2024-005 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 2023-005. 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.
Department of Transportation Federal Financial Assistance Listing 20.106; Awards AIP3-46-0050-59, AIP3-46-0050-62, AIP3-46-0050-63, and AIP3-46-0050-64. COVID-19 Airport Improvement Program Reporting Material Weakness in Internal Control over Compliance; Material Noncompliance 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, 2024, for award AIP3-46-0050-64 underreported the federal share of expenditures by $23,588, while the FAA Form 5100-127 annual report dated December 31, 2023, for all awards underreported the total capital expenditures and construction in progress by $2,729,962. 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 7 reports out of 27 reports. Repeat Finding from Prior Year – Yes, prior year finding 2023-002 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 AIP3-46-0050-59, AIP3-46-0050-62, AIP3-46-0050-63, and AIP3-46-0050-64. COVID-19 Airport Improvement Program Reporting Material Weakness in Internal Control over Compliance; Material Noncompliance 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, 2024, for award AIP3-46-0050-64 underreported the federal share of expenditures by $23,588, while the FAA Form 5100-127 annual report dated December 31, 2023, for all awards underreported the total capital expenditures and construction in progress by $2,729,962. 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 7 reports out of 27 reports. Repeat Finding from Prior Year – Yes, prior year finding 2023-002 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 AIP3-46-0050-59, AIP3-46-0050-62, AIP3-46-0050-63, and AIP3-46-0050-64. COVID-19 Airport Improvement Program Reporting Material Weakness in Internal Control over Compliance; Material Noncompliance 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, 2024, for award AIP3-46-0050-64 underreported the federal share of expenditures by $23,588, while the FAA Form 5100-127 annual report dated December 31, 2023, for all awards underreported the total capital expenditures and construction in progress by $2,729,962. 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 7 reports out of 27 reports. Repeat Finding from Prior Year – Yes, prior year finding 2023-002 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 AIP3-46-0050-59, AIP3-46-0050-62, AIP3-46-0050-63, and AIP3-46-0050-64. COVID-19 Airport Improvement Program Reporting Material Weakness in Internal Control over Compliance; Material Noncompliance 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, 2024, for award AIP3-46-0050-64 underreported the federal share of expenditures by $23,588, while the FAA Form 5100-127 annual report dated December 31, 2023, for all awards underreported the total capital expenditures and construction in progress by $2,729,962. 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 7 reports out of 27 reports. Repeat Finding from Prior Year – Yes, prior year finding 2023-002 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.
2024-001 Procurement Policies and Procedures Federal Agency: U.S. Department of Treasury Federal Program Name: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: ISA-ARPA-ADWR-123022-01 - 2023 Pass-Through Agency: State of Arizona Governor’s Office Pass-Through Number(s): ERMT-20-002 Award Period: January 1, 2023 through January 1, 2026 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Under the U.S. Code of Federal Regulations Title 2, Part 200, Uniform Administrative 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 this requirements can be found in Title 2, Part 200, CFR Section 318(a). Condition: During our testing, we noted the District did not have adequate internal controls designed to ensure procurement procedures that conform to Uniform Guidance were followed, or designed to ensure vendors were not suspended or debarred. Questioned costs: None Context: During our testing, it was noted that the District was not following their federal procurement policy #2023-05 to ensure compliance with CFR, Subtitle A Chapter II, Part 200, Subparts D and E when entering into vendor contracts. Also noted the District was not reviewing vendors prior to entering into a contract to ensure the vendor was not on the suspended or debarred vendor list maintained by the General Services Administration. Cause: The District does not have effective internal controls in place to ensure compliance with the Uniform Guidance procurement rules and procedures. Effect: The lack of internal controls over the provisions of procurement, suspension, and debarment compliance requirements provides an opportunity for noncompliance. Repeat Finding: Repeat of prior year finding 2023-001. Recommendation: We recommend the District design controls to ensure an adequate review process is in place to review potential contractors to determine compliance with the Uniform Guidance procurement rules and procedures. Views of responsible officials and planned corrective actions: Management concurs with the finding, and as reported in the corrective action plan, District policies will be updated and approved to conform to federal guidance.
Finding No. 2024-001 Significant Deficiency: Procurement and Suspension and Debarment - Compliance and Control Finding ALN 21.027 - Coronavirus State and Local Fiscal Recovery Funds Federal Agency: US Department of the Treasury Pass-Through Entity: Johnson County, Kansas Criteria Or Specific Requirement: 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. The regulations in 2 CFR 200.327 also require certain contract language to be included in all federal contracts as identified in Appendix II to 2 CFR part 200. Condition: Audit procedures revealed that both contracts tested did not include a suspension and debarment clause representing that the vendor is not suspended or debarred, or that the vendor was evaluated for suspension or debarment prior to allocating federal funds to the contract. Additionally, the contracts did not include all contract provisions as required by 2 CFR 200.327. Cause: The vendor did not include a suspension and debarment clause representing that the vendor is not suspended and debarred, and the District did not evaluate the vendor for suspension and debarment prior to allocating federal funds to the contract. The District utilized pre-existing on-call construction services and architectural services contracts that were competitively bid by Johnson County, Kansas for non-federal purposes and utilized these contracts for federal purposes without requiring the vendor to execute contract amendments to incorporate the requirements of 2 CFR 200.327. Effect: Suspension and debarment provisions were not met for both contracts tested; however, suspension and debarment checks were performed subsequent to contract performance indicating the vendors were not suspended or debarred. The contract provisions that were excluded as required by 2 CFR 200.327, could have resulted in the vendor or the District violating federal laws and regulations identified in the required contract provisions of 2 CFR 200.327. Questioned Costs: Not applicable. Context: Out of two contracts tested, both contracts tested did not include a suspension and debarment clause representing that the vendor is not suspended or debarred and that the vendor was not evaluated for suspension and debarment prior to allocating federal funds to the contract. Both contracts also did not include the contract provisions required by 2 CFR 200.327. Identification As A Repeat Finding: This is a not a repeat finding. Recommendation: We recommend that management include a suspension and debarment clause in all contracts which may get allocated to federal funding prior to allocating federal funds to the contract or perform alternative procedures to ensure the vendor is not suspended or debarred. We recommend that management execute contract amendments for the federally funded project to ensure that the contract provisions of 2 CFR 200.327 are incorporated into the existing vendor contracts. Views Of Responsible Officials (Unaudited): Management has since performed the suspension and debarment check for each vendor for which it used the on-call services contracts available. Additionally, management will include an addendum in future contracts to ensure vendor compliance with the federal contract regulations. Anticipated Completion Date: May 2025 Contact Person: Noelle Lewis, CFO
Finding No. 2024-001 Significant Deficiency: Procurement and Suspension and Debarment - Compliance and Control Finding ALN 21.027 - Coronavirus State and Local Fiscal Recovery Funds Federal Agency: US Department of the Treasury Pass-Through Entity: Johnson County, Kansas Criteria Or Specific Requirement: 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. The regulations in 2 CFR 200.327 also require certain contract language to be included in all federal contracts as identified in Appendix II to 2 CFR part 200. Condition: Audit procedures revealed that both contracts tested did not include a suspension and debarment clause representing that the vendor is not suspended or debarred, or that the vendor was evaluated for suspension or debarment prior to allocating federal funds to the contract. Additionally, the contracts did not include all contract provisions as required by 2 CFR 200.327. Cause: The vendor did not include a suspension and debarment clause representing that the vendor is not suspended and debarred, and the District did not evaluate the vendor for suspension and debarment prior to allocating federal funds to the contract. The District utilized pre-existing on-call construction services and architectural services contracts that were competitively bid by Johnson County, Kansas for non-federal purposes and utilized these contracts for federal purposes without requiring the vendor to execute contract amendments to incorporate the requirements of 2 CFR 200.327. Effect: Suspension and debarment provisions were not met for both contracts tested; however, suspension and debarment checks were performed subsequent to contract performance indicating the vendors were not suspended or debarred. The contract provisions that were excluded as required by 2 CFR 200.327, could have resulted in the vendor or the District violating federal laws and regulations identified in the required contract provisions of 2 CFR 200.327. Questioned Costs: Not applicable. Context: Out of two contracts tested, both contracts tested did not include a suspension and debarment clause representing that the vendor is not suspended or debarred and that the vendor was not evaluated for suspension and debarment prior to allocating federal funds to the contract. Both contracts also did not include the contract provisions required by 2 CFR 200.327. Identification As A Repeat Finding: This is a not a repeat finding. Recommendation: We recommend that management include a suspension and debarment clause in all contracts which may get allocated to federal funding prior to allocating federal funds to the contract or perform alternative procedures to ensure the vendor is not suspended or debarred. We recommend that management execute contract amendments for the federally funded project to ensure that the contract provisions of 2 CFR 200.327 are incorporated into the existing vendor contracts. Views Of Responsible Officials (Unaudited): Management has since performed the suspension and debarment check for each vendor for which it used the on-call services contracts available. Additionally, management will include an addendum in future contracts to ensure vendor compliance with the federal contract regulations. Anticipated Completion Date: May 2025 Contact Person: Noelle Lewis, CFO
Finding No. 2024-001 Significant Deficiency: Procurement and Suspension and Debarment - Compliance and Control Finding ALN 21.027 - Coronavirus State and Local Fiscal Recovery Funds Federal Agency: US Department of the Treasury Pass-Through Entity: Johnson County, Kansas Criteria Or Specific Requirement: 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. The regulations in 2 CFR 200.327 also require certain contract language to be included in all federal contracts as identified in Appendix II to 2 CFR part 200. Condition: Audit procedures revealed that both contracts tested did not include a suspension and debarment clause representing that the vendor is not suspended or debarred, or that the vendor was evaluated for suspension or debarment prior to allocating federal funds to the contract. Additionally, the contracts did not include all contract provisions as required by 2 CFR 200.327. Cause: The vendor did not include a suspension and debarment clause representing that the vendor is not suspended and debarred, and the District did not evaluate the vendor for suspension and debarment prior to allocating federal funds to the contract. The District utilized pre-existing on-call construction services and architectural services contracts that were competitively bid by Johnson County, Kansas for non-federal purposes and utilized these contracts for federal purposes without requiring the vendor to execute contract amendments to incorporate the requirements of 2 CFR 200.327. Effect: Suspension and debarment provisions were not met for both contracts tested; however, suspension and debarment checks were performed subsequent to contract performance indicating the vendors were not suspended or debarred. The contract provisions that were excluded as required by 2 CFR 200.327, could have resulted in the vendor or the District violating federal laws and regulations identified in the required contract provisions of 2 CFR 200.327. Questioned Costs: Not applicable. Context: Out of two contracts tested, both contracts tested did not include a suspension and debarment clause representing that the vendor is not suspended or debarred and that the vendor was not evaluated for suspension and debarment prior to allocating federal funds to the contract. Both contracts also did not include the contract provisions required by 2 CFR 200.327. Identification As A Repeat Finding: This is a not a repeat finding. Recommendation: We recommend that management include a suspension and debarment clause in all contracts which may get allocated to federal funding prior to allocating federal funds to the contract or perform alternative procedures to ensure the vendor is not suspended or debarred. We recommend that management execute contract amendments for the federally funded project to ensure that the contract provisions of 2 CFR 200.327 are incorporated into the existing vendor contracts. Views Of Responsible Officials (Unaudited): Management has since performed the suspension and debarment check for each vendor for which it used the on-call services contracts available. Additionally, management will include an addendum in future contracts to ensure vendor compliance with the federal contract regulations. Anticipated Completion Date: May 2025 Contact Person: Noelle Lewis, CFO
Finding 2024-001 Procurement Information on the Federal Programs: 93.421 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 318 “General Procurement Standards” states that the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards. Furthermore, paragraph 319 “Competition” states that all procurement transactions must be conducted in a manner providing full and open competition consistent with these standards. Condition: We noted that BCHC does not have a written procurement policy in accordance with 2 CFR 200. We also noted that although certain vendors were included in award proposals by BCHC, full and open competition was not documented for certain purchases using Federal funds. Cause: BCHC does not have a procurement policy in accordance with 2 CFR 200 and is therefore not following the procedures required within 2 CFR 200. Effect or Potential Effect: BCHC could incur disallowed costs for not properly procuring goods and services. Questioned Costs: $200,000 Context: BCHC is at risk of entering into contracts for goods or services under Federal awards that were not adequately procured based on the regulations in the Uniform Guidance and the awarding agency or pass-through entity could disallow the costs paid for the goods or services. Identification as a Repeat Finding, if Applicable: Not applicable Recommendation: We recommend that BCHC develop and implement a formal procurement policy that complies with the Uniform Guidance (2 CFR 200.317–200.327), specifically addressing requirements for full and open competition, documentation of procurement procedures, and selection criteria for vendors. The policy should establish thresholds for the different procurement methods (e.g., micro-purchases, small purchases, sealed bids, competitive proposals, and noncompetitive proposals) and clearly outline the circumstances under which non-competitive procurement is permissible. These exceptions include sole source availability, public exigency or emergency, explicit authorization by the Federal awarding agency or pass-through entity, or inadequate competition despite solicitation efforts should be defined in accordance with 2 CFR § 200.320(c). Additionally, the policy should require that all purchases using Federal funds are supported by appropriate documentation of the procurement process and justification for the selected method.
Finding 2024-001 Procurement Information on the Federal Programs: 93.421 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 318 “General Procurement Standards” states that the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards. Furthermore, paragraph 319 “Competition” states that all procurement transactions must be conducted in a manner providing full and open competition consistent with these standards. Condition: We noted that BCHC does not have a written procurement policy in accordance with 2 CFR 200. We also noted that although certain vendors were included in award proposals by BCHC, full and open competition was not documented for certain purchases using Federal funds. Cause: BCHC does not have a procurement policy in accordance with 2 CFR 200 and is therefore not following the procedures required within 2 CFR 200. Effect or Potential Effect: BCHC could incur disallowed costs for not properly procuring goods and services. Questioned Costs: $200,000 Context: BCHC is at risk of entering into contracts for goods or services under Federal awards that were not adequately procured based on the regulations in the Uniform Guidance and the awarding agency or pass-through entity could disallow the costs paid for the goods or services. Identification as a Repeat Finding, if Applicable: Not applicable Recommendation: We recommend that BCHC develop and implement a formal procurement policy that complies with the Uniform Guidance (2 CFR 200.317–200.327), specifically addressing requirements for full and open competition, documentation of procurement procedures, and selection criteria for vendors. The policy should establish thresholds for the different procurement methods (e.g., micro-purchases, small purchases, sealed bids, competitive proposals, and noncompetitive proposals) and clearly outline the circumstances under which non-competitive procurement is permissible. These exceptions include sole source availability, public exigency or emergency, explicit authorization by the Federal awarding agency or pass-through entity, or inadequate competition despite solicitation efforts should be defined in accordance with 2 CFR § 200.320(c). Additionally, the policy should require that all purchases using Federal funds are supported by appropriate documentation of the procurement process and justification for the selected method.
Finding 2024-001 Procurement Information on the Federal Programs: 93.421 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 318 “General Procurement Standards” states that the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards. Furthermore, paragraph 319 “Competition” states that all procurement transactions must be conducted in a manner providing full and open competition consistent with these standards. Condition: We noted that BCHC does not have a written procurement policy in accordance with 2 CFR 200. We also noted that although certain vendors were included in award proposals by BCHC, full and open competition was not documented for certain purchases using Federal funds. Cause: BCHC does not have a procurement policy in accordance with 2 CFR 200 and is therefore not following the procedures required within 2 CFR 200. Effect or Potential Effect: BCHC could incur disallowed costs for not properly procuring goods and services. Questioned Costs: $200,000 Context: BCHC is at risk of entering into contracts for goods or services under Federal awards that were not adequately procured based on the regulations in the Uniform Guidance and the awarding agency or pass-through entity could disallow the costs paid for the goods or services. Identification as a Repeat Finding, if Applicable: Not applicable Recommendation: We recommend that BCHC develop and implement a formal procurement policy that complies with the Uniform Guidance (2 CFR 200.317–200.327), specifically addressing requirements for full and open competition, documentation of procurement procedures, and selection criteria for vendors. The policy should establish thresholds for the different procurement methods (e.g., micro-purchases, small purchases, sealed bids, competitive proposals, and noncompetitive proposals) and clearly outline the circumstances under which non-competitive procurement is permissible. These exceptions include sole source availability, public exigency or emergency, explicit authorization by the Federal awarding agency or pass-through entity, or inadequate competition despite solicitation efforts should be defined in accordance with 2 CFR § 200.320(c). Additionally, the policy should require that all purchases using Federal funds are supported by appropriate documentation of the procurement process and justification for the selected method.
Finding 2024-001 Procurement Information on the Federal Programs: 93.421 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 318 “General Procurement Standards” states that the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards. Furthermore, paragraph 319 “Competition” states that all procurement transactions must be conducted in a manner providing full and open competition consistent with these standards. Condition: We noted that BCHC does not have a written procurement policy in accordance with 2 CFR 200. We also noted that although certain vendors were included in award proposals by BCHC, full and open competition was not documented for certain purchases using Federal funds. Cause: BCHC does not have a procurement policy in accordance with 2 CFR 200 and is therefore not following the procedures required within 2 CFR 200. Effect or Potential Effect: BCHC could incur disallowed costs for not properly procuring goods and services. Questioned Costs: $200,000 Context: BCHC is at risk of entering into contracts for goods or services under Federal awards that were not adequately procured based on the regulations in the Uniform Guidance and the awarding agency or pass-through entity could disallow the costs paid for the goods or services. Identification as a Repeat Finding, if Applicable: Not applicable Recommendation: We recommend that BCHC develop and implement a formal procurement policy that complies with the Uniform Guidance (2 CFR 200.317–200.327), specifically addressing requirements for full and open competition, documentation of procurement procedures, and selection criteria for vendors. The policy should establish thresholds for the different procurement methods (e.g., micro-purchases, small purchases, sealed bids, competitive proposals, and noncompetitive proposals) and clearly outline the circumstances under which non-competitive procurement is permissible. These exceptions include sole source availability, public exigency or emergency, explicit authorization by the Federal awarding agency or pass-through entity, or inadequate competition despite solicitation efforts should be defined in accordance with 2 CFR § 200.320(c). Additionally, the policy should require that all purchases using Federal funds are supported by appropriate documentation of the procurement process and justification for the selected method.
Finding 2024-001 Procurement Information on the Federal Programs: 93.421 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 318 “General Procurement Standards” states that the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards. Furthermore, paragraph 319 “Competition” states that all procurement transactions must be conducted in a manner providing full and open competition consistent with these standards. Condition: We noted that BCHC does not have a written procurement policy in accordance with 2 CFR 200. We also noted that although certain vendors were included in award proposals by BCHC, full and open competition was not documented for certain purchases using Federal funds. Cause: BCHC does not have a procurement policy in accordance with 2 CFR 200 and is therefore not following the procedures required within 2 CFR 200. Effect or Potential Effect: BCHC could incur disallowed costs for not properly procuring goods and services. Questioned Costs: $200,000 Context: BCHC is at risk of entering into contracts for goods or services under Federal awards that were not adequately procured based on the regulations in the Uniform Guidance and the awarding agency or pass-through entity could disallow the costs paid for the goods or services. Identification as a Repeat Finding, if Applicable: Not applicable Recommendation: We recommend that BCHC develop and implement a formal procurement policy that complies with the Uniform Guidance (2 CFR 200.317–200.327), specifically addressing requirements for full and open competition, documentation of procurement procedures, and selection criteria for vendors. The policy should establish thresholds for the different procurement methods (e.g., micro-purchases, small purchases, sealed bids, competitive proposals, and noncompetitive proposals) and clearly outline the circumstances under which non-competitive procurement is permissible. These exceptions include sole source availability, public exigency or emergency, explicit authorization by the Federal awarding agency or pass-through entity, or inadequate competition despite solicitation efforts should be defined in accordance with 2 CFR § 200.320(c). Additionally, the policy should require that all purchases using Federal funds are supported by appropriate documentation of the procurement process and justification for the selected method.
Finding 2024-001 Procurement Information on the Federal Programs: 93.421 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 318 “General Procurement Standards” states that the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards. Furthermore, paragraph 319 “Competition” states that all procurement transactions must be conducted in a manner providing full and open competition consistent with these standards. Condition: We noted that BCHC does not have a written procurement policy in accordance with 2 CFR 200. We also noted that although certain vendors were included in award proposals by BCHC, full and open competition was not documented for certain purchases using Federal funds. Cause: BCHC does not have a procurement policy in accordance with 2 CFR 200 and is therefore not following the procedures required within 2 CFR 200. Effect or Potential Effect: BCHC could incur disallowed costs for not properly procuring goods and services. Questioned Costs: $200,000 Context: BCHC is at risk of entering into contracts for goods or services under Federal awards that were not adequately procured based on the regulations in the Uniform Guidance and the awarding agency or pass-through entity could disallow the costs paid for the goods or services. Identification as a Repeat Finding, if Applicable: Not applicable Recommendation: We recommend that BCHC develop and implement a formal procurement policy that complies with the Uniform Guidance (2 CFR 200.317–200.327), specifically addressing requirements for full and open competition, documentation of procurement procedures, and selection criteria for vendors. The policy should establish thresholds for the different procurement methods (e.g., micro-purchases, small purchases, sealed bids, competitive proposals, and noncompetitive proposals) and clearly outline the circumstances under which non-competitive procurement is permissible. These exceptions include sole source availability, public exigency or emergency, explicit authorization by the Federal awarding agency or pass-through entity, or inadequate competition despite solicitation efforts should be defined in accordance with 2 CFR § 200.320(c). Additionally, the policy should require that all purchases using Federal funds are supported by appropriate documentation of the procurement process and justification for the selected method.
Procurement, Suspension and Debarment Federal agency: U.S. Department of Health and Human Services Program: Continuation of the National Evaluations System for Health Technology Coordinating Center Assistance listing number: 93.103 Federal award identification number and year: • 2U01FD006292-06 2024 • 3U01FD006292-06S1 2023 Criteria: 2 CFR 200.318 states non-federal entities must have and use documented procurement procedures that conform to 2 CFR 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 Order 12549 and 12689, 2 CFR Part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. 2 CFR 200 requires adequate documentation of compliance with 2 CFR 200.214. Condition and context: The Organization established policies and procedures over suspension and debarment, including checking all vendors against the government suspension and debarment listing. The policies and procedures for suspension and debarment were being followed however the evidence of the search on sam.gov was not retained. A sample of five vendors with a total contract value of $8,528,526 was selected from a population of twelve. Cause: The Organization’s management did not retain evidence of compliance with the above criteria regarding suspension and debarment due to oversight. Effect: The Organization’s documentation was lacking evidence of tracking vendors for suspension and debarment. Questioned costs: None Repeat finding: No Recommendation: We recommend management updates its policies and procedures to ensure adequate supporting documentation of suspension and debarment verification is maintained. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
Procurement, Suspension and Debarment Federal agency: U.S. Department of Health and Human Services Program: Continuation of the National Evaluations System for Health Technology Coordinating Center Assistance listing number: 93.103 Federal award identification number and year: • 2U01FD006292-06 2024 • 3U01FD006292-06S1 2023 Criteria: 2 CFR 200.318 states non-federal entities must have and use documented procurement procedures that conform to 2 CFR 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 Order 12549 and 12689, 2 CFR Part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. 2 CFR 200 requires adequate documentation of compliance with 2 CFR 200.214. Condition and context: The Organization established policies and procedures over suspension and debarment, including checking all vendors against the government suspension and debarment listing. The policies and procedures for suspension and debarment were being followed however the evidence of the search on sam.gov was not retained. A sample of five vendors with a total contract value of $8,528,526 was selected from a population of twelve. Cause: The Organization’s management did not retain evidence of compliance with the above criteria regarding suspension and debarment due to oversight. Effect: The Organization’s documentation was lacking evidence of tracking vendors for suspension and debarment. Questioned costs: None Repeat finding: No Recommendation: We recommend management updates its policies and procedures to ensure adequate supporting documentation of suspension and debarment verification is maintained. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
Compliance Requirement: Procurement, Suspension, and Debarment Criteria: Procurement In accordance with 2 CFR Part 200 for Procurement, small purchase procedures are used for purchases that exceed the micro-purchase amount but do not exceed the simplified acquisition threshold ($250,000). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. Micro-purchases may be awarded without soliciting competitive quotations if the non-federal entity considers the price reasonable and maintains documents to support its conclusion. Further, in accordance with the Laboratory’s procurement policy, documentation is required, using the Laboratory’s vendor justification/price verification form, for purchases to support the price checking and vendor selection for the items being charged directly to a federal award. Condition: 30 procurement transactions were selected from all procurement transactions over $10,000 under federal awards. Of the 30 items selected, we noted 1 item did not follow the requirement to obtain and maintain documentation in accordance with the Laboratory’s policy over soliciting competitive quotations for procurements over $10,000. Possible Asserted Cause and Effect: The Laboratory did not comply with their procurement policy or the 2 CFR Part 200, Appendix XI. The review controls in place to identify such required documentation was not executed as designed and as a result an invoice was charged to a federal award without the requisite documentation. However, we note the Laboratory did identify the error in documentation after the fact, during a monitoring review conducted by internal audit in 2025. Identification of Questioned Costs: $33,940 Whether Sampling was Statistically Valid: The sample was not intended to be, and was not, a statistically valid sample. Identification of Whether the Audit Finding was a Repeat Findings: This is not a repeat finding. Recommendation: We recommend that the Laboratory review its current policies and procedures to ensure procurement transactions are reviewed and substantiated with formal documentation prior to approval of the transaction. Views of Responsible Officials: Management agrees with finding 2024-001. In fiscal year 2024 the Laboratory charged a federal sponsored award for a procurement item, which exceeded the Laboratory’s micro-purchase threshold, without maintaining the proper documentation as required by Laboratory procurement policy. In fiscal 2025 this item was identified by the Laboratory’s Internal Audit and Sponsored Programs Accounting Offices as part of their routine review program. The transaction cost was removed by Laboratory Management from the federal award within 90 days of the item’s discovery; however, because the item was identified and adjusted in 2025, the fiscal year 2024 Schedule of Expenditures of Federal Awards (SEFA) was overstated. To ensure compliance with the Laboratory’s procurement policies, the Laboratory has implemented corrective actions as detailed below, in line with the recommendation: Corrective Actions Previously Implemented: 1. The Laboratory’s Internal Audit and Sponsored Program Accounting Offices will continue to conduct regular reviews of procurement items to ensure that documentation complies with Laboratory Procurement Methods Policy and Procedure, to ensure compliance with Laboratory policy, designed to ensure compliance with 2 CFR Sections 200.317 through 200.327. The audit focus will continue to be on 100% of sponsored award procurement transactions in the small purchase threshold. 2. The Laboratory Information Technology department, in collaboration with the Laboratory’s Procurement Office Director, enhanced certain system-generated reporting to allow for easier identification by Procurement Office personnel of charges to sponsored awards. Corrective Actions to be Implemented: 1. The Laboratory’s Sponsored Programs Accounting Office, in collaboration with its Procurement Office, will provide an annual re-education to Laboratory administrative research personnel concerning Laboratory Procurement Policies, designed to ensure compliance with 2 CFR Sections 200.317 through 200.327. 2. The Sponsored Programs Accounting Office will provide re-training for administrative staff to reinforce the Laboratory Procurement Method Policies and Procedure. 3. The Director of Procurement will streamline access and visibility of the Procurement Methods Policy and Procedure on the Laboratory’s internal website. Management intends for the re-education of administrative research personnel and re-training for administrative staff to be concluded by the end of the third quarter and/or early fourth quarter of 2025. Management intends to provide for streamlined access and visibility of Laboratory Procurement Methods Policy and Procedure on its internal website prior to the end of 2025.
2024-001: Internal Controls over Compliance for Procurement Suspension & Debarment U.S. DEPARTMENT OF TREASURY COVID-19 Coronavirus State and Local Fiscal Recovery Funds – ALN 21.027 Criteria: Per 2 CFR sections 200.318 through 200.327, [entities] 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. Further, 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. Condition: The City did not follow its Grant Standard Operating procedures for validating that a contractor was not suspended or debarred or otherwise excluded from participating in the transaction. Cause: The contract agreement was finalized without validation that all proper procurement procedures had been followed. Effect: By not following the City’s procedures in place, it puts the City at risk of doing business with companies who are suspended, debarred or otherwise excluded from doing business with the federal government. Questioned Costs: $0 Context: The auditor tested one procurement transaction entered into during 2024 using COVID- 19 Coronavirus State and Local Fiscal Recovery Funds. The City’s Grant Standard Operating procedures over suspension and debarment were not followed for this one procurement. Identification of Repeat Finding: Not a repeat finding. Recommendation: We recommend the City perform a separate individual check of contract files to ensure the City’s Grant Standard Operating procedures are followed and documented prior to entering into a contract agreement with covered contractors. Views of Responsible Officials and Planned Corrective Actions: Management agrees with this finding and is in the process of developing internal controls to ensure timely and appropriate actions are taken on the deficiency noted. Additional details can be found in the City of Bloomington’s Corrective Action Plan.
2024-003: Lack of Procurement Policy – Significant Deficiency AL 66.468 Base Capitalization Grants for Drinking Water State Revolving Funds 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 The City does not have a written procurement policy in place. Cause The City has not written and approved a procurement policy. Effect Non-compliance with Procurement Suspension & Debarment compliance requirements. Questioned Costs $0 Recommendation We recommend for the City 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 A procurement policy will be developed and approved by the City Council. Repeat Finding This is a new finding.
FINDING 2024-003 Subject: Water and Waste Disposal Systems for Rural Communities - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal Systems for Rural Communities Assistance Listings Number: 10.760 Federal Award Number and Year (or Other Identifying Number): FY2024 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 17 TOWN OF PAOLI SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-002. Condition and Context As part of sound management of the federal award, the Town was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The Town had not properly designed or implemented such a system, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The Town entered into contracts with three vendors in a prior year to provide goods and services for the duration of the Town's wastewater plant construction project. The total contract expenditures for all three vendors fell under the simplified acquisition threshold. The Town paid all three vendors with grant funds during the audit period, and all three were selected for testing accordingly. For two of the vendors, the Town properly procured the goods and services through the bidding process. For the third vendor, with disbursements totaling $106,269 in 2024, the Town was unable to provide any documentation that the procurement method used was appropriate or that the procurement provided full and open competition or rationale to support the determination to limit competition. Additionally, the history of the procurement, including rationale for the method of procurement, selection of the vendor, and the basis for the price, was not adequately documented. The lack of internal controls and noncompliance were isolated to one vendor throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." INDIANA STATE BOARD OF ACCOUNTS 18 TOWN OF PAOLI SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320 states in part: ". . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance awards exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. INDIANA STATE BOARD OF ACCOUNTS 19 TOWN OF PAOLI SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and (iv) The non-Federal entity may use competitive proposal procedures for qualifications based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate." Cause The vendor in question was an engineering firm that the Town has utilized for various projects over the course of many years. For continuity purposes, the Town chose to limit competition when awarding the contract but was unaware of the requirements necessary to do so. Since this was a multi-year award for which the Town entered into the contract in a prior year, the Town was unable to correct the noncompliance for the current audit period. INDIANA STATE BOARD OF ACCOUNTS 20 TOWN OF PAOLI SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without a proper system of internal controls in place that operated effectively, noncompliance remained undetected. As a result, proper procurement procedures were not adhered to for all vendors. Without following the required methods for procurement, the Town could be overpaying for services. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funds to the Town. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Town's management establish a proper system of internal controls to ensure expenditures made from federal awards use the appropriate procurement method and retain the documentation to support the procurement methods used in order to ensure compliance with the terms and conditions of the federal award. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Significant Deficiency/Noncompliance 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 nineteen 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. Officials Response: See Corrective Action Plan
Finding – Procurement, Suspension and Debarment; Special Education – Special Olympics Education Programs; Assistance Listing Number 84.380, 2023-2024 and 2024-2025 Award Years, U.S. Department of Education, passed through Special Olympics, Inc. Criteria or Specific Requirement The recipient must maintain and use documented (written) procedures for procurement transactions under a Federal Award or subaward, including for acquisition of property or services. These documented procedures must be consistent with applicable State, and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in the Uniform Guidance (2 CFR 200.317-200.327) Condition and Context The Organization has a written (documented) purchasing policy in place, but it does not include all required elements for a procurement policy in accordance with Federal statutes. Cause The Organization has not created and developed a written procurement policy in accordance with Federal procurement statutes.Effect The purchase of goods, property or services may not be in accordance with Federal procurement requirements. Identification as a Repeat Finding Not a repeat finding. Questioned Costs None. Recommendation We recommend that management develop a written procurement procedures policy in accordance with the requirements at 2 CFR 200.317-200.327 and ensure that procurement procedures follow this policy when procurement transactions are conducted using federal awards. Views of Responsible Officials and Planned Corrective Actions See Corrective Action Plan.
Finding 2024-003 – Material Weakness Award No.: Assistance List No. 15.555 and No. 15.074 Federal Grantor: U.S. Department of the Interior, Bureau of Reclamation. AL No. 15.074 Passed-through the Del Puerto Water District. Compliance Requirement: Procurement, Suspension and Debarment. Condition: The following conditions were noted during the single audit: The District was not able to provide evidence that procurements for the Mendota Pool Fish Screen and Control Structure Project and Poso Canal Bridge Replacement Project design contractors under AL 15.555 met the requirements for adequate price competition and was unable to provide documentation confirming the sole-source solicitations met the requirements of Uniform Guidance. Specifically the District was unable to provide evidence it received enough statements of qualification to have adequate price competition or complied with one or more provisions of Section 200.210(c) that allows a sole source agreement to occur. It would appear the District would need evidence that the grantor approved the sole source procurement, but was not able to provide documentation of approvals of sole source procurements by the grantors. The District also was unable to provide documentation of the advertisement of the solicitation of requests for qualifications for the Fish Screen and Control Structure Project. The District was not able to provide adequate documentation that the Mendota Pool Fish Screen and Control Structure Project contract under AL 15.555 and Orestimba Creek Recharge and Recovery Expansion Project contract under AL 15.074 complied with Section 200.327 and appendix II to this part requiring federal contract provisions to be included in the approved contract. This resulted in the District not having evidence that the contractor certified it was in compliance with all required federal provisions. Criteria: Uniform Guidance states the following: Section 200.318(i) states that “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, contractors selection or rejection, and the basis for the contract price.” Section 300.320(c) states “There are specific circumstances in which the recipient or subrecipient may use a noncompetitive procurement method. The noncompetitive procurement method may only be used if one of the following circumstances applies: (1) The aggregate amount of the procurement transaction does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The procurement transaction can only be fulfilled by a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from providing public notice of a competitive solicitation; (4) The recipient or subrecipient requests in writing to use a noncompetitive procurement method, and the Federal agency or pass-through entity provides written approval; or (5) After soliciting several sources, competition is determined inadequate. The provisions of the Brooks Act (49 United State Code, Section 1104) require local agencies to award federally funded engineering and design related contracts, otherwise know as A&E contracts, on the basis of fair and open competitive negotiations, demonstrated competence, and professional qualifications (23 Code of Federal Regulations (CFR), Part 172) at a fair and reasonable price (48 CFR 31.201-3). Both federal regulation and California state law (Government Code 4525-4529 et a) require selection of A&E consultant services on the basis of demonstrated competence and professional qualifications. Procurement by noncompetitive proposals may be used only when the award of a contract is infeasible under small purchase procedures, sealed bids or competitive proposals, as cited above. Section 200.327 states “The non-federal entity’s contracts must contain the applicable provisions described in appendix II to this part.” Appendix II contains requirements to include in federally funded contracts termination for cause and convenience provisions, Equal Employment Opportunity provisions, Davis-Bacon Act provisions, Contract Work Hours and Safety Standards Act provisions, Clean Air Act provisions, debarment and suspension provisions, Byrd Anti-Lobbying Amendment provisions, and other provisions, as applicable. Cause: The current staff was not able to find procurement documentation prepared before they were hired. Effect: The District was unable to provide evidence that it was in compliance with the requirement to maintain documentation indicating the procurement was in compliance with Uniform Guidance Sections 200.318 to 200.327 and appendix II to this part. Context: The original procurement for the consulting firm for the Mendota Pool Fish Screens and Control Structure project was performed in September 2018 and awarded in late October 2018. This procurement precedes the current staff. Staff indicated the grantor approved the Mendota Pool Fish Screen and Control Structure Project sole source procurement and the Board Resolution approving the agreement indicated the grantor approved the sole source procurement, but staff was not able to provide proof of written approval by the grantor. Recommendation: We recommend management implement additional controls over the procurement process that ensures each procurement complies with Uniform Guidance Section 200.318 to 200.326, including training of staff working on procurements of the documentation retention and other requirements under the Uniform Guidance. We further recommend the District establish a procurement folder on its server with subfolder for each individual procurement where documentation of each procurement is maintained, including advertising of the procurement, requests for proposals/qualifications with language that satisfies Uniform Guidance requirements, proposals received, executed contracts, certifications of compliance with federal contracting provisions by the contractor if not part of the proposal or executed contracts, documented quantitative and qualitative analysis indicating why the recommended bid was selected for approval, management report to board recommending which bid should be approved, board resolution approving the winning bid and for contracts under $250,000 a memo or form documenting bids received and reason for selecting the bid, including reasons for not selecting the lowest bid if applicable. If a sole source procurement method is used, documentation showing the sole source procurement is allowable under criteria listed in Section 300.320(c) should be retained. Views of Responsible Officials and Planned Corrective Actions: Management’s response and planned corrective action is included in the Corrective Action Plan included at the end of the report.
Finding 2024-003 – Material Weakness Award No.: Assistance List No. 15.555 and No. 15.074 Federal Grantor: U.S. Department of the Interior, Bureau of Reclamation. AL No. 15.074 Passed-through the Del Puerto Water District. Compliance Requirement: Procurement, Suspension and Debarment. Condition: The following conditions were noted during the single audit: The District was not able to provide evidence that procurements for the Mendota Pool Fish Screen and Control Structure Project and Poso Canal Bridge Replacement Project design contractors under AL 15.555 met the requirements for adequate price competition and was unable to provide documentation confirming the sole-source solicitations met the requirements of Uniform Guidance. Specifically the District was unable to provide evidence it received enough statements of qualification to have adequate price competition or complied with one or more provisions of Section 200.210(c) that allows a sole source agreement to occur. It would appear the District would need evidence that the grantor approved the sole source procurement, but was not able to provide documentation of approvals of sole source procurements by the grantors. The District also was unable to provide documentation of the advertisement of the solicitation of requests for qualifications for the Fish Screen and Control Structure Project. The District was not able to provide adequate documentation that the Mendota Pool Fish Screen and Control Structure Project contract under AL 15.555 and Orestimba Creek Recharge and Recovery Expansion Project contract under AL 15.074 complied with Section 200.327 and appendix II to this part requiring federal contract provisions to be included in the approved contract. This resulted in the District not having evidence that the contractor certified it was in compliance with all required federal provisions. Criteria: Uniform Guidance states the following: Section 200.318(i) states that “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, contractors selection or rejection, and the basis for the contract price.” Section 300.320(c) states “There are specific circumstances in which the recipient or subrecipient may use a noncompetitive procurement method. The noncompetitive procurement method may only be used if one of the following circumstances applies: (1) The aggregate amount of the procurement transaction does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The procurement transaction can only be fulfilled by a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from providing public notice of a competitive solicitation; (4) The recipient or subrecipient requests in writing to use a noncompetitive procurement method, and the Federal agency or pass-through entity provides written approval; or (5) After soliciting several sources, competition is determined inadequate. The provisions of the Brooks Act (49 United State Code, Section 1104) require local agencies to award federally funded engineering and design related contracts, otherwise know as A&E contracts, on the basis of fair and open competitive negotiations, demonstrated competence, and professional qualifications (23 Code of Federal Regulations (CFR), Part 172) at a fair and reasonable price (48 CFR 31.201-3). Both federal regulation and California state law (Government Code 4525-4529 et a) require selection of A&E consultant services on the basis of demonstrated competence and professional qualifications. Procurement by noncompetitive proposals may be used only when the award of a contract is infeasible under small purchase procedures, sealed bids or competitive proposals, as cited above. Section 200.327 states “The non-federal entity’s contracts must contain the applicable provisions described in appendix II to this part.” Appendix II contains requirements to include in federally funded contracts termination for cause and convenience provisions, Equal Employment Opportunity provisions, Davis-Bacon Act provisions, Contract Work Hours and Safety Standards Act provisions, Clean Air Act provisions, debarment and suspension provisions, Byrd Anti-Lobbying Amendment provisions, and other provisions, as applicable. Cause: The current staff was not able to find procurement documentation prepared before they were hired. Effect: The District was unable to provide evidence that it was in compliance with the requirement to maintain documentation indicating the procurement was in compliance with Uniform Guidance Sections 200.318 to 200.327 and appendix II to this part. Context: The original procurement for the consulting firm for the Mendota Pool Fish Screens and Control Structure project was performed in September 2018 and awarded in late October 2018. This procurement precedes the current staff. Staff indicated the grantor approved the Mendota Pool Fish Screen and Control Structure Project sole source procurement and the Board Resolution approving the agreement indicated the grantor approved the sole source procurement, but staff was not able to provide proof of written approval by the grantor. Recommendation: We recommend management implement additional controls over the procurement process that ensures each procurement complies with Uniform Guidance Section 200.318 to 200.326, including training of staff working on procurements of the documentation retention and other requirements under the Uniform Guidance. We further recommend the District establish a procurement folder on its server with subfolder for each individual procurement where documentation of each procurement is maintained, including advertising of the procurement, requests for proposals/qualifications with language that satisfies Uniform Guidance requirements, proposals received, executed contracts, certifications of compliance with federal contracting provisions by the contractor if not part of the proposal or executed contracts, documented quantitative and qualitative analysis indicating why the recommended bid was selected for approval, management report to board recommending which bid should be approved, board resolution approving the winning bid and for contracts under $250,000 a memo or form documenting bids received and reason for selecting the bid, including reasons for not selecting the lowest bid if applicable. If a sole source procurement method is used, documentation showing the sole source procurement is allowable under criteria listed in Section 300.320(c) should be retained. Views of Responsible Officials and Planned Corrective Actions: Management’s response and planned corrective action is included in the Corrective Action Plan included at the end of the report.
Finding 2024-003 – Material Weakness Award No.: Assistance List No. 15.555 and No. 15.074 Federal Grantor: U.S. Department of the Interior, Bureau of Reclamation. AL No. 15.074 Passed-through the Del Puerto Water District. Compliance Requirement: Procurement, Suspension and Debarment. Condition: The following conditions were noted during the single audit: The District was not able to provide evidence that procurements for the Mendota Pool Fish Screen and Control Structure Project and Poso Canal Bridge Replacement Project design contractors under AL 15.555 met the requirements for adequate price competition and was unable to provide documentation confirming the sole-source solicitations met the requirements of Uniform Guidance. Specifically the District was unable to provide evidence it received enough statements of qualification to have adequate price competition or complied with one or more provisions of Section 200.210(c) that allows a sole source agreement to occur. It would appear the District would need evidence that the grantor approved the sole source procurement, but was not able to provide documentation of approvals of sole source procurements by the grantors. The District also was unable to provide documentation of the advertisement of the solicitation of requests for qualifications for the Fish Screen and Control Structure Project. The District was not able to provide adequate documentation that the Mendota Pool Fish Screen and Control Structure Project contract under AL 15.555 and Orestimba Creek Recharge and Recovery Expansion Project contract under AL 15.074 complied with Section 200.327 and appendix II to this part requiring federal contract provisions to be included in the approved contract. This resulted in the District not having evidence that the contractor certified it was in compliance with all required federal provisions. Criteria: Uniform Guidance states the following: Section 200.318(i) states that “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, contractors selection or rejection, and the basis for the contract price.” Section 300.320(c) states “There are specific circumstances in which the recipient or subrecipient may use a noncompetitive procurement method. The noncompetitive procurement method may only be used if one of the following circumstances applies: (1) The aggregate amount of the procurement transaction does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The procurement transaction can only be fulfilled by a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from providing public notice of a competitive solicitation; (4) The recipient or subrecipient requests in writing to use a noncompetitive procurement method, and the Federal agency or pass-through entity provides written approval; or (5) After soliciting several sources, competition is determined inadequate. The provisions of the Brooks Act (49 United State Code, Section 1104) require local agencies to award federally funded engineering and design related contracts, otherwise know as A&E contracts, on the basis of fair and open competitive negotiations, demonstrated competence, and professional qualifications (23 Code of Federal Regulations (CFR), Part 172) at a fair and reasonable price (48 CFR 31.201-3). Both federal regulation and California state law (Government Code 4525-4529 et a) require selection of A&E consultant services on the basis of demonstrated competence and professional qualifications. Procurement by noncompetitive proposals may be used only when the award of a contract is infeasible under small purchase procedures, sealed bids or competitive proposals, as cited above. Section 200.327 states “The non-federal entity’s contracts must contain the applicable provisions described in appendix II to this part.” Appendix II contains requirements to include in federally funded contracts termination for cause and convenience provisions, Equal Employment Opportunity provisions, Davis-Bacon Act provisions, Contract Work Hours and Safety Standards Act provisions, Clean Air Act provisions, debarment and suspension provisions, Byrd Anti-Lobbying Amendment provisions, and other provisions, as applicable. Cause: The current staff was not able to find procurement documentation prepared before they were hired. Effect: The District was unable to provide evidence that it was in compliance with the requirement to maintain documentation indicating the procurement was in compliance with Uniform Guidance Sections 200.318 to 200.327 and appendix II to this part. Context: The original procurement for the consulting firm for the Mendota Pool Fish Screens and Control Structure project was performed in September 2018 and awarded in late October 2018. This procurement precedes the current staff. Staff indicated the grantor approved the Mendota Pool Fish Screen and Control Structure Project sole source procurement and the Board Resolution approving the agreement indicated the grantor approved the sole source procurement, but staff was not able to provide proof of written approval by the grantor. Recommendation: We recommend management implement additional controls over the procurement process that ensures each procurement complies with Uniform Guidance Section 200.318 to 200.326, including training of staff working on procurements of the documentation retention and other requirements under the Uniform Guidance. We further recommend the District establish a procurement folder on its server with subfolder for each individual procurement where documentation of each procurement is maintained, including advertising of the procurement, requests for proposals/qualifications with language that satisfies Uniform Guidance requirements, proposals received, executed contracts, certifications of compliance with federal contracting provisions by the contractor if not part of the proposal or executed contracts, documented quantitative and qualitative analysis indicating why the recommended bid was selected for approval, management report to board recommending which bid should be approved, board resolution approving the winning bid and for contracts under $250,000 a memo or form documenting bids received and reason for selecting the bid, including reasons for not selecting the lowest bid if applicable. If a sole source procurement method is used, documentation showing the sole source procurement is allowable under criteria listed in Section 300.320(c) should be retained. Views of Responsible Officials and Planned Corrective Actions: Management’s response and planned corrective action is included in the Corrective Action Plan included at the end of the report.
SECTION III - FINDINGS AND QUESTIONED COSTS FOR FEDERAL AWARDS Finding 2024-001: Procurement and Suspension and Debarment (Significant Deficiency) Federal Agency: U.S. Department of the Treasury Assistance Listing Number and Title: 21.027 - Coronavirus State and Local Fiscal Recovery Funds Federal award year: 2024 Criteria: Per 2 CFR §200.318, General procurement Standards, a recipient or subrecipient of Federal awards must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations and the standards identified in sections 200.317 through 200.327, as appropriate. The recipient or subrecipient must maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price. In addition, non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. 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 is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by: (1) checking SAM.gov Exclusions, (2) collecting a certification from that entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR §180.300). Condition/Context: From a sample of five (5) procurement transactions, there was no evidence that management performed simplified acquisition procedures relating to obtaining price and rate quotations from an adequate number of qualified sources for three (3) of the transactions tested. Further, for these three (3) transactions, there was no evidence that management completed procedures to verify whether the vendors were suspended or debarred. Cause: The USGA has significant prior history and experience in conducting competitive procurement processes for projects relating to improvements made to golf courses. Based on the USGA’s familiarity with vendors that perform such services, including knowledge of vendor pricing, qualifications, and other relevant factors, simplified acquisition procedures and suspension and debarment verification were not consistently performed. Effect: Procurement transactions could be conducted in a manner that does not provide full and open competition. Further, covered transactions could be entered into with an entity that is suspended or debarred. Questioned Costs: None identified Identified as a Repeat Finding: No Recommendations: We recommend that the USGA strengthen its policies and procedures relating to documentation of procurement decisions and suspension and debarment verifications. Vies of Responsible Officials: Refer to Corrective Action Plan.
Finding 2024-001 Procurement, Suspension, and Debarment Agency and Award: Federal Agency: U.S. Department of Housing and Urban Development Program: Economic Development Imitative, Community Project Funding, and Miscellaneous Grants Assistance Listing Number: 14.251 Federal Award Identification Number: B-23-CP-CA-0141 Criteria: 2 CFR 200.318 states non-federal entities must have and use documented procurement procedures that conform to 2 CFR 200.317 through 200.327. They must use their own documented procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and procurement requirements identified in 2 CFR Part 200. These standards require non-federal entities to maintain written procedures for procurement transactions to ensure full and open competition, proper cost analysis, and avoidance of conflicts of interest. Condition and context: ASMYCA does not have an internal procurement policy established. Without a formal procurement policy, ASYMCA lacks a consistent framework for vendor selection, contract negotiation, and cost justification. Cause: ASYMCA’s management did not retain evidence in compliance with the above criteria regarding procurement. Effect: ASYMCA’s documentation was lacking evidence of an internal procurement policy. This may lead to inconsistent procurement practices, potential favoritism, increased risk of unallowable costs, or overpayment for goods and services. Questioned costs: None Repeat finding: No Recommendation: ASYMCA develop and implement a formal procurement policy as soon as possible. Views of Responsible Officials: Management concurs with this finding and a response is included in the corrective action plan.
Department of Homeland Security, Iowa Department of Homeland Security and Emergency Management, Federal Financial Assistance Listing 97.039, DR-4457-IA-0040 Hazard Mitigation Grant Program Procurement, Suspension & Debarment Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal awards 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. 2 CFR 200.318 maintains that recipients must have and use documented procurement policies and must conform procurement standards in sections 200.317 through 200.327. Condition: The cooperative’s procurement policy had not identified the dollar thresholds of procurement within the methods of procurement. In addition, one contract selected for testing was missing one of the required contract provisions. Cause: The cooperative’s procurement policy is very thorough and identifies the methods of procurement, however, management had not identified the thresholds of procurement included within the policy. Effect: The Cooperative’s policy was missing required information Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 7 transactions out of 29 transactions were selected for testing, which accounted for $1,134,758 of $3,548,469 federal program expenditures. Repeat Finding form Prior Year: No Recommendation: We recommend the Cooperative review their procurement policy to ensure it includes the dollar thresholds for each of the procurement methods. In addition, we suggest the Cooperative review their contracts to ensure it includes all the required contract provisions. Views of Responsible Officials: Management agrees with the finding.
2024-002 Procurement Federal Agency U.S. Department of the Treasury Federal Assistance Listing Numbers 21.027 – Coronavirus State and Local Fiscal Recovery Funds Criteria [ X ] Compliance Finding [ ] Significant Deficiency [ X ] Material Weakness Entities receiving federal awards must have and follow documented procurement policies. Title 2 CFR 200.320 outlines acceptable methods of procurement and establishes applicable threshold requirements. Condition During our review of federally funded purchases, we noted several instances where procurement transactions were not conducted in accordance with these federal guidelines. For purchases falling between the micro-purchase threshold and the simplified acquisition threshold, the District did not retain documentation to demonstrate that price quotations were obtained from an adequate number of qualified sources. Additionally, for purchases exceeding the simplified acquisition threshold, the District was unable to provide documentation showing that the required number of bids were solicited. In one instance, a sole source acquisition was made without sufficient written justification, as required by 2 CFR 200.320(c), which permits noncompetitive procurement only under specific and well-documented circumstances. Furthermore, the District could not provide documentation verifying that vendors were screened against the federal System for Award Management (SAM.gov) to confirm that they were not suspended or debarred from participating in federal programs. Lastly, the District could not demonstrate that it performed conflict of interest checks to ensure that employees or officers participated in the selection, award or administration of a contract where conflicts of interest exist. This finding appears to be a systemic problem. Cause The District’s procurement policy was not compared with the federal regulations when it was developed. Management did not follow its established procurement policy and documentation was not maintained evidencing its compliance with the policy. Effect Noncompliance with federal procurement requirements increases the risk of unallowable costs, noncompetitive vendor selection, and potential questioned costs. This could result in financial penalties or the need to return federal funds. The absence of conflict of interest checks also exposes the District to the risk of biased procurement decisions and compromised integrity. Recommendation The District should update and enforce procurement policies and procedures to fully comply with 2 CFR 200.318–200.327. These procedures must include documented competitive procurement processes, appropriate documentation retention, sole source justification protocols, and mandatory screening of vendors through SAM.gov. Written standards of conduct should be maintained and enforced to prevent conflicts of interest. Additionally, all staff involved in procurement should receive comprehensive training on federal procurement requirements and internal control responsibilities. The District should also implement a monitoring process to ensure ongoing compliance with these requirements. Views of responsible officials and planned corrective actions Two new policies will be implemented; a board policy to cover board approvals for the bidding of large projects and an internal policy and procedure which spells out additional requirements, like requiring three written bids for large purchases. In addition, all members of the Board of Directors and senior leadership team will sign Conflict of Interest statements on an annual basis to confirm that they do not have any potential conflicts that could impact purchasing decisions.
2024-002 Procurement Federal Agency U.S. Department of the Treasury Federal Assistance Listing Numbers 21.027 – Coronavirus State and Local Fiscal Recovery Funds Criteria [ X ] Compliance Finding [ ] Significant Deficiency [ X ] Material Weakness Entities receiving federal awards must have and follow documented procurement policies. Title 2 CFR 200.320 outlines acceptable methods of procurement and establishes applicable threshold requirements. Condition During our review of federally funded purchases, we noted several instances where procurement transactions were not conducted in accordance with these federal guidelines. For purchases falling between the micro-purchase threshold and the simplified acquisition threshold, the District did not retain documentation to demonstrate that price quotations were obtained from an adequate number of qualified sources. Additionally, for purchases exceeding the simplified acquisition threshold, the District was unable to provide documentation showing that the required number of bids were solicited. In one instance, a sole source acquisition was made without sufficient written justification, as required by 2 CFR 200.320(c), which permits noncompetitive procurement only under specific and well-documented circumstances. Furthermore, the District could not provide documentation verifying that vendors were screened against the federal System for Award Management (SAM.gov) to confirm that they were not suspended or debarred from participating in federal programs. Lastly, the District could not demonstrate that it performed conflict of interest checks to ensure that employees or officers participated in the selection, award or administration of a contract where conflicts of interest exist. This finding appears to be a systemic problem. Cause The District’s procurement policy was not compared with the federal regulations when it was developed. Management did not follow its established procurement policy and documentation was not maintained evidencing its compliance with the policy. Effect Noncompliance with federal procurement requirements increases the risk of unallowable costs, noncompetitive vendor selection, and potential questioned costs. This could result in financial penalties or the need to return federal funds. The absence of conflict of interest checks also exposes the District to the risk of biased procurement decisions and compromised integrity. Recommendation The District should update and enforce procurement policies and procedures to fully comply with 2 CFR 200.318–200.327. These procedures must include documented competitive procurement processes, appropriate documentation retention, sole source justification protocols, and mandatory screening of vendors through SAM.gov. Written standards of conduct should be maintained and enforced to prevent conflicts of interest. Additionally, all staff involved in procurement should receive comprehensive training on federal procurement requirements and internal control responsibilities. The District should also implement a monitoring process to ensure ongoing compliance with these requirements. Views of responsible officials and planned corrective actions Two new policies will be implemented; a board policy to cover board approvals for the bidding of large projects and an internal policy and procedure which spells out additional requirements, like requiring three written bids for large purchases. In addition, all members of the Board of Directors and senior leadership team will sign Conflict of Interest statements on an annual basis to confirm that they do not have any potential conflicts that could impact purchasing decisions.
2024-002 Procurement Federal Agency U.S. Department of the Treasury Federal Assistance Listing Numbers 21.027 – Coronavirus State and Local Fiscal Recovery Funds Criteria [ X ] Compliance Finding [ ] Significant Deficiency [ X ] Material Weakness Entities receiving federal awards must have and follow documented procurement policies. Title 2 CFR 200.320 outlines acceptable methods of procurement and establishes applicable threshold requirements. Condition During our review of federally funded purchases, we noted several instances where procurement transactions were not conducted in accordance with these federal guidelines. For purchases falling between the micro-purchase threshold and the simplified acquisition threshold, the District did not retain documentation to demonstrate that price quotations were obtained from an adequate number of qualified sources. Additionally, for purchases exceeding the simplified acquisition threshold, the District was unable to provide documentation showing that the required number of bids were solicited. In one instance, a sole source acquisition was made without sufficient written justification, as required by 2 CFR 200.320(c), which permits noncompetitive procurement only under specific and well-documented circumstances. Furthermore, the District could not provide documentation verifying that vendors were screened against the federal System for Award Management (SAM.gov) to confirm that they were not suspended or debarred from participating in federal programs. Lastly, the District could not demonstrate that it performed conflict of interest checks to ensure that employees or officers participated in the selection, award or administration of a contract where conflicts of interest exist. This finding appears to be a systemic problem. Cause The District’s procurement policy was not compared with the federal regulations when it was developed. Management did not follow its established procurement policy and documentation was not maintained evidencing its compliance with the policy. Effect Noncompliance with federal procurement requirements increases the risk of unallowable costs, noncompetitive vendor selection, and potential questioned costs. This could result in financial penalties or the need to return federal funds. The absence of conflict of interest checks also exposes the District to the risk of biased procurement decisions and compromised integrity. Recommendation The District should update and enforce procurement policies and procedures to fully comply with 2 CFR 200.318–200.327. These procedures must include documented competitive procurement processes, appropriate documentation retention, sole source justification protocols, and mandatory screening of vendors through SAM.gov. Written standards of conduct should be maintained and enforced to prevent conflicts of interest. Additionally, all staff involved in procurement should receive comprehensive training on federal procurement requirements and internal control responsibilities. The District should also implement a monitoring process to ensure ongoing compliance with these requirements. Views of responsible officials and planned corrective actions Two new policies will be implemented; a board policy to cover board approvals for the bidding of large projects and an internal policy and procedure which spells out additional requirements, like requiring three written bids for large purchases. In addition, all members of the Board of Directors and senior leadership team will sign Conflict of Interest statements on an annual basis to confirm that they do not have any potential conflicts that could impact purchasing decisions.
Department of Treasury, State of Iowa Department of Management, Federal Financial Assistance Listing 21.029, 526659 Coronavirus Capital Projects Fund Procurement, Suspension & Debarment Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.318 maintains that recipients must have and use documented procurement policies and must conform procurement standards in sections 200.317 through 200.327. 2 CFR 200 Appendix II requires certain provisions be included in contracts if criteria are applicable. Additionally, 2 CFR 200.214 requires recipients to restrict the subawards and contract with certain parities that are debarred, suspended, or excluded from ineligible participation in Federal assistance programs or activities. Condition: Testing of the federal program identified the following: • The Cooperative’s formally documented procurement policy was missing one required element as it relates to the methods of procurement. • One instance where the Cooperative followed a bid process, however, the documentation was not retained to support the selection. Additionally, the contract with the vendor was missing required contract provisions in accordance with Uniform Guidance. • One instance where the Cooperative did not follow the procurement process as detailed in the procurement policy and did not have any formal documentation or contract in place with the vendor. • Two instances where the Cooperative entered into a contract with a vendor over $25,000 and there was no review performed to ensure the vendor was not suspended or debarred. Cause: Contract provisions were not evaluated compared to Uniform Guidance contract requirements. Contracts entered were not evaluated in accordance with Uniform Guidance as it relates to suspension and debarment. Effect: Ineffective controls over this are of compliance could result in a reasonable possibility the Cooperative would be noncompliant with the compliance requirements outlined above. Additionally, the cooperative may enter into a covered transaction with a vendor that is suspended or debarred. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 2 out of 4 vendors were selected for testing. Repeat Finding form Prior Year: No Recommendation: We recommend the Cooperative update their procurement policy to ensure it includes the required elements as it relates to the methods of procurement. In addition, we suggest that management implement procedures and control processes related to the review of contracts to ensure the procurement methods are being followed as it relates to covered transactions and those contracts include the required Uniform Guidance provisions. Also, management should ensure vendors are not suspended or debarred from doing business with the federal government. Views of Responsible Officials: Management agrees with the finding.
FINDING 2024-002 Subject: Water and Waste Disposal Systems for Rural Communities - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal Systems for Rural Communities Assistance Listings Number: 10.760 Federal Award Number and Year (or Other Identifying Number): BAN-2 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context As part of sound management of the federal award, the City was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The City had not properly designed or implemented such a system, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. INDIANA STATE BOARD OF ACCOUNTS 16 CITY OF HUNTINGBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds, micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Procurement - Simplified Acquisition During the audit period, the City had two vendors with purchases over the $150,000 threshold that were considered simplified acquisition procurements. Both vendors were tested. For one vendor, the City could not provide the procurement history or the rationale for the method of procurement, the selection of vendor, or the basis for price. The total amount spent with this vendor was $2,391,895. Procurement - Policy The City provided its purchasing policy for review, but it did not include the applicable federal regulations, such as procedures to avoid the acquisition of unnecessary or duplicative items and procedures to ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Additionally, the City did not maintain written standards of conduct covering conflicts of interest and governing actions of its employees engaged in the selection, award, and administration of contracts. Suspension and Debarment Prior to entering into subawards and covered transactions with, recipients are required to verify that such contracts and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. A population of four covered transactions for goods or services were paid from USDA award funds during the audit period. A sample of two vendors were selected for testing. Of the two vendors tested, one vendor was not verified to not be suspended nor debarred or otherwise excluded or disqualified from participating in federal assistance programs or activities. The lack of internal controls and noncompliance were isolated to the same single vendor for both the simplified acquisition and the suspension and debarment issues as noted above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 17 CITY OF HUNTINGBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320(b) states in part: "Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance awards exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. . . . (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." INDIANA STATE BOARD OF ACCOUNTS 18 CITY OF HUNTINGBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The vendor in question was an engineering firm that the City originally hired to do a study at $40,000 in 2018 related to the wastewater treatment plant project. Through the years, the City did amendments to the contract to include more engineering services and did not advertise for bids or verify that the engineering firm was not suspended or debarred from receiving federal funds. Effect Without the proper implementation of an effectively designed system of internal controls, the City cannot ensure that the services obtained provided full and open competition or the basis of the price. In addition, the City cannot ensure the vendors paid were eligible to participate in federal programs. Any program funds the City used to pay vendors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the City's management establish a proper system of internal controls to ensure expenditures made from federal awards use the appropriate procurement method and retain the documentation to support the procurement methods used in order to ensure compliance with the terms and conditions of the federal award. We recommended that management of the City establish a proper system of internal controls and develop policies and procedures to ensure contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into contracts or subawards. We also recommended strengthening its policies and procedures to ensure appropriate supporting documentation for federal programs is retained to be presented for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-004 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): FY2024 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 2023-005. 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 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. INDIANA STATE BOARD OF ACCOUNTS 20 SHELBY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Suspension and Debarment Prior to entering into subawards and covered transactions with COVID-19 - 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. 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 $95,122, 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. 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." INDIANA STATE BOARD OF ACCOUNTS 21 SHELBY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.214 states: "Recipients and subrecipients are subject to the nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, as well as 2 CFR part 180. The regulations in 2 CFR part 180 restrict making Federal awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal awards." 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 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.
U.S. Department of Treasury Passed through State of South Dakota Board of Water and Natural Resources Federal Financial Assistance Listing 21.027 Federal Award Number SLFRP5319 Federal Award Year 2021 Coronavirus State and Local Fiscal Recovery Funds Procurement Material Weakness in Internal Control over Compliance and Noncompliance Criteria: Non-federal entities other than states must follow the procurement standards set out at 2 CFR sections 200.318 through 200.327, which include having documented procedures for procurement transactions and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award, and administration of contracts. Condition: The City does not have a formal documented procurement policy which includes written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award, and administration of contracts with federal funds. Cause: The City has not formalized their practiced procurement policy and conflict of interest standards into a formal written document. Effect: This condition increases the risk of that federal procurement requirements and conflict of interest standards are not adequately communicated to and understood by employees engaged in the selection, award, and administration of contracts, which increases the risk of procurements under federal awards being made not in compliance with federal regulations or other procurement requirements specific to an award. Context/Sampling: No sampling used. Repeat Finding from Prior Year(s): No Recommendation: We recommend management formally document their procurement policy, ensuring that all required procurement standards within 2 CFR sections 200.318 through 200.327 are addressed. Views of Responsible Officials: Management agrees with the finding.
FINDING 2024-001 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): 2021 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediate prior audit report. The prior audit finding number was 2023-001. Condition and Context An effective internal control system was not designed or implemented at the City to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. Micro-purchases are typically for those purchases $10,000 or under, and small purchase procedures are for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. One vendor was identified that fell within the small purchase threshold. Purchases from the vendor totaled $40,458. As such, price or rate quotations from an adequate number of qualified sources should have been obtained. However, the City did not obtain price or rate quotations for the purchases, nor was full and open competition provided for the vendor. Additionally, there was no documentation available to support the rationale to limit competition. Suspension and Debarment The City elected to receive the standard revenue loss allowance, allowing the City to claim $10,000,000 of its total COVID-19 - State and Local Fiscal Recovery Funds (SLFRF) allocation of $16,549,045 as revenue loss to use for government services. The U.S. Department of the Treasury (Treasury) determined that there are no subawards under this eligible use category, and that recipients' use of revenue loss funds would not give rise to subrecipient relationships given that there is no federal program or purpose to carry out in the case of the revenue loss portion of the award. Prior to entering into subawards and covered transactions with SLFRF award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person or entity. Due to the Treasury's determination that the revenue loss eligible use category does not give rise to subawards, the City was only required to comply with suspension and debarment requirements related to contracts. The City's policies related to SLFRF suspension and debarment requirements include the Board of Public Works completing a review of each bid packet to ensure the bidder submitted a statement indicating if they were not suspended or debarred or an employee from the City Controller's office checking the Sam.gov website. There were 13 covered transactions identified that equaled or exceeded $25,000, and 2 covered transactions, totaling $251,334, were selected for testing. For both of the transactions tested, the City did not verify the suspension or debarment status prior to payment. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The nonfederal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases– (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause The City did not follow the City's established policy to ensure the proper procurement of services and supplies and to verify suspension and debarment status for covered transactions. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. The City did not use the proper method of procurement to choose a vendor. In addition, the City did not ensure the contractors paid with federal funds are eligible to participate in federal programs. Any program funds the City used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Furthermore, noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City follow the City's established policies to ensure compliance with requirements related to procurement and suspension and debarment. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): TRSW222046 Pass-Through Entity: Indiana Finance Authority Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not designed or implemented at the City to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. Micro-purchases are typically for those purchases $10,000 or under, and small purchase procedures are for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The grant covered one project with one vendor that fell within the simplified acquisition threshold. Payments to the vendor for the project totaled $189,741 with $120,452 of that amount was grant funds. As such, the formal bid process should have been followed. The City did not perform bid procedures or provide the rationale for the method of procurement, the selection of vendor, or the basis for price. Additionally, the City did not obtain a written contract for the services. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAM exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person or entity. The City's policies related to COVID-19 - Coronavirus State and Local Fiscal Recovery Funds suspension and debarment requirements include the Board of Public Works completing a review of each bid packet to ensure the bidder submitted a statement indicating if they were not suspended or debarred or an employee from the City Controller's office checking the Sam.gov website. As noted above, the grant covered one project with one vendor utilized and the City did not verify the suspension or debarment status prior to payment for this vendor. The lack of internal controls and noncompliance was isolated to the instance noted above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The nonfederal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (b) Formal Procurement Methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. . . . (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause The City did not follow the City's established policy to ensure the proper procurement of services and supplies and to verify suspension and debarment status for covered transactions. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. The City did not use the proper method of procurement to choose a vendor. In addition, the City did not ensure the contractors paid with federal funds are eligible to participate in federal programs. Any program funds the City used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Furthermore, noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City follow its established policies to ensure compliance with requirements related to procurement and suspension and debarment. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2024-002 – Reporting – Significant Deficiency in Internal Controls Over Compliance and Noncompliance Federal program information: Funding agency: Department of Energy Title: Performance Partnership Grants ALN Number: 66.605 Award year and number: 2022-2026 Criteria: In accordance with 2 CFR 200.327 and 2 CFR 200.328 (Uniform Guidance), recipients of federal funds must file complete, accurate, and timely financial reports using the prescribed standard reporting forms (e.g., SF-425). These reports must be supported by the recipient’s underlying accounting records and signed by authorized personnel. Condition/Context: The Tribe was unable to provide documentation demonstrating that the required Federal Financial Report (FFR) for the year ended September 30, 2024, was submitted. As a result, we could not determine whether the FFR was filed in a timely manner or whether it included the proper authorization signature. Cause/Effect: The apparent lack of formal procedures or controls for retaining evidence of FFR submissions contributed to the unavailability of supporting documentation. The absence of evidence of submission and authorization could result in noncompliance with federal reporting requirements. If the report was not submitted timely or was not signed by authorized personnel, the Tribe may be subject to adverse consequences, including potential questioning of costs, additional oversight, or delays in future funding. Repeat Finding – This is not a repeat finding. Auditor’s Recommendations: The Tribe should implement and maintain a standardized process, which includes clearly documented procedures, for retaining evidence of financial report submissions. This process should ensure that each FFR is filed promptly, reviewed by appropriate officials, and accompanied by documentation showing the submission date, authorized signature, and confirmation of receipt from the federal agency, if available. Management’s Response: The Tribe has drafted a comprehensive Financial Management Policies and Procedures Manual, which includes a section specific to grants management and procurement, that will provide guidance for month end close, asset management and preparation of the Schedule of Expenditures of Federal Awards, Reporting, etc. The Financial Management Policies and Procedures Manual will be presented to the Tribal Council for review and adoption by December 2025. Additionally, the Tribe has a third-party CPA firm to conduct mandatory Uniform Guidance training and regular grant compliance and accounting training for all program and accounting staff working with grant awards.
Finding Number: 2024-001 Finding Type: Federal award finding Federal Assistance Listing No.: 15.685 Program Name: National Fish Passage Federal Agency: U.S. Department of the Interior Federal Grant Number: F24C01411-00 Federal Award Year: 2024 Pass-through entity: Rogue River Watershed Council Grant Number: 205 Control Deficiency Type: Significant deficiency in internal controls and instances of non-compliance Instances of Noncompliance: Yes Compliance Requirement: Procurement, suspension and debarment Questioned Costs: None Repeat Finding: No Criteria: A non-federal organization must follow its own documented procurement procedures, provided they comply with applicable state and local laws and align with the federal standards outlined in 2 CFR 200.318–200.327 (“Uniform Guidance”). Specifically, 2 CFR 200.318(i) requires entities to maintain records sufficient to detail the history of the procurement, including but not limited to the rationale for the procurement method chosen, the basis for selecting or rejecting contractors, and the justification for the contract price. In addition, all procurement transactions must be conducted in a manner providing full and open competition. Furthermore, federal requirements prohibit grant recipients from contracting with, or purchasing from, contractors who are suspended and debarred from doing business with the federal government. Whenever the organization enters into contracts or purchases goods or services with federal funds that it expects to equal or exceed $25,000, it must verify that the contractor or vendor has not been suspended, debarred or otherwise excluded. Finally, the organization must ensure that all federal programs comply with Section 70914 of the Build America, Buy America (BABA) Act for infrastructure projects. Condition: The organization has enacted a written procurement policy and management believed that it met all the standards required under 2 CFR 200.318 through 200.326. However, the policy failed to include some of the most stringent requirements included in the Uniform Guidance, and the organization did not comply with all the documentation requirements laid out in its procurement policy. More specifically, the organization did not maintain written thorough documentation of the procurement process as stated in 2 CFR 200.318(i), nor publicized the request for proposal in accordance with 2 CFR 200.319. Finally, the contract funded under the major program did not incorporate the mandatory BABA Act compliance language. Cause: As this was the entity’s first federal audit, WaterWatch was unaware of some procurement requirements outlined in the Uniform Guidance that needed to be incorporated into its procurement policies and procedures. Furthermore, the entity was new to the federal procurement environment. Regarding suspension and debarment, and the BABA Act, the organization was generally aware of these requirements and believed it had achieved compliance. However, WaterWatch was not aware of the need to perform documented formal verification regarding debarment beyond regularly sharing information in their existing networks of restoration agency and NGOs which rely on the same pool of experience contractors. Regarding BABA, WaterWatch was not aware of the specific documentation requirements. WaterWatch did not add the required contract language regarding BABA or debarment. In addition, due to the limited number of contractors performing this type of work, only four contractors responded to this particular request for proposal and only one submitted a bid. As a result, WaterWatch did not generate their comparison-based procurement process written documentation. Effect: The organization did not comply with some of the procurement, suspension and debarment requirement as outline in the Uniform Guidance. Audit Recommendation: We recommend that management review its current procurement policy to ensure that all procurement activities fully comply with the federal regulations, as well as establish additional procedure and oversight mechanism to ensure that procurement activities fully comply with the organization’s policies. Management’s Response: The following corrective actions are being immediately implemented for contracts in WaterWatch’s restoration program in order to achieve compliance: 1. Language requiring all contractors to comply with the Build America, Buy America (BABA) Act is added to all new WaterWatch contracts and all current contracts via amendment. 2. Language requiring all contractors to comply with federal suspension and debarment contracting standards is added to all new WaterWatch contracts and all current contracts via amendment. 3. WaterWatch will keep formal documentation of debarment searches for all contractors. 4. WaterWatch will keep formal documentation of contractor procurement process in both Southern Oregon and Portland offices.
Finding Number: 2024-001 Finding Type: Federal award finding Federal Assistance Listing No.: 15.685 Program Name: National Fish Passage Federal Agency: U.S. Department of the Interior Federal Grant Number: F24C01411-00 Federal Award Year: 2024 Pass-through entity: Rogue River Watershed Council Grant Number: 205 Control Deficiency Type: Significant deficiency in internal controls and instances of non-compliance Instances of Noncompliance: Yes Compliance Requirement: Procurement, suspension and debarment Questioned Costs: None Repeat Finding: No Criteria: A non-federal organization must follow its own documented procurement procedures, provided they comply with applicable state and local laws and align with the federal standards outlined in 2 CFR 200.318–200.327 (“Uniform Guidance”). Specifically, 2 CFR 200.318(i) requires entities to maintain records sufficient to detail the history of the procurement, including but not limited to the rationale for the procurement method chosen, the basis for selecting or rejecting contractors, and the justification for the contract price. In addition, all procurement transactions must be conducted in a manner providing full and open competition. Furthermore, federal requirements prohibit grant recipients from contracting with, or purchasing from, contractors who are suspended and debarred from doing business with the federal government. Whenever the organization enters into contracts or purchases goods or services with federal funds that it expects to equal or exceed $25,000, it must verify that the contractor or vendor has not been suspended, debarred or otherwise excluded. Finally, the organization must ensure that all federal programs comply with Section 70914 of the Build America, Buy America (BABA) Act for infrastructure projects. Condition: The organization has enacted a written procurement policy and management believed that it met all the standards required under 2 CFR 200.318 through 200.326. However, the policy failed to include some of the most stringent requirements included in the Uniform Guidance, and the organization did not comply with all the documentation requirements laid out in its procurement policy. More specifically, the organization did not maintain written thorough documentation of the procurement process as stated in 2 CFR 200.318(i), nor publicized the request for proposal in accordance with 2 CFR 200.319. Finally, the contract funded under the major program did not incorporate the mandatory BABA Act compliance language. Cause: As this was the entity’s first federal audit, WaterWatch was unaware of some procurement requirements outlined in the Uniform Guidance that needed to be incorporated into its procurement policies and procedures. Furthermore, the entity was new to the federal procurement environment. Regarding suspension and debarment, and the BABA Act, the organization was generally aware of these requirements and believed it had achieved compliance. However, WaterWatch was not aware of the need to perform documented formal verification regarding debarment beyond regularly sharing information in their existing networks of restoration agency and NGOs which rely on the same pool of experience contractors. Regarding BABA, WaterWatch was not aware of the specific documentation requirements. WaterWatch did not add the required contract language regarding BABA or debarment. In addition, due to the limited number of contractors performing this type of work, only four contractors responded to this particular request for proposal and only one submitted a bid. As a result, WaterWatch did not generate their comparison-based procurement process written documentation. Effect: The organization did not comply with some of the procurement, suspension and debarment requirement as outline in the Uniform Guidance. Audit Recommendation: We recommend that management review its current procurement policy to ensure that all procurement activities fully comply with the federal regulations, as well as establish additional procedure and oversight mechanism to ensure that procurement activities fully comply with the organization’s policies. Management’s Response: The following corrective actions are being immediately implemented for contracts in WaterWatch’s restoration program in order to achieve compliance: 1. Language requiring all contractors to comply with the Build America, Buy America (BABA) Act is added to all new WaterWatch contracts and all current contracts via amendment. 2. Language requiring all contractors to comply with federal suspension and debarment contracting standards is added to all new WaterWatch contracts and all current contracts via amendment. 3. WaterWatch will keep formal documentation of debarment searches for all contractors. 4. WaterWatch will keep formal documentation of contractor procurement process in both Southern Oregon and Portland offices.
Internal control deficiency and noncompliance over procurement and suspension and debarment. Identification of the federal program: Assistance Listing Number 21.027: • COVID-19 – Coronavirus State and Local Fiscal Recovery Funds • U.S. Department of the Treasury • Federal award identification number – Not Applicable • Federal award year – March 3, 2021 to December 1, 2024 • Pass-through entity – State of Georgia Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303 Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 General procurement standards (a) the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 200.317 through 200.327; (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders; (c) (1) the non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 General procurement standards (i) the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.319 Competition (a) All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and 200.320. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 Methods of procurement to be followed. The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the simplified acquisition threshold, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate – (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price; (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 Methods of procurement to be followed. (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.324 Contract cost and price. (a) The non-Federal entity must perform a cost or price analysis in connection with every procurement action in excess of the Simplified Acquisition Threshold including contract modifications. The method and degree of analysis is dependent on the facts surrounding the particular procurement situation, but as a starting point, the non-Federal entity must make independent estimates before receiving bids or proposals. Title 2, Subtitle A, Chapter II, Part 200, Subpart C 200.214 Suspension and debarment. Non-Federal entities are subject to the non-procurement debarment and suspension regulations that restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Title 2, Subtitle A, Chapter I, Part 180, Subpart C 180.300 What must I do before I enter into a covered transaction with another person at the next lower tier? When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) checking SAM Exclusions; (b) Collecting a certification from that person; or (c) adding a clause or condition to the covered transaction with that person. Condition: During our testing over procurement, we observed management did not have documented procurement procedures that conformed to the procurement standards identified in 2 CFR section 200.318 to 200.327 and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Management did not have internal controls in place over small purchase procurements to ensure price or rate quotations were obtained from an adequate number of qualified sources, formal procurements to ensure sealed bids or proposals were obtained through public advertising, and completion of a cost or price analysis in connection with all procurement actions exceeding the simplified acquisition threshold. Management did not maintain records for procurements to document the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. In addition, during our testing over suspension and debarment, we observed management did not have documented suspension and debarment procedures and did not have internal controls in place to ensure vendors were searched for suspension and debarment at the time of vendor selection. Cause: Management did not have internal controls in place over the compliance requirements as stated in the criteria or specific requirement section above. Effect or potential effect: Procurements were not supported by internal controls and could potentially include unreasonable prices or rates. In addition, if a search for suspension and debarment is not conducted, the entity could contract with vendors that are suspended or debarred. Questioned costs: $917,218 – Assistance Listing Number 21.027 – Federal award identification number – Not Applicable Questioned costs were computed as the entire population of procurement transactions subject to small purchase, formal procurement, and suspension and debarment compliance requirements. Questioned costs means an amount, expended or received from a Federal award, that (1) is noncompliant or suspected noncompliant with Federal statutes, regulations, or the terms and conditions of the Federal award or (2) at the time of the audit, lacked adequate documentation to support compliance. Context: During our testing over procurements, we obtained a listing of expenditures that included $917,218 of procurement transactions subject to small purchase, formal procurement, and suspension and debarment compliance requirements. We observed management did not have internal controls in place to ensure the compliance requirements as stated in the criteria or specific requirement section above were performed. Identification as a repeat finding, if applicable: No. Recommendation: Management should create documented procurement procedures that conform to the procurement standards identified in 2 CFR section 200.318 through 200.327 and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Management should develop and implement internal controls over small purchase procurements to ensure price or rate quotations are obtained from an adequate number of qualified sources, formal procurements to ensure sealed bids or proposals are obtained through public advertising, and completion of a cost or price analysis in connection with all procurement actions exceeding the simplified acquisition threshold. Management should maintain records for procurements to document the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Management should create documented suspension and debarment procedures and develop and implement internal controls to ensure vendors were searched for suspension and debarment at the time of vendor selection. Management should review the procurements identified as questioned costs to identify if any improper payments were made to the entity. Views of responsible officials: We agree with the finding that internal controls were not sufficient to maintain compliance with federal procurement standards under Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 to 200.327 for a non-federal entity. However, the funds were expended for the intended purpose of the federal award. The Company is committed to implementing internal controls to ensure procurement related to federal awards follow 2 CFR section 200.318 to 200.327. The Company will update the procurement policy to ensure it complies with the requirements of 2 CFR section 200.318 through 200.327, that includes the written standards of conduct covering conflicts of interest, governing the actions of its employees who select, award and administer procurement contracts. This policy will include procedures to ensure proper procurement for small purchases to ensure sufficient price quotations are obtained from the required number of qualified sources, proper sealed bids or proposals are obtained through public advertising, an appropriate cost or price analysis is performed for procurement actions exceeding the simplified acquisition threshold, documentation is retained, and proper oversight is exercised to demonstrate compliance with 2 CFR section 200.318 through 200.327. While the Company did not perform a check of each vendor against the SAM Exclusions prior to selecting a vendor, the Company has procedures in place to ensure the vendors are approved by Corporate purchasing and in good standing, which limits the risk of conflict of interest between employees and vendors, and contracting with a vendor who is suspended or debarred from federal related contracting. Further, the Company confirmed the vendors that were contracted with were not included on the SAM Exclusions listing.
Internal control deficiency and noncompliance over procurement and suspension and debarment. Identification of the federal program: Assistance Listing Number 84.116Z: • Fund for the Improvement of Postsecondary Education • U.S. Department of Education • Federal award identification number – P116Z230323 • Federal award year – June 1, 2023 to May 31, 2026 Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303 Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 General procurement standards (a) the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 200.317 through 200.327; (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders; (c) (1) the non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 General procurement standards (i) the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.319 Competition (a) All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and 200.320. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 Methods of procurement to be followed. The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 Methods of procurement to be followed. (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Title 2, Subtitle A, Chapter II, Part 200, Subpart C 200.214 Suspension and debarment. Non-Federal entities are subject to the non-procurement debarment and suspension regulations that restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Title 2, Subtitle A, Chapter I, Part 180, Subpart C 180.300 What must I do before I enter into a covered transaction with another person at the next lower tier? When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) checking SAM Exclusions; (b) Collecting a certification from that person; or (c) adding a clause or condition to the covered transaction with that person. Condition: During our testing over procurement, we observed management did not have documented procurement procedures that conformed to the procurement standards identified in 2 CFR section 200.318 to 200.327 and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Management did not have internal controls in place over small purchase procurements to ensure price or rate quotations were obtained from an adequate number of qualified sources. Management did not maintain records for procurements to document the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. In addition, during our testing over suspension and debarment, we observed management did not have documented suspension and debarment procedures and did not have internal controls in place to ensure vendors were searched for suspension and debarment at the time of vendor selection. Cause: Management did not have internal controls in place over the compliance requirements as stated in the criteria or specific requirement section above. Effect or potential effect: Procurements were not supported by internal controls and could potentially include unreasonable prices or rates. In addition, if a search for suspension and debarment is not conducted, the entity could contract with vendors that are suspended or debarred. Questioned costs: $153,169 – Assistance Listing Number 84.116Z – Federal award identification number – P116Z230323 Questioned costs were computed as the entire population of procurement transactions subject to small purchase and suspension and debarment compliance requirements. Questioned costs means an amount, expended or received from a Federal award, that (1) is noncompliant or suspected noncompliant with Federal statutes, regulations, or the terms and conditions of the Federal award or (2) at the time of the audit, lacked adequate documentation to support compliance. Context: During our testing over procurements, we obtained a listing of expenditures that included $153,169 of procurement transactions subject to small purchase and suspension and debarment compliance requirements. We observed management did not have internal controls in place to ensure the compliance requirements as stated in the criteria or specific requirement section above were performed. Identification as a repeat finding, if applicable: No. Recommendation: Management should create documented procurement procedures that conform to the procurement standards identified in 2 CFR section 200.318 through 200.327 and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. Management should develop and implement internal controls over small purchase procurements to ensure price or rate quotations are obtained from an adequate number of qualified sources. Management should maintain records for procurements to document the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Management should create documented suspension and debarment procedures and develop and implement internal controls to ensure vendors were searched for suspension and debarment at the time of vendor selection. Management should review the procurements identified as questioned costs to identify if any improper payments were made to the entity. Views of responsible officials: We agree with the finding that internal controls were not sufficient to maintain compliance with federal procurement standards under Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 to 200.327 for a non-federal entity. However, the funds were expended for the intended purpose of the federal award. The Company is committed to implementing internal controls to ensure procurement related to federal awards follow 2 CFR section 200.318 to 200.327. The Company will update the procurement policy to ensure it complies with the requirements of 2 CFR section 200.318 through 200.327, that includes the written standards of conduct covering conflicts of interest, governing the actions of its employees who select, award and administer procurement contracts. This policy will include procedures to ensure proper procurement for small purchases to ensure sufficient price quotations are obtained from the required number of qualified sources, proper sealed bids or proposals are obtained through public advertising, an appropriate cost or price analysis is performed for procurement actions exceeding the simplified acquisition threshold, documentation is retained, and proper oversight is exercised to demonstrate compliance with 2 CFR section 200.318 through 200.327. While the Company did not perform a check of each vendor against the SAM Exclusions prior to selecting a vendor, the Company has procedures in place to ensure the vendors are approved by Corporate purchasing and in good standing, which limits the risk of conflict of interest between employees and vendors, and contracting with a vendor who is suspended or debarred from federal related contracting. Further, the Company confirmed the vendors that were contracted with were not included on the SAM Exclusions listing.
FINDING 2024-002 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): FY2023 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not in place at the City to ensure compliance with the requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Suspension and Debarment Prior to entering into subawards and covered transactions with COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such beneficiaries 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 certification from that person, or adding a clause or condition to the covered transaction with that person. Two vendors were selected for testing that equaled or exceeded $25,000 paid from SLFRF funds during the audit period was identified, totaling $166,579. For one of the two vendors, the City did not verify the suspension and debarment status prior to payment. INDIANA STATE BOARD OF ACCOUNTS 16 CITY OF MARION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(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 the ELPS; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The City's management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. The City did not obtain evidence of one vendor's verification for suspension and debarment, since it is up to the individual departments to complete that verification. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. As a result, adequate documentation was not retained for suspension and debarment. 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. INDIANA STATE BOARD OF ACCOUNTS 17 CITY OF MARION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the City establish a proper system of internal controls and develop policies and procedures to ensure all required documentation related to suspension and debarment is maintained. We also recommended that the City perform suspension and debarment procedures on all vendors with purchases above $25,000 and ensure that documentation is maintained to show the verification was performed. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Item 2024-002 - Reporting - U.S. Department of Health and Human Services, Health Center Program Cluster (Assistance Listing Number 93.224/93.527) Notice of Award Number 6 H80CS00849-22-07, 6 H8NCS53876-01-01, 6 H8FCS40693-01-04 and 1 H8LCS51735-01-00 - (Significant Deficiency) Criteria: In accordance with 2 CFR § 200.327 and the terms and conditions of the federal award, the Project is required to submit accurate and timely Federal Financial Reports (SF-425) that reflect cumulative expenditures, unobligated balances, and program income. These reports must align with the underlying accounting records and be supported by documentation evidencing management's review and approval prior to submission. Statement of condition: The Project did not maintain documentation evidencing management's review of the Federal Financial Report (SF-425) prior to submission. Although the reports were submitted timely, there were no indication of formal review procedures to validate the accuracy, completeness, or consistency of reported financial data with the accounting records. Cause: Lack of policies and procedures in relation to the review of the Federal Financial Report by a knowledgeable individual who is not the preparer thereof. Effect: In the absence of documented review, there is an increased risk of inaccurate financial reporting, which could lead to misstated expenditures and noncompliance with federal reporting requirements. Questioned costs: None Context: All three annual Federal Financial Report (SF-425) tested had no evidence of review prior to submission. However, there was adequate support for the report and the report agrees to those underlying records. Identification as a repeat finding: This is not a repeat finding. Recommendation: We recommend that the Project establish and implement a formal review process over the Federal Financial Report (SF-425); we also recommend that evidence of the review be documented and approval be kept on file. Management response: Management agrees with the finding and will be implementing formal review procedures including documented evidence of review and approval prior to submission.
Item 2024-002 - Reporting - U.S. Department of Health and Human Services, Health Center Program Cluster (Assistance Listing Number 93.224/93.527) Notice of Award Number 6 H80CS00849-22-07, 6 H8NCS53876-01-01, 6 H8FCS40693-01-04 and 1 H8LCS51735-01-00 - (Significant Deficiency) Criteria: In accordance with 2 CFR § 200.327 and the terms and conditions of the federal award, the Project is required to submit accurate and timely Federal Financial Reports (SF-425) that reflect cumulative expenditures, unobligated balances, and program income. These reports must align with the underlying accounting records and be supported by documentation evidencing management's review and approval prior to submission. Statement of condition: The Project did not maintain documentation evidencing management's review of the Federal Financial Report (SF-425) prior to submission. Although the reports were submitted timely, there were no indication of formal review procedures to validate the accuracy, completeness, or consistency of reported financial data with the accounting records. Cause: Lack of policies and procedures in relation to the review of the Federal Financial Report by a knowledgeable individual who is not the preparer thereof. Effect: In the absence of documented review, there is an increased risk of inaccurate financial reporting, which could lead to misstated expenditures and noncompliance with federal reporting requirements. Questioned costs: None Context: All three annual Federal Financial Report (SF-425) tested had no evidence of review prior to submission. However, there was adequate support for the report and the report agrees to those underlying records. Identification as a repeat finding: This is not a repeat finding. Recommendation: We recommend that the Project establish and implement a formal review process over the Federal Financial Report (SF-425); we also recommend that evidence of the review be documented and approval be kept on file. Management response: Management agrees with the finding and will be implementing formal review procedures including documented evidence of review and approval prior to submission.
Item 2024-002 - Reporting - U.S. Department of Health and Human Services, Health Center Program Cluster (Assistance Listing Number 93.224/93.527) Notice of Award Number 6 H80CS00849-22-07, 6 H8NCS53876-01-01, 6 H8FCS40693-01-04 and 1 H8LCS51735-01-00 - (Significant Deficiency) Criteria: In accordance with 2 CFR § 200.327 and the terms and conditions of the federal award, the Project is required to submit accurate and timely Federal Financial Reports (SF-425) that reflect cumulative expenditures, unobligated balances, and program income. These reports must align with the underlying accounting records and be supported by documentation evidencing management's review and approval prior to submission. Statement of condition: The Project did not maintain documentation evidencing management's review of the Federal Financial Report (SF-425) prior to submission. Although the reports were submitted timely, there were no indication of formal review procedures to validate the accuracy, completeness, or consistency of reported financial data with the accounting records. Cause: Lack of policies and procedures in relation to the review of the Federal Financial Report by a knowledgeable individual who is not the preparer thereof. Effect: In the absence of documented review, there is an increased risk of inaccurate financial reporting, which could lead to misstated expenditures and noncompliance with federal reporting requirements. Questioned costs: None Context: All three annual Federal Financial Report (SF-425) tested had no evidence of review prior to submission. However, there was adequate support for the report and the report agrees to those underlying records. Identification as a repeat finding: This is not a repeat finding. Recommendation: We recommend that the Project establish and implement a formal review process over the Federal Financial Report (SF-425); we also recommend that evidence of the review be documented and approval be kept on file. Management response: Management agrees with the finding and will be implementing formal review procedures including documented evidence of review and approval prior to submission.
Item 2024-002 - Reporting - U.S. Department of Health and Human Services, Health Center Program Cluster (Assistance Listing Number 93.224/93.527) Notice of Award Number 6 H80CS00849-22-07, 6 H8NCS53876-01-01, 6 H8FCS40693-01-04 and 1 H8LCS51735-01-00 - (Significant Deficiency) Criteria: In accordance with 2 CFR § 200.327 and the terms and conditions of the federal award, the Project is required to submit accurate and timely Federal Financial Reports (SF-425) that reflect cumulative expenditures, unobligated balances, and program income. These reports must align with the underlying accounting records and be supported by documentation evidencing management's review and approval prior to submission. Statement of condition: The Project did not maintain documentation evidencing management's review of the Federal Financial Report (SF-425) prior to submission. Although the reports were submitted timely, there were no indication of formal review procedures to validate the accuracy, completeness, or consistency of reported financial data with the accounting records. Cause: Lack of policies and procedures in relation to the review of the Federal Financial Report by a knowledgeable individual who is not the preparer thereof. Effect: In the absence of documented review, there is an increased risk of inaccurate financial reporting, which could lead to misstated expenditures and noncompliance with federal reporting requirements. Questioned costs: None Context: All three annual Federal Financial Report (SF-425) tested had no evidence of review prior to submission. However, there was adequate support for the report and the report agrees to those underlying records. Identification as a repeat finding: This is not a repeat finding. Recommendation: We recommend that the Project establish and implement a formal review process over the Federal Financial Report (SF-425); we also recommend that evidence of the review be documented and approval be kept on file. Management response: Management agrees with the finding and will be implementing formal review procedures including documented evidence of review and approval prior to submission.
Department of Treasury, State of Iowa Chief Information Officer, Federal Financial Assistance Listing 21.027, NOFO #007 – 433524,433385, 2024 Coronavirus State and Local Fiscal Recovery Funds Procurement, Suspension & Debarment Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.318 maintains that recipients must have and use documented procurement policies and must conform procurement standards in sections 200.317 through 200.327. 2 CFR 200 Appendix II requires certain provisions be included in contracts if criteria are applicable. Additionally, 2 CFR 200.214 requires recipients to restrict the subawards and contract with certain parities that are debarred, suspended, or excluded from participation in Federal assistance programs or activities. Condition: Testing of the federal program identified the following: - One instance where the Cooperative followed a bid process, however, the documentation was not retained to support the selection. Additionally, the contract with the vendor was missing required contract provisions in accordance with Uniform Guidance. - Two instances where the Cooperative did not follow the procurement process as detailed in the procurement policy and did not have any formal documentation or contract in place with the vendor. - Three instances where the Cooperative entered into a contract with a vendor over $25,000 and there was no review performed to ensure the vendor was not suspended or debarred. Cause: Contract provisions were not evaluated compared to Uniform Guidance contract requirements. Contracts entered were not evaluated in accordance with Uniform Guidance as it relates to suspension and debarment. Effect: Ineffective controls over this area of compliance could result in a reasonable possibility the Cooperative would be noncompliant with the compliance requirements outlined above. Additionally, the cooperative may enter into a covered transaction with a vendor that is suspended or debarred. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 3 out of 5 vendors were selected for testing. Repeat Finding from Prior Year: No Recommendation: We recommend that management implement procedures related to the review of contracts to ensure the procurement methods are being followed and to ensure contracts include the required Uniform Guidance provisions. Also, management should incorporate procedures to ensure vendors are not suspended or debarred from doing business with the federal government. Documentation should be retained to provide evidence that procedures were completed. Views of Responsible Officials: Management agrees with the finding.
FINDING 2024-001 Subject: Federal Transit Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Transportation Federal Program: Federal Transit Formula Grants Assistance Listings Number: 20.507 Federal Award Number and Year (or Other Identifying Number): IN-2022-018, IN-2024-003-00, IN-2018-028-06 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The City has a process in place that requires the Board of Public Works to approve bids and contracts, but the process did not operate effectively for one of three vendors tested who were subject to the small-purchase procurement requirements. One vendor was identified that fell within the small purchase threshold. Purchases from the vendor totaled $129,259. As such, price or rate quotations from an adequate number of qualified sources should have been obtained. However, the City did not obtain price or rate quotations for the purchases nor was full and open competition provided for the vendor. Additionally, there was no documentation available to support the rationale to limit competition nor was a contract awarded for the services provided. Suspension and Debarment Prior to entering into covered transactions with federal award funds, recipients are required to verify that vendors are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Inquiry and fieldwork determined that the City had a process in place to verify that vendors were not suspended or debarred but the process was not operating effectively. There was no documented oversight, review, or approval process to ensure the process was completed timely. INDIANA STATE BOARD OF ACCOUNTS 14 CITY OF ANDERSON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Two vendors were selected for suspension and debarment testing. We were able to determine that suspension and debarment searches on the SAM.GOV website were made, but we could not determine that the searches occurred prior to contracting with the vendor. For the first vendor, the documentation provided indicated that the search for suspension and debarment on the SAM.GOV website was done subsequent to the purchase of the equipment. For the second vendor, the date of the search on the SAM.GOV website could not be determined. Additionally, the suspension and debarment verification was done by one employee without evidence of oversite and review. The lack of internal controls and noncompliance was a systemic issue throughout the audit period for the federal awards IN-2022-018, IN-2024-003-00, and IN-2018-028-06. 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 1200.10 adopts the Office of Management and Budget (OMB) guidance in subparts A through I of 2 CFR part 180, as supplemented by this part, as the Department of Transportation policies and procedures for nonprocurement suspension and debarment. 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." INDIANA STATE BOARD OF ACCOUNTS 15 CITY OF ANDERSON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Management had not designed or implemented a system of internal controls that would have ensured procedures were in place that would comply with the provisions of federal statutes, regulations, and the terms and conditions of the federal award in relation to the requirements of the Procurement and Suspension and Debarment compliance requirement. For the small purchases procurement requirement, several purchases from one vendor had occurred without the City noticing the small purchases threshold had been exceeded. For the requirement to check the suspension and debarment status, the City failed to document the date searched in one case and saved a search dated after the award date in another case. Effect The failure to design and implement an effective internal control system enabled noncompliance to remain undetected. Noncompliance with the provisions of federal statutes, regulations, and terms and conditions of the federal award could result in the reduction of future federal funding to the City. Questioned Costs There were no questioned costs identified.