement procedures consistent with state and local laws for the acquisition of property or services required under a federal award or subaward as outlined in the code of federal regulations. In addition, we recommended the County adhere to the procurement policies and obtain required quotes and bids or adequately document a sole source situation. Finally, we recommended that the County strengthen its system of internal controls to ensure that all vendors that are 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 any 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 2023-002 Subject: Water and Wastewater 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 or Years (or Other Identifying Numbers): EDA Grant / 06-79-06190, RD Loan 01 / 06-79-06190 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context 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 non-federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. INDIANA STATE BOARD OF ACCOUNTS 16 CITY OF PETERSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) During the audit period, the City had five vendors with purchases over the $150,000 threshold that were considered simplified acquisition procurements. Only one vendor was selected for testing due to the procurement requirements being tested on the other four vendors during the prior audit. For the one vendor, the City could not provide the procurement history or the rationale for the method of procurement, the selection of vendor, or the basis for price. The total dollar amount spent with this vendor during 2023 was $414,465. The lack of internal controls and noncompliance were isolated to the one vendor noted above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320(b) states in part: "Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance awards exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. . . . INDIANA STATE BOARD OF ACCOUNTS 17 CITY OF PETERSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." Cause The City was unable to provide documentation to demonstrate they had properly procured services. A proper system of internal controls was not designed by management of the City. Embedded within a properly designed or implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the City cannot demonstrate it obtained an adequate number of price or rate quotations prior to selecting a vendor. Therefore, the City could have overpaid for the services obtained. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City strengthen its system of internal controls to ensure that an adequate number of price or rate quotations are obtained. We also recommended strengthening its policies and procedures to ensure appropriate supporting documentation for federal programs is retained to be presented for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Criteria: 2 CFR Section 200.318 requires that the non-federal entity must have and use documented procurement procedures, consistent with state, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a federal award or subaward. The non-federal entity's documented procurement procedures must conform to the procurement standard identified in §§ 200.317 through 200.327 and must be adhered to. Condition and context: During testing of Moonshot Mission’s controls on compliance over procurement and suspension and debarment, we identified one vendor Moonshot Missions did not have all the needed documentation around the procurement process and the suspension and debarment check. Cause: Controls and processes were not effectively designed to ensure there was all proper documentation around the procurement process and the suspension and debarment check. Effect: Moonshot missions was not fully in compliance with the procurement and suspension and debarment check requirements of the Uniform Guidance. Questioned Costs: None Identification as a Repeat Finding: N/A Recommendation: We recommend that Moonshot Missions review its current processes and controls over procurement and suspension and debarment to ensure all required documentation is retained and available. Views of Responsible Official: Management agrees with the finding. See Corrective Action Plan.
Criteria: 2 CFR Section 200.318 requires that the non-federal entity must have and use documented procurement procedures, consistent with state, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a federal award or subaward. The non-federal entity's documented procurement procedures must conform to the procurement standard identified in §§ 200.317 through 200.327 and must be adhered to. Condition and context: During testing of Moonshot Mission’s controls on compliance over procurement and suspension and debarment, we identified one vendor Moonshot Missions did not have all the needed documentation around the procurement process and the suspension and debarment check. Cause: Controls and processes were not effectively designed to ensure there was all proper documentation around the procurement process and the suspension and debarment check. Effect: Moonshot missions was not fully in compliance with the procurement and suspension and debarment check requirements of the Uniform Guidance. Questioned Costs: None Identification as a Repeat Finding: N/A Recommendation: We recommend that Moonshot Missions review its current processes and controls over procurement and suspension and debarment to ensure all required documentation is retained and available. Views of Responsible Official: Management agrees with the finding. See Corrective Action Plan.
Criteria: 2 CFR Section 200.318 requires that the non-federal entity must have and use documented procurement procedures, consistent with state, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a federal award or subaward. The non-federal entity's documented procurement procedures must conform to the procurement standard identified in §§ 200.317 through 200.327 and must be adhered to. Condition and context: During testing of Moonshot Mission’s controls on compliance over procurement and suspension and debarment, we identified one vendor Moonshot Missions did not have all the needed documentation around the procurement process and the suspension and debarment check. Cause: Controls and processes were not effectively designed to ensure there was all proper documentation around the procurement process and the suspension and debarment check. Effect: Moonshot missions was not fully in compliance with the procurement and suspension and debarment check requirements of the Uniform Guidance. Questioned Costs: None Identification as a Repeat Finding: N/A Recommendation: We recommend that Moonshot Missions review its current processes and controls over procurement and suspension and debarment to ensure all required documentation is retained and available. Views of Responsible Official: Management agrees with the finding. See Corrective Action Plan.
Criteria: 2 CFR Section 200.318 requires that the non-federal entity must have and use documented procurement procedures, consistent with state, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a federal award or subaward. The non-federal entity's documented procurement procedures must conform to the procurement standard identified in §§ 200.317 through 200.327 and must be adhered to. Condition and context: During testing of Moonshot Mission’s controls on compliance over procurement and suspension and debarment, we identified one vendor Moonshot Missions did not have all the needed documentation around the procurement process and the suspension and debarment check. Cause: Controls and processes were not effectively designed to ensure there was all proper documentation around the procurement process and the suspension and debarment check. Effect: Moonshot missions was not fully in compliance with the procurement and suspension and debarment check requirements of the Uniform Guidance. Questioned Costs: None Identification as a Repeat Finding: N/A Recommendation: We recommend that Moonshot Missions review its current processes and controls over procurement and suspension and debarment to ensure all required documentation is retained and available. Views of Responsible Official: Management agrees with the finding. See Corrective Action Plan.
Criteria: 2 CFR Section 200.318 requires that the non-federal entity must have and use documented procurement procedures, consistent with state, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a federal award or subaward. The non-federal entity's documented procurement procedures must conform to the procurement standard identified in §§ 200.317 through 200.327 and must be adhered to. Condition and context: During testing of Moonshot Mission’s controls on compliance over procurement and suspension and debarment, we identified one vendor Moonshot Missions did not have all the needed documentation around the procurement process and the suspension and debarment check. Cause: Controls and processes were not effectively designed to ensure there was all proper documentation around the procurement process and the suspension and debarment check. Effect: Moonshot missions was not fully in compliance with the procurement and suspension and debarment check requirements of the Uniform Guidance. Questioned Costs: None Identification as a Repeat Finding: N/A Recommendation: We recommend that Moonshot Missions review its current processes and controls over procurement and suspension and debarment to ensure all required documentation is retained and available. Views of Responsible Official: Management agrees with the finding. See Corrective Action Plan.
Criteria: 2 CFR Section 200.318 requires that the non-federal entity must have and use documented procurement procedures, consistent with state, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a federal award or subaward. The non-federal entity's documented procurement procedures must conform to the procurement standard identified in §§ 200.317 through 200.327 and must be adhered to. Condition and context: During testing of Moonshot Mission’s controls on compliance over procurement and suspension and debarment, we identified one vendor Moonshot Missions did not have all the needed documentation around the procurement process and the suspension and debarment check. Cause: Controls and processes were not effectively designed to ensure there was all proper documentation around the procurement process and the suspension and debarment check. Effect: Moonshot missions was not fully in compliance with the procurement and suspension and debarment check requirements of the Uniform Guidance. Questioned Costs: None Identification as a Repeat Finding: N/A Recommendation: We recommend that Moonshot Missions review its current processes and controls over procurement and suspension and debarment to ensure all required documentation is retained and available. Views of Responsible Official: Management agrees with the finding. See Corrective Action Plan.
Criteria: 2 CFR Section 200.318 requires that the non-federal entity must have and use documented procurement procedures, consistent with state, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a federal award or subaward. The non-federal entity's documented procurement procedures must conform to the procurement standard identified in §§ 200.317 through 200.327 and must be adhered to. Condition and context: During testing of Moonshot Mission’s controls on compliance over procurement and suspension and debarment, we identified one vendor Moonshot Missions did not have all the needed documentation around the procurement process and the suspension and debarment check. Cause: Controls and processes were not effectively designed to ensure there was all proper documentation around the procurement process and the suspension and debarment check. Effect: Moonshot missions was not fully in compliance with the procurement and suspension and debarment check requirements of the Uniform Guidance. Questioned Costs: None Identification as a Repeat Finding: N/A Recommendation: We recommend that Moonshot Missions review its current processes and controls over procurement and suspension and debarment to ensure all required documentation is retained and available. Views of Responsible Official: Management agrees with the finding. See Corrective Action Plan.
Criteria: 2 CFR Section 200.318 requires that the non-federal entity must have and use documented procurement procedures, consistent with state, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a federal award or subaward. The non-federal entity's documented procurement procedures must conform to the procurement standard identified in §§ 200.317 through 200.327 and must be adhered to. Condition and context: During testing of Moonshot Mission’s controls on compliance over procurement and suspension and debarment, we identified one vendor Moonshot Missions did not have all the needed documentation around the procurement process and the suspension and debarment check. Cause: Controls and processes were not effectively designed to ensure there was all proper documentation around the procurement process and the suspension and debarment check. Effect: Moonshot missions was not fully in compliance with the procurement and suspension and debarment check requirements of the Uniform Guidance. Questioned Costs: None Identification as a Repeat Finding: N/A Recommendation: We recommend that Moonshot Missions review its current processes and controls over procurement and suspension and debarment to ensure all required documentation is retained and available. Views of Responsible Official: Management agrees with the finding. See Corrective Action Plan.
Criteria: 2 CFR Section 200.318 requires that the non-federal entity must have and use documented procurement procedures, consistent with state, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a federal award or subaward. The non-federal entity's documented procurement procedures must conform to the procurement standard identified in §§ 200.317 through 200.327 and must be adhered to. Condition and context: During testing of Moonshot Mission’s controls on compliance over procurement and suspension and debarment, we identified one vendor Moonshot Missions did not have all the needed documentation around the procurement process and the suspension and debarment check. Cause: Controls and processes were not effectively designed to ensure there was all proper documentation around the procurement process and the suspension and debarment check. Effect: Moonshot missions was not fully in compliance with the procurement and suspension and debarment check requirements of the Uniform Guidance. Questioned Costs: None Identification as a Repeat Finding: N/A Recommendation: We recommend that Moonshot Missions review its current processes and controls over procurement and suspension and debarment to ensure all required documentation is retained and available. Views of Responsible Official: Management agrees with the finding. See Corrective Action Plan.
FINDING 2023-003 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): TRSW220818 Pass-Through Entity: Indiana Finance Authority Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement - Policy The Town did not have an approved procurement policy that reflected applicable state laws and regulations, including procedures to avoid 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. The Town is required to have and use documented procurement procedures, which are 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. Suspension and Debarment The Town received $1,578,280 in State Water Infrastructure Fund distributions, which were funded with State and Local Fiscal Recovery Funds (SLFRF) dollars and were subject to the suspension and debarment requirements. Prior to entering into subawards and covered transactions with SLFRF award funds, recipients are required to verify that such contracts and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under procurement and nonprocurement transactions (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. Upon inquiry of the Town to determine its policies and procedures related to suspension and debarment requirements, the Town stated that it did not have policies or procedures in place for verifying that an entity with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded or disqualified from participating in federal assistance programs or activities. Six covered transactions, totaling $1,578,280, to one vendor for goods or services that equaled or exceeded $25,000 that were paid from SLFRF funds were identified. Each transaction was examined to determine whether the Town verified the suspension and debarment status prior to payment. The Town had not verified the vendor's suspension and debarment status for any of the covered transactions prior to issuing payment. The lack of internal controls and noncompliance were systematic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 18 TOWN OF DALEVILLE 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(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls was not designed by the management of the Town. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the Town's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. The Town had not received federal funds for several years. The Clerk-Treasurer was not knowledgeable on the compliance requirements of the federal award. Although the Town contracted with outside engineers to manage the compliance requirement, there was no documentation that they included a suspension or debarment clause. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. INDIANA STATE BOARD OF ACCOUNTS 19 TOWN OF DALEVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 them. Additionally, 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 Town. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Town adopt a procurement policy that is reflective of state laws and regulations. We also recommended that the Town strengthen its system of internal controls to ensure that all vendors that are 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 any covered transactions. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Criteria Part 2, CFR 200, 200.318 states “The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 200.317 through 200.327.” Condition While performing tests of the Garden’s internal controls over compliance, we noted the Garden had no procurement policy. Cause of Condition The Garden has not implemented proper internal control policies to adhere to the requirements of the Uniform Guidance. Effect of Condition Noncompliance may impact future funding from Federal awards. Recommendation We recommend the Garden implement proper internal control procedures including implementing and following a procurement policy in line with the Uniform Guidance.
Criteria Part 2, CFR 200, 200.318 states “The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 200.317 through 200.327.” Condition While performing tests of the Garden’s internal controls over compliance, we noted the Garden had no procurement policy. Cause of Condition The Garden has not implemented proper internal control policies to adhere to the requirements of the Uniform Guidance. Effect of Condition Noncompliance may impact future funding from Federal awards. Recommendation We recommend the Garden implement proper internal control procedures including implementing and following a procurement policy in line with the Uniform Guidance.
Criteria Part 2, CFR 200, 200.318 states “The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 200.317 through 200.327.” Condition While performing tests of the Garden’s internal controls over compliance, we noted the Garden had no procurement policy. Cause of Condition The Garden has not implemented proper internal control policies to adhere to the requirements of the Uniform Guidance. Effect of Condition Noncompliance may impact future funding from Federal awards. Recommendation We recommend the Garden implement proper internal control procedures including implementing and following a procurement policy in line with the Uniform Guidance.
Criteria Part 2, CFR 200, 200.318 states “The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 200.317 through 200.327.” Condition While performing tests of the Garden’s internal controls over compliance, we noted the Garden had no procurement policy. Cause of Condition The Garden has not implemented proper internal control policies to adhere to the requirements of the Uniform Guidance. Effect of Condition Noncompliance may impact future funding from Federal awards. Recommendation We recommend the Garden implement proper internal control procedures including implementing and following a procurement policy in line with the Uniform Guidance.
Criteria Part 2, CFR 200, 200.318 states “The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 200.317 through 200.327.” Condition While performing tests of the Garden’s internal controls over compliance, we noted the Garden had no procurement policy. Cause of Condition The Garden has not implemented proper internal control policies to adhere to the requirements of the Uniform Guidance. Effect of Condition Noncompliance may impact future funding from Federal awards. Recommendation We recommend the Garden implement proper internal control procedures including implementing and following a procurement policy in line with the Uniform Guidance.
Criteria Part 2, CFR 200, 200.318 states “The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 200.317 through 200.327.” Condition While performing tests of the Garden’s internal controls over compliance, we noted the Garden had no procurement policy. Cause of Condition The Garden has not implemented proper internal control policies to adhere to the requirements of the Uniform Guidance. Effect of Condition Noncompliance may impact future funding from Federal awards. Recommendation We recommend the Garden implement proper internal control procedures including implementing and following a procurement policy in line with the Uniform Guidance.
Criteria Part 2, CFR 200, 200.318 states “The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 200.317 through 200.327.” Condition While performing tests of the Garden’s internal controls over compliance, we noted the Garden had no procurement policy. Cause of Condition The Garden has not implemented proper internal control policies to adhere to the requirements of the Uniform Guidance. Effect of Condition Noncompliance may impact future funding from Federal awards. Recommendation We recommend the Garden implement proper internal control procedures including implementing and following a procurement policy in line with the Uniform Guidance.
Criteria Part 2, CFR 200, 200.318 states “The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 200.317 through 200.327.” Condition While performing tests of the Garden’s internal controls over compliance, we noted the Garden had no procurement policy. Cause of Condition The Garden has not implemented proper internal control policies to adhere to the requirements of the Uniform Guidance. Effect of Condition Noncompliance may impact future funding from Federal awards. Recommendation We recommend the Garden implement proper internal control procedures including implementing and following a procurement policy in line with the Uniform Guidance.
Criteria Part 2, CFR 200, 200.318 states “The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 200.317 through 200.327.” Condition While performing tests of the Garden’s internal controls over compliance, we noted the Garden had no procurement policy. Cause of Condition The Garden has not implemented proper internal control policies to adhere to the requirements of the Uniform Guidance. Effect of Condition Noncompliance may impact future funding from Federal awards. Recommendation We recommend the Garden implement proper internal control procedures including implementing and following a procurement policy in line with the Uniform Guidance.
Criteria Part 2, CFR 200, 200.318 states “The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 200.317 through 200.327.” Condition While performing tests of the Garden’s internal controls over compliance, we noted the Garden had no procurement policy. Cause of Condition The Garden has not implemented proper internal control policies to adhere to the requirements of the Uniform Guidance. Effect of Condition Noncompliance may impact future funding from Federal awards. Recommendation We recommend the Garden implement proper internal control procedures including implementing and following a procurement policy in line with the Uniform Guidance.
FINDING 2023-005 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): FY 2022 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-004. Condition and Context An effective internal control system was not in place at the County to ensure compliance with the requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement - Policy The County had not established a purchasing policy that would reflect applicable state laws and regulations, including 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; and did not maintain written standards of conduct covering conflicts of interest and governing actions of its employees engaged in the selection, award, and administration of contracts. Suspension and Debarment Prior to entering into subawards and covered transactions with 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 County did not have internal controls in place to ensure compliance with the suspension and debarment compliance requirement. Upon inquiry of the County's policies and procedures related to suspension and debarment requirements, the County stated that they did not have policies or procedures in place for verifying that an entity with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded or disqualified from participating in federal assistance programs or activities. INDIANA STATE BOARD OF ACCOUNTS 21 SHELBY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Two covered transactions for goods or services that equaled or exceeded $25,000 that were paid from SLFRF funds during the audit period were identified. Each transaction was examined to determine whether the County verified the suspension and debarment status of either vendor prior to payment. The two covered transactions, totaling $223,499, did not include the appropriate provisions in the contracts nor did the County require a certification or check the EPLS to ensure the entity was not suspended or debarred prior to making payment. The lack of internal controls and noncompliance were systemic issues throughout the audit period for the FY 2022 grant. 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 non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 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." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." INDIANA STATE BOARD OF ACCOUNTS 22 SHELBY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not designed by management of the County. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, vendors and subrecipients to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Any program funds the County used to pay vendors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County establish a proper system of internal controls and develop policies and procedures to ensure contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Additionally, we recommended the County establish documented procurement procedures consistent with state and local laws for the acquisition of property or services required under a federal award or subaward. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: Water and Waste Disposal Systems for Rural Communities - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal Systems for Rural Communities Assistance Listings Number: 10.760 Federal Award Number and Year (or Other Identifying Number): FY 2023 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement - Policy The Town did not have an approved procurement policy that reflected applicable state laws and regulations including procedures to avoid 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. The Town is required to have and use documented procurement procedures, which are 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. Suspension and Debarment Prior to entering into subawards and covered transactions with the Water and Waste Disposal Systems for Rural Communities award funds, recipients are required to verify that such contracts and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under procurement and nonprocurement transactions (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking SAM exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Upon inquiry of the Town to determine its policies and procedures related to suspension and debarment requirements, the Town stated that a suspension and debarment clause is included in contracts. Contracts are reviewed by the President of the Town Council. Four covered transactions, totaling $20,152,969, were identified and tested. The Town could not provide documentation that procedures were performed to verify that three of the four vendors paid from the Water and Waste Disposal Systems for Rural Communities award funds with contracts over $25,000 were not excluded or disqualified from participation in federal programs. Additionally, the Town had two agreements subject to the Buy America Build America (BABA) provisions. The Town could not provide documentation that procedures were performed to ensure the Buy America domestic preference provisions were included in either agreement nor was a BABA waiver obtained. INDIANA STATE BOARD OF ACCOUNTS 19 TOWN OF FRANKTON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls and noncompliance were systematic 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(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." 2 CFR 184.4 states in part: "(a) Applicability of Buy America Preference to infrastructure projects. The Buy America Preference applies to Federal awards where funds are appropriated or otherwise made available for infrastructure projects in the United States, regardless of whether infrastructure is the primary purpose of the Federal award. (b) Including the Buy America Preference in Federal awards. All Federal awards with infrastructure projects must include the Buy America Preference in the terms and conditions. The Buy America Preference must be included in all subawards, contracts, and purchase orders for the work performed, or products supplied under the Federal award. . . ." INDIANA STATE BOARD OF ACCOUNTS 20 TOWN OF FRANKTON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not designed by the management of the Town. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the Town's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. The Clerk-Treasurer was new to the position as of January 1, 2024. The former Clerk-Treasurer was not knowledgeable on the compliance requirements of the federal award. The Town contracted with outside engineers to manage the compliance requirement, and there was no documentation that BABA provisions or a waiver was obtained for the contracts nor that they included a suspension or debarment clause. Lastly, a procurement policy nor documentation that vendors were not suspended or debarred was not provided for review. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. In addition, the BABA provisions were not appropriately included in infrastructure projects. 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 them. Additionally, 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 Town. Questioned Costs There were no questioned costs identified. Recommendation We recommended the Town establish documented procurement procedures consistent with state and local laws for the acquisition of property or services required under a federal award or subaward as outlined in the code of federal regulations. In addition, we recommended that the Town strengthen its system of internal controls to ensure that all vendors that are 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 any covered transactions. Lastly, we recommended that the Town ensure all applicable contracts contain the required BABA provisions. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 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): FY 2023 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-005. Condition and Context 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 written standards of conduct covering conflicts of interest and governing actions of its employees engaged in the selection, award, and administration of contracts. Procurement - Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The City did not obtain price or rate quotes for the one vendor tested that was less than the simplified acquisition threshold of $150,000 but exceeded the $10,000 micro-purchase threshold. The micro-purchase threshold may be increased, but the City did not provide documentation that the threshold had been increased. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. INDIANA STATE BOARD OF ACCOUNTS 19 CITY OF MUNCIE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Suspension and Debarment Prior to entering into subawards and covered transactions with COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF), recipients are required to verify that such contracts and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Due to the U.S. Department of the Treasury's determination that the revenue loss eligible use category does not give rise to subawards, the City was only required to comply with suspension and debarment requirements related to covered transactions. A population of nine covered transactions for goods or services were paid from SLFRF award funds during the audit period. A sample of three transactions were selected for testing. Of the three transactions tested, one vendor was not verified to not be suspended nor debarred or otherwise excluded or disqualified from participating in federal assistance programs or activities. The lack of effective internal controls and noncompliance were isolated to the small purchase noted above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 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. . . . INDIANA STATE BOARD OF ACCOUNTS 20 CITY OF MUNCIE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity." Part 4 of the Treasury's Compliance and Reporting Guidance states: ". . . recipients are expected to have procurement policies and procedures in place that comply with the procurement standards outlined in the Uniform Guidance . . ." Cause The system of internal controls as established by management of the City was not effective at ensuring all required aspects of a procurement policy were included and that small purchases adhered to the procurement requirements. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the City cannot ensure their policy includes all the necessary elements and that the detailed history of procurement including the method utilized are retained for audit. INDIANA STATE BOARD OF ACCOUNTS 21 CITY OF MUNCIE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended management of the City establish documented procurement procedures consistent with state and local laws for the acquisition of property or services required under a federal award or subaward as outlined in the code of federal regulations. In addition, we recommended the City adhere to the procurement policies and obtain required quotes and bids or adequately document a sole source situation. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample Repeat Finding: Yes (2022-002) 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 were 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 did not identify 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 $458 thousand. 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 fro each bidding threshold in accordance with the Uniform Guidance.
Assistance Listing 10.766 Title Community Facilities Loans and Grants Federal Grantor U.S. Department of Agriculture Compliance Area Reporting Type of Finding Internal Control – Significant Deficiency Questioned Costs None Reported Repeat Finding Yes Criteria 2 CFR 200.327 establishes that reports be complete, accurate, and supported by accounting records (if applicable) and be submitted in compliance with the appropriate deadlines. Condition Westward Heights submitted each quarterly report to the USDA after the required due dates. Quarterly reports are due by the end of the following month. Cause Westward Heights did not have an internal control policy in place to ensure timely closing of month-end or year-end financials. Effect The lack of policy resulted in multiple reports being submitted to the USDA after the due date. Recommendation We recommend that Westward Heights establish deadlines for accounting personnel to complete month-end and year-end financials. Views of Responsible Officials Management and Westward Heights’ Board of Directors agree with the finding. See Westward Heights’ Corrective Action Plan for Finding 2023-002.
Federal Program Coronavirus Capital Projects Fund (AL 21.029) Procurement Suspended and Debarred Parties Significant Deficiency Criteria 2 CFR Part 200.318 states that a non-Federal entity must have and use documented procedures, consistent with state, local, and tribal laws and regulations and the standards of 2 CFR part 200.317 through 200.327. Condition East Central Energy and Subsidiaries does not have a written procurement policy in place that adheres to Federal minimum standards. Cause East Central Energy and Subsidiaries does not have a written procurement policy that adheres to Federal minimum standards. Questioned Costs None Context Per inquiry with East Central Energy and Subsidiaries management, they do not have a procurement policy in place that adheres to Federal minimum standards. Effect Non-compliance with Procurement compliance requirements. This could result in East Central Energy and Subsidiaries not following state and local regulations as well as 2 CFR Part 200.317 through 200.327. Repeat Finding This is not a repeat finding. Recommendation Recommend for East Central Energy and Subsidiaries to create and implement a procurement policy that adheres to state and local regulations as well as 2 CFR Part 200.317 through 200.327. Views of Responsible Officials East Central Energy and Subsidiaries agrees with the recommendation.
Federal Program Coronavirus Capital Projects Fund (AL 21.029) Procurement Suspended and Debarred Parties Significant Deficiency Criteria 2 CFR Part 200.318 states that a non-Federal entity must have and use documented procedures, consistent with state, local, and tribal laws and regulations and the standards of 2 CFR part 200.317 through 200.327. Condition East Central Energy and Subsidiaries does not have a written procurement policy in place that adheres to Federal minimum standards. Cause East Central Energy and Subsidiaries does not have a written procurement policy that adheres to Federal minimum standards. Questioned Costs None Context Per inquiry with East Central Energy and Subsidiaries management, they do not have a procurement policy in place that adheres to Federal minimum standards. Effect Non-compliance with Procurement compliance requirements. This could result in East Central Energy and Subsidiaries not following state and local regulations as well as 2 CFR Part 200.317 through 200.327. Repeat Finding This is not a repeat finding. Recommendation Recommend for East Central Energy and Subsidiaries to create and implement a procurement policy that adheres to state and local regulations as well as 2 CFR Part 200.317 through 200.327. Views of Responsible Officials East Central Energy and Subsidiaries agrees with the recommendation.
Federal Program Coronavirus Capital Projects Fund (AL 21.029) Procurement Suspended and Debarred Parties Significant Deficiency Criteria 2 CFR Part 200.318 states that a non-Federal entity must have and use documented procedures, consistent with state, local, and tribal laws and regulations and the standards of 2 CFR part 200.317 through 200.327. Condition East Central Energy and Subsidiaries does not have a written procurement policy in place that adheres to Federal minimum standards. Cause East Central Energy and Subsidiaries does not have a written procurement policy that adheres to Federal minimum standards. Questioned Costs None Context Per inquiry with East Central Energy and Subsidiaries management, they do not have a procurement policy in place that adheres to Federal minimum standards. Effect Non-compliance with Procurement compliance requirements. This could result in East Central Energy and Subsidiaries not following state and local regulations as well as 2 CFR Part 200.317 through 200.327. Repeat Finding This is not a repeat finding. Recommendation Recommend for East Central Energy and Subsidiaries to create and implement a procurement policy that adheres to state and local regulations as well as 2 CFR Part 200.317 through 200.327. Views of Responsible Officials East Central Energy and Subsidiaries agrees with the recommendation.
Federal Program Coronavirus Capital Projects Fund (AL 21.029) Procurement Suspended and Debarred Parties Significant Deficiency Criteria 2 CFR Part 200.318 states that a non-Federal entity must have and use documented procedures, consistent with state, local, and tribal laws and regulations and the standards of 2 CFR part 200.317 through 200.327. Condition East Central Energy and Subsidiaries does not have a written procurement policy in place that adheres to Federal minimum standards. Cause East Central Energy and Subsidiaries does not have a written procurement policy that adheres to Federal minimum standards. Questioned Costs None Context Per inquiry with East Central Energy and Subsidiaries management, they do not have a procurement policy in place that adheres to Federal minimum standards. Effect Non-compliance with Procurement compliance requirements. This could result in East Central Energy and Subsidiaries not following state and local regulations as well as 2 CFR Part 200.317 through 200.327. Repeat Finding This is not a repeat finding. Recommendation Recommend for East Central Energy and Subsidiaries to create and implement a procurement policy that adheres to state and local regulations as well as 2 CFR Part 200.317 through 200.327. Views of Responsible Officials East Central Energy and Subsidiaries agrees with the recommendation.