Finding 2023-002: Procurement, Suspension, and Debarment (Material Weakness) Federal Program: Assistance Listing Number 14.267 Criterion or Specific Requirements: 2 CFR Section 200.318 requires that the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. 2 CFR Section 200.214 requires that, for covered transactions, a non-Federal entity must verify that entities are not suspended, debarred or otherwise excluded. This verification may be accomplished by checking the System for Award Management (SAM) website maintained by the General Services Administration. Condition: IW has a formal written procurement policy, but it does not conform to the procurement standards identified in §§ 200.317 through 200.327, which is the Uniform Guidance. As a result, no procurement files were maintained to document IW's procurement actions. In addition, for all disbursements tested, IW could not provide documentation of their verification, prior to payment, that the vendors were not suspended, debarred or otherwise excluded. Questioned Costs: None. Cause: IW has not updated its written procurement policy to conform to the Uniform Guidance. In addition, IW did not require that evidence of SAM checks be maintained in its vendor files. As a result, IW did not maintain adequate support to provide evidence that appropriate suspension and debarment searches were performed. Despite the lack of documentation, a search was performed after the fact to verify that the vendors or individuals in our sample were not suspended, debarred or otherwise excluded. Therefore, no questioned costs have been reported related to the sample that was tested. Effect or Potential Effect: Without an updated procurement policy that conforms to the Uniform Guidance and related procurement documentation, there is a risk that IW did not perform a proper evaluation of each potential vendor whose costs were charged to Federal programs. In addition, IW could not readily provide evidence that it had assessed whether or not its vendors were suspended, debarred, or otherwise excluded. As a result, the potential for payments to suspended, debarred, or otherwise excluded vendors and individuals exists. Recommendation: IW should revise its procurement policy so that it conforms to the Uniform Guidance. Furthermore, IW should maintain documentation in its files to provide evidence to support that it followed the procurement policy. In addition, IW should establish internal controls to ensure documentation is maintained to evidence that it performed the required suspension and debarment searches on the SAM website.
Finding 2023-002: Procurement, Suspension, and Debarment (Material Weakness) Federal Program: Assistance Listing Number 14.267 Criterion or Specific Requirements: 2 CFR Section 200.318 requires that the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. 2 CFR Section 200.214 requires that, for covered transactions, a non-Federal entity must verify that entities are not suspended, debarred or otherwise excluded. This verification may be accomplished by checking the System for Award Management (SAM) website maintained by the General Services Administration. Condition: IW has a formal written procurement policy, but it does not conform to the procurement standards identified in §§ 200.317 through 200.327, which is the Uniform Guidance. As a result, no procurement files were maintained to document IW's procurement actions. In addition, for all disbursements tested, IW could not provide documentation of their verification, prior to payment, that the vendors were not suspended, debarred or otherwise excluded. Questioned Costs: None. Cause: IW has not updated its written procurement policy to conform to the Uniform Guidance. In addition, IW did not require that evidence of SAM checks be maintained in its vendor files. As a result, IW did not maintain adequate support to provide evidence that appropriate suspension and debarment searches were performed. Despite the lack of documentation, a search was performed after the fact to verify that the vendors or individuals in our sample were not suspended, debarred or otherwise excluded. Therefore, no questioned costs have been reported related to the sample that was tested. Effect or Potential Effect: Without an updated procurement policy that conforms to the Uniform Guidance and related procurement documentation, there is a risk that IW did not perform a proper evaluation of each potential vendor whose costs were charged to Federal programs. In addition, IW could not readily provide evidence that it had assessed whether or not its vendors were suspended, debarred, or otherwise excluded. As a result, the potential for payments to suspended, debarred, or otherwise excluded vendors and individuals exists. Recommendation: IW should revise its procurement policy so that it conforms to the Uniform Guidance. Furthermore, IW should maintain documentation in its files to provide evidence to support that it followed the procurement policy. In addition, IW should establish internal controls to ensure documentation is maintained to evidence that it performed the required suspension and debarment searches on the SAM website.
Criteria: Recipients are responsible for ensuring that any procurement using State and Local Fiscal Recovery Funds, or payments under procurement contracts using such funds, are consistent with the procurement standards set forth in the Uniform Guidance at 2 CFR 200.317 through 2 CFR 200.327. All contracts made by the non-Federal entity under the Federal award must contain the applicable provisions covering Davis Bacon Act. Condition: The City utilized a vendor from a state contract for public work in excess of $2,000 and did not execute a contract enumerating all required provisions. Cause: The City did not acquire the necessary certified payrolls. Effect: The City is not in compliance with the requirements of the awarding agency. Questioned Costs: None Context/Sampling: All contracts for public works were tested to ensure the necessary required provisions were included and that contractors and subcontractors submitted certified payrolls. The City did not acquire a contract for one project. Prior Year: None Recommendation: We recommend the City enhance internal controls to ensure that all purchases for goods and services under the federal award requiring a formal contract executes one. Client Response: The City recognizes the importance of internal controls and plans to enhance procedures to ensure that all purchases for goods and services under a federal award requiring a formal contract executes one. The City believes it is prudent such awards have a contract to support purchase orders. Covid interruptions with related illnesses, early retirements and hiring difficulties all contributed to the negative impact.
FINDING 2023-001 PROCUREMENT SIGNIFICANT DEFICIENCY Federal Program: Charter School Programs Assistance Listing Numbers: 84.282A Criteria Per 2 CFR 200.318, “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.” Per 2 CFR 200.320(a)(2)(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.” Condition The School was unable to provide documentation to support that price comparisons were obtained from vendors for costs falling in the category of small purchases (between $10,000 and $249,999). Additionally, the School’s procedures manual did not include procedures for the handling of these transactions. Cause Documentation was not maintained to support that this step in the procurement process was completed. Effect Not documenting these procedures could result in the School completing procurement transactions not in compliance with Federal regulations. Recommendation We recommend the School develop procedures to ensure price comparisons are obtained and documented. Views of Responsible Officials and Planned Corrective Actions The School’s Corrective Action Plan is included on page 23.
FINDING 2023-001 PROCUREMENT SIGNIFICANT DEFICIENCY Federal Program: Charter School Programs Assistance Listing Numbers: 84.282A Criteria Per 2 CFR 200.318, “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.” Per 2 CFR 200.320(a)(2)(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.” Condition The School was unable to provide documentation to support that price comparisons were obtained from vendors for costs falling in the category of small purchases (between $10,000 and $249,999). Additionally, the School’s procedures manual did not include procedures for the handling of these transactions. Cause Documentation was not maintained to support that this step in the procurement process was completed. Effect Not documenting these procedures could result in the School completing procurement transactions not in compliance with Federal regulations. Recommendation We recommend the School develop procedures to ensure price comparisons are obtained and documented. Views of Responsible Officials and Planned Corrective Actions The School’s Corrective Action Plan is included on page 23.
2 CFR § 400.1 gives regulatory effect for the U.S. Department of Agriculture to the OMB guidance in 2 CFR § 200. 2 CFR § 200.317 - 200.327 requires entities to use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR Part 200. A non-Federal entity must: 1. Meet the general procurement standards in 2 CFR 200.318, which include oversight of contractors’ performance, maintaining written standards of conduct for employees involved in contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurements. 2. Conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR 200.319. 3. Use the micro-purchase and small purchase methods only for procurements that meet the applicable criteria under 2 CFR 200.320(a)(1) and (2). Under the micro-purchase method, the aggregate dollar amount does not exceed $10,000 ($2,000 in the case of acquisition for construction subject to the Wage Rate Requirements (Davis-Bacon Act)). Small purchase procedures are used for purchases that exceed the micro-purchase amount but do not exceed the simplified acquisition threshold ($250,000). Micro-purchases may be awarded without soliciting competitive quotations if the non-Federal entity considers the price to be reasonable (2 CFR 200.320(a)). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR 200.320(b)). 4. For acquisitions exceeding the simplified acquisition threshold, the non-Federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR 200.320(b); the competitive proposals method under the conditions specified in 2 CFR 200.320(b)(2); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR 200.320(c). 5. Perform a cost or price analysis in connection with every procurement action in excess of the simplified acquisition threshold, including contract modifications (2 CFR 200.324(a)). The cost plus a percentage of cost and percentage of construction cost methods of contracting must not be used (2 CFR 200.324(d)). 6. Ensure that every purchase order or other contract includes applicable provisions required by 2 CFR 200.326. These provisions are described in Appendix II to 2 CFR Part 200, “Contract Provisions for Non-Federal Entity Contracts Under Federal Awards.” The School District paid more than $250,000 to Valley Wholesale during fiscal year 2023 for food products for the Child Nutrition Cluster. This amount exceeded the simplified acquisition threshold thus the District should follow a formal competitive procurement method described in 2 CFR 200.320(b). However, the School District did not follow a formal procurement method because they chose to use this local vendor (Valley Wholesale) to allow them to get their fresh produce in a timely manner to avoid food waste. The School District did not have the proper internal controls in place to ensure proper bidding procedures were followed. Failure to have the appropriate controls in place may result in vendors being used that are not providing the best possible prices. The School District should follow their established procurement policies and federal guidelines when choosing all vendors for the Child Nutrition Cluster.
2 CFR § 400.1 gives regulatory effect for the U.S. Department of Agriculture to the OMB guidance in 2 CFR § 200. 2 CFR § 200.317 - 200.327 requires entities to use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR Part 200. A non-Federal entity must: 1. Meet the general procurement standards in 2 CFR 200.318, which include oversight of contractors’ performance, maintaining written standards of conduct for employees involved in contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurements. 2. Conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR 200.319. 3. Use the micro-purchase and small purchase methods only for procurements that meet the applicable criteria under 2 CFR 200.320(a)(1) and (2). Under the micro-purchase method, the aggregate dollar amount does not exceed $10,000 ($2,000 in the case of acquisition for construction subject to the Wage Rate Requirements (Davis-Bacon Act)). Small purchase procedures are used for purchases that exceed the micro-purchase amount but do not exceed the simplified acquisition threshold ($250,000). Micro-purchases may be awarded without soliciting competitive quotations if the non-Federal entity considers the price to be reasonable (2 CFR 200.320(a)). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR 200.320(b)). 4. For acquisitions exceeding the simplified acquisition threshold, the non-Federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR 200.320(b); the competitive proposals method under the conditions specified in 2 CFR 200.320(b)(2); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR 200.320(c). 5. Perform a cost or price analysis in connection with every procurement action in excess of the simplified acquisition threshold, including contract modifications (2 CFR 200.324(a)). The cost plus a percentage of cost and percentage of construction cost methods of contracting must not be used (2 CFR 200.324(d)). 6. Ensure that every purchase order or other contract includes applicable provisions required by 2 CFR 200.326. These provisions are described in Appendix II to 2 CFR Part 200, “Contract Provisions for Non-Federal Entity Contracts Under Federal Awards.” The School District paid more than $250,000 to Valley Wholesale during fiscal year 2023 for food products for the Child Nutrition Cluster. This amount exceeded the simplified acquisition threshold thus the District should follow a formal competitive procurement method described in 2 CFR 200.320(b). However, the School District did not follow a formal procurement method because they chose to use this local vendor (Valley Wholesale) to allow them to get their fresh produce in a timely manner to avoid food waste. The School District did not have the proper internal controls in place to ensure proper bidding procedures were followed. Failure to have the appropriate controls in place may result in vendors being used that are not providing the best possible prices. The School District should follow their established procurement policies and federal guidelines when choosing all vendors for the Child Nutrition Cluster.
2 CFR § 400.1 gives regulatory effect for the U.S. Department of Agriculture to the OMB guidance in 2 CFR § 200. 2 CFR § 200.317 - 200.327 requires entities to use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR Part 200. A non-Federal entity must: 1. Meet the general procurement standards in 2 CFR 200.318, which include oversight of contractors’ performance, maintaining written standards of conduct for employees involved in contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurements. 2. Conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR 200.319. 3. Use the micro-purchase and small purchase methods only for procurements that meet the applicable criteria under 2 CFR 200.320(a)(1) and (2). Under the micro-purchase method, the aggregate dollar amount does not exceed $10,000 ($2,000 in the case of acquisition for construction subject to the Wage Rate Requirements (Davis-Bacon Act)). Small purchase procedures are used for purchases that exceed the micro-purchase amount but do not exceed the simplified acquisition threshold ($250,000). Micro-purchases may be awarded without soliciting competitive quotations if the non-Federal entity considers the price to be reasonable (2 CFR 200.320(a)). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR 200.320(b)). 4. For acquisitions exceeding the simplified acquisition threshold, the non-Federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR 200.320(b); the competitive proposals method under the conditions specified in 2 CFR 200.320(b)(2); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR 200.320(c). 5. Perform a cost or price analysis in connection with every procurement action in excess of the simplified acquisition threshold, including contract modifications (2 CFR 200.324(a)). The cost plus a percentage of cost and percentage of construction cost methods of contracting must not be used (2 CFR 200.324(d)). 6. Ensure that every purchase order or other contract includes applicable provisions required by 2 CFR 200.326. These provisions are described in Appendix II to 2 CFR Part 200, “Contract Provisions for Non-Federal Entity Contracts Under Federal Awards.” The School District paid more than $250,000 to Valley Wholesale during fiscal year 2023 for food products for the Child Nutrition Cluster. This amount exceeded the simplified acquisition threshold thus the District should follow a formal competitive procurement method described in 2 CFR 200.320(b). However, the School District did not follow a formal procurement method because they chose to use this local vendor (Valley Wholesale) to allow them to get their fresh produce in a timely manner to avoid food waste. The School District did not have the proper internal controls in place to ensure proper bidding procedures were followed. Failure to have the appropriate controls in place may result in vendors being used that are not providing the best possible prices. The School District should follow their established procurement policies and federal guidelines when choosing all vendors for the Child Nutrition Cluster.
Assistance Listing Number(s): 21.027 Name of Federal Program or Cluster: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency: Department of the Treasury Name of Pass-through Entity: City of Madison, City of Sun Prairie, Wisconsin Department of Workforce Development Award Period: January 1, 2022 through December 31, 2022; September 22, 2021 through December 31, 2024; June 20, 2022 through June 30, 2025 Criteria or Specific Requirement: 2 CFR section 200.318(a) requires a non-federal entity to have and use documented procurement procedures, consistent with state, local, and tribal laws and regulations and the standards of 2 CFR sections 200.317 through 200.327. 2 CFR section 200.318(c)(1) requires a nonfederal entity to 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. 2 CFR section 200.318(i) requires a non-federal entity to maintain records sufficient to detail the history of procurement including, but not limited to, the: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition and Context: There are no documented procurement procedures that meet the requirements of 2 CFR sections 200.317 through 200.327. While there is a conflict-of-interest policy, it does not specifically include standards of conduct covering conflicts of interest for procurement. There are no designed and implemented internal controls documented to ensure compliance with 2 CFR sections 200.317 through 200.327. For three significant transactions tested there were no documentation of the rationale for the method, documentation to support a required procurement method used, contractor selections or rejections, suspension and debarment, and bases for contract prices. The only support documented are the invoices. Total procurements were $482,904. Cause: The organization began charging procurement transactions in the current year to federal awards. The organization’s staff did not understand how to document the procurement history. Effect or Potential Effect: Questioned costs may be disallowed and required to be repaid. Questioned Costs: $365,501; total of the three significant transactions tested. Repeat Finding: No. Recommendation: The organization should develop and document procurement procedures that meet state, local, and Uniform Guidance requirements. The conflict-of-interest policy should be updated to include standards of conduct for those involved in procuring and to include organizational conflicts of interest. Internal controls should be designed, implemented, and documented within the procurement procedures to ensure compliance with 2 CFR sections 200.317 through 200.327. At a minimum, the procurement history including rationale for the method, procurement method support, contract selections and rejections, suspension and debarment, and bases for contract prices should be documented. Views of Responsible Officials: Boys and Girls Club of Dane County, Inc. agrees with the finding and is implementing procurement and conflict-of-interest policies.
Assistance Listing Number(s): 21.027 Name of Federal Program or Cluster: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency: Department of the Treasury Name of Pass-through Entity: City of Madison, City of Sun Prairie, Wisconsin Department of Workforce Development Award Period: January 1, 2022 through December 31, 2022; September 22, 2021 through December 31, 2024; June 20, 2022 through June 30, 2025 Criteria or Specific Requirement: 2 CFR section 200.318(a) requires a non-federal entity to have and use documented procurement procedures, consistent with state, local, and tribal laws and regulations and the standards of 2 CFR sections 200.317 through 200.327. 2 CFR section 200.318(c)(1) requires a nonfederal entity to 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. 2 CFR section 200.318(i) requires a non-federal entity to maintain records sufficient to detail the history of procurement including, but not limited to, the: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition and Context: There are no documented procurement procedures that meet the requirements of 2 CFR sections 200.317 through 200.327. While there is a conflict-of-interest policy, it does not specifically include standards of conduct covering conflicts of interest for procurement. There are no designed and implemented internal controls documented to ensure compliance with 2 CFR sections 200.317 through 200.327. For three significant transactions tested there were no documentation of the rationale for the method, documentation to support a required procurement method used, contractor selections or rejections, suspension and debarment, and bases for contract prices. The only support documented are the invoices. Total procurements were $482,904. Cause: The organization began charging procurement transactions in the current year to federal awards. The organization’s staff did not understand how to document the procurement history. Effect or Potential Effect: Questioned costs may be disallowed and required to be repaid. Questioned Costs: $365,501; total of the three significant transactions tested. Repeat Finding: No. Recommendation: The organization should develop and document procurement procedures that meet state, local, and Uniform Guidance requirements. The conflict-of-interest policy should be updated to include standards of conduct for those involved in procuring and to include organizational conflicts of interest. Internal controls should be designed, implemented, and documented within the procurement procedures to ensure compliance with 2 CFR sections 200.317 through 200.327. At a minimum, the procurement history including rationale for the method, procurement method support, contract selections and rejections, suspension and debarment, and bases for contract prices should be documented. Views of Responsible Officials: Boys and Girls Club of Dane County, Inc. agrees with the finding and is implementing procurement and conflict-of-interest policies.
Assistance Listing Number(s): 21.027 Name of Federal Program or Cluster: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency: Department of the Treasury Name of Pass-through Entity: City of Madison, City of Sun Prairie, Wisconsin Department of Workforce Development Award Period: January 1, 2022 through December 31, 2022; September 22, 2021 through December 31, 2024; June 20, 2022 through June 30, 2025 Criteria or Specific Requirement: 2 CFR section 200.318(a) requires a non-federal entity to have and use documented procurement procedures, consistent with state, local, and tribal laws and regulations and the standards of 2 CFR sections 200.317 through 200.327. 2 CFR section 200.318(c)(1) requires a nonfederal entity to 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. 2 CFR section 200.318(i) requires a non-federal entity to maintain records sufficient to detail the history of procurement including, but not limited to, the: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition and Context: There are no documented procurement procedures that meet the requirements of 2 CFR sections 200.317 through 200.327. While there is a conflict-of-interest policy, it does not specifically include standards of conduct covering conflicts of interest for procurement. There are no designed and implemented internal controls documented to ensure compliance with 2 CFR sections 200.317 through 200.327. For three significant transactions tested there were no documentation of the rationale for the method, documentation to support a required procurement method used, contractor selections or rejections, suspension and debarment, and bases for contract prices. The only support documented are the invoices. Total procurements were $482,904. Cause: The organization began charging procurement transactions in the current year to federal awards. The organization’s staff did not understand how to document the procurement history. Effect or Potential Effect: Questioned costs may be disallowed and required to be repaid. Questioned Costs: $365,501; total of the three significant transactions tested. Repeat Finding: No. Recommendation: The organization should develop and document procurement procedures that meet state, local, and Uniform Guidance requirements. The conflict-of-interest policy should be updated to include standards of conduct for those involved in procuring and to include organizational conflicts of interest. Internal controls should be designed, implemented, and documented within the procurement procedures to ensure compliance with 2 CFR sections 200.317 through 200.327. At a minimum, the procurement history including rationale for the method, procurement method support, contract selections and rejections, suspension and debarment, and bases for contract prices should be documented. Views of Responsible Officials: Boys and Girls Club of Dane County, Inc. agrees with the finding and is implementing procurement and conflict-of-interest policies.
2023-005 - Internal Control Over Compliance and Compliance – Reporting (Preparation of the Schedule of Expenditures of Federal Awards) Program- U.S. Department of Energy, National Forum for State and Territorial Chief Executives - HHS OA, Yr 10 and Yr 11, National Forum ALN: 93.528, Award #: 2U98OA09028, Award Year: 09/01/2022 – 09/29/2023 Program- U.S. Department of Health and Human Services, Strengthening Public Health Systems and Services through National Partnerships to Improve and Protect the Nation’s Health ALN: 93.421, Award #: Various, Award Year: 08/01/2018 – 07/31/2023 Criteria – 2 CFR Section §200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section §200.502 Basis for determining Federal awards expended.” The schedule must provide total Federal awards expended for each individual Federal program. In accordance with §200.302 Financial Management, a non-federal entity’s financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. The financial management system of each non-federal entity must provide for the following: (1) Identification, in its accounts, of all federal awards received and expended and the federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in §200.327 Financial Reporting and §200.328 Monitoring and Reporting Program Performance. (3) Records that identify adequately the source and application of funds for federally-funded activities. (4) Effective control over, and accountability for, all funds, property, and other assets. Condition – The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed. During our testing of management’s preparation of the SEFA, it was determined that some federal award expenditures were excluded from the original SEFA provided by management. Management subsequently corrected the SEFA to reflect the inclusion of the federal expenditures. In addition, several versions were received from management prior to the final SEFA. Questioned Costs – None. Context – This is a condition identified per review of NGA Center’s compliance with specified requirements. Cause – NGA Center only prepares the SEFA once a year in conjunction with the annual audit. This annual process lends itself to less familiarity with the processes necessary to provide a complete SEFA reporting package and turnover in key personnel historically involved in the SEFA process negatively impacted the process. Effect – Failure to present the SEFA correctly can result in incorrect major program selection and incorrect reporting to federal agencies. The finding identified was not of a magnitude to impact BDO’s selection of major programs. Repeat Finding – This is not a repeat finding. Recommendation - We recommend management continue to focus on training for both preparer and reviewer of the SEFA to ensure the documented policies and procedures can be performed as prescribed to comply with Section §200.510(b). This will ensure that the SEFA provides all relevant information as prescribed. Views of Responsible Officials – NGA Center agrees with the finding and recommendations set forth within and has developed a corrective action plan to address the instances of noncompliance identified and lapses in prescribed internal controls.
2023-005 - Internal Control Over Compliance and Compliance – Reporting (Preparation of the Schedule of Expenditures of Federal Awards) Program- U.S. Department of Energy, National Forum for State and Territorial Chief Executives - HHS OA, Yr 10 and Yr 11, National Forum ALN: 93.528, Award #: 2U98OA09028, Award Year: 09/01/2022 – 09/29/2023 Program- U.S. Department of Health and Human Services, Strengthening Public Health Systems and Services through National Partnerships to Improve and Protect the Nation’s Health ALN: 93.421, Award #: Various, Award Year: 08/01/2018 – 07/31/2023 Criteria – 2 CFR Section §200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section §200.502 Basis for determining Federal awards expended.” The schedule must provide total Federal awards expended for each individual Federal program. In accordance with §200.302 Financial Management, a non-federal entity’s financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. The financial management system of each non-federal entity must provide for the following: (1) Identification, in its accounts, of all federal awards received and expended and the federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in §200.327 Financial Reporting and §200.328 Monitoring and Reporting Program Performance. (3) Records that identify adequately the source and application of funds for federally-funded activities. (4) Effective control over, and accountability for, all funds, property, and other assets. Condition – The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed. During our testing of management’s preparation of the SEFA, it was determined that some federal award expenditures were excluded from the original SEFA provided by management. Management subsequently corrected the SEFA to reflect the inclusion of the federal expenditures. In addition, several versions were received from management prior to the final SEFA. Questioned Costs – None. Context – This is a condition identified per review of NGA Center’s compliance with specified requirements. Cause – NGA Center only prepares the SEFA once a year in conjunction with the annual audit. This annual process lends itself to less familiarity with the processes necessary to provide a complete SEFA reporting package and turnover in key personnel historically involved in the SEFA process negatively impacted the process. Effect – Failure to present the SEFA correctly can result in incorrect major program selection and incorrect reporting to federal agencies. The finding identified was not of a magnitude to impact BDO’s selection of major programs. Repeat Finding – This is not a repeat finding. Recommendation - We recommend management continue to focus on training for both preparer and reviewer of the SEFA to ensure the documented policies and procedures can be performed as prescribed to comply with Section §200.510(b). This will ensure that the SEFA provides all relevant information as prescribed. Views of Responsible Officials – NGA Center agrees with the finding and recommendations set forth within and has developed a corrective action plan to address the instances of noncompliance identified and lapses in prescribed internal controls.
2023-005 - Internal Control Over Compliance and Compliance – Reporting (Preparation of the Schedule of Expenditures of Federal Awards) Program- U.S. Department of Energy, National Forum for State and Territorial Chief Executives - HHS OA, Yr 10 and Yr 11, National Forum ALN: 93.528, Award #: 2U98OA09028, Award Year: 09/01/2022 – 09/29/2023 Program- U.S. Department of Health and Human Services, Strengthening Public Health Systems and Services through National Partnerships to Improve and Protect the Nation’s Health ALN: 93.421, Award #: Various, Award Year: 08/01/2018 – 07/31/2023 Criteria – 2 CFR Section §200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section §200.502 Basis for determining Federal awards expended.” The schedule must provide total Federal awards expended for each individual Federal program. In accordance with §200.302 Financial Management, a non-federal entity’s financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. The financial management system of each non-federal entity must provide for the following: (1) Identification, in its accounts, of all federal awards received and expended and the federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in §200.327 Financial Reporting and §200.328 Monitoring and Reporting Program Performance. (3) Records that identify adequately the source and application of funds for federally-funded activities. (4) Effective control over, and accountability for, all funds, property, and other assets. Condition – The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed. During our testing of management’s preparation of the SEFA, it was determined that some federal award expenditures were excluded from the original SEFA provided by management. Management subsequently corrected the SEFA to reflect the inclusion of the federal expenditures. In addition, several versions were received from management prior to the final SEFA. Questioned Costs – None. Context – This is a condition identified per review of NGA Center’s compliance with specified requirements. Cause – NGA Center only prepares the SEFA once a year in conjunction with the annual audit. This annual process lends itself to less familiarity with the processes necessary to provide a complete SEFA reporting package and turnover in key personnel historically involved in the SEFA process negatively impacted the process. Effect – Failure to present the SEFA correctly can result in incorrect major program selection and incorrect reporting to federal agencies. The finding identified was not of a magnitude to impact BDO’s selection of major programs. Repeat Finding – This is not a repeat finding. Recommendation - We recommend management continue to focus on training for both preparer and reviewer of the SEFA to ensure the documented policies and procedures can be performed as prescribed to comply with Section §200.510(b). This will ensure that the SEFA provides all relevant information as prescribed. Views of Responsible Officials – NGA Center agrees with the finding and recommendations set forth within and has developed a corrective action plan to address the instances of noncompliance identified and lapses in prescribed internal controls.
2023-005 - Internal Control Over Compliance and Compliance – Reporting (Preparation of the Schedule of Expenditures of Federal Awards) Program- U.S. Department of Energy, National Forum for State and Territorial Chief Executives - HHS OA, Yr 10 and Yr 11, National Forum ALN: 93.528, Award #: 2U98OA09028, Award Year: 09/01/2022 – 09/29/2023 Program- U.S. Department of Health and Human Services, Strengthening Public Health Systems and Services through National Partnerships to Improve and Protect the Nation’s Health ALN: 93.421, Award #: Various, Award Year: 08/01/2018 – 07/31/2023 Criteria – 2 CFR Section §200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section §200.502 Basis for determining Federal awards expended.” The schedule must provide total Federal awards expended for each individual Federal program. In accordance with §200.302 Financial Management, a non-federal entity’s financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. The financial management system of each non-federal entity must provide for the following: (1) Identification, in its accounts, of all federal awards received and expended and the federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in §200.327 Financial Reporting and §200.328 Monitoring and Reporting Program Performance. (3) Records that identify adequately the source and application of funds for federally-funded activities. (4) Effective control over, and accountability for, all funds, property, and other assets. Condition – The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed. During our testing of management’s preparation of the SEFA, it was determined that some federal award expenditures were excluded from the original SEFA provided by management. Management subsequently corrected the SEFA to reflect the inclusion of the federal expenditures. In addition, several versions were received from management prior to the final SEFA. Questioned Costs – None. Context – This is a condition identified per review of NGA Center’s compliance with specified requirements. Cause – NGA Center only prepares the SEFA once a year in conjunction with the annual audit. This annual process lends itself to less familiarity with the processes necessary to provide a complete SEFA reporting package and turnover in key personnel historically involved in the SEFA process negatively impacted the process. Effect – Failure to present the SEFA correctly can result in incorrect major program selection and incorrect reporting to federal agencies. The finding identified was not of a magnitude to impact BDO’s selection of major programs. Repeat Finding – This is not a repeat finding. Recommendation - We recommend management continue to focus on training for both preparer and reviewer of the SEFA to ensure the documented policies and procedures can be performed as prescribed to comply with Section §200.510(b). This will ensure that the SEFA provides all relevant information as prescribed. Views of Responsible Officials – NGA Center agrees with the finding and recommendations set forth within and has developed a corrective action plan to address the instances of noncompliance identified and lapses in prescribed internal controls.
2023-005 - Internal Control Over Compliance and Compliance – Reporting (Preparation of the Schedule of Expenditures of Federal Awards) Program- U.S. Department of Energy, National Forum for State and Territorial Chief Executives - HHS OA, Yr 10 and Yr 11, National Forum ALN: 93.528, Award #: 2U98OA09028, Award Year: 09/01/2022 – 09/29/2023 Program- U.S. Department of Health and Human Services, Strengthening Public Health Systems and Services through National Partnerships to Improve and Protect the Nation’s Health ALN: 93.421, Award #: Various, Award Year: 08/01/2018 – 07/31/2023 Criteria – 2 CFR Section §200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section §200.502 Basis for determining Federal awards expended.” The schedule must provide total Federal awards expended for each individual Federal program. In accordance with §200.302 Financial Management, a non-federal entity’s financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. The financial management system of each non-federal entity must provide for the following: (1) Identification, in its accounts, of all federal awards received and expended and the federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in §200.327 Financial Reporting and §200.328 Monitoring and Reporting Program Performance. (3) Records that identify adequately the source and application of funds for federally-funded activities. (4) Effective control over, and accountability for, all funds, property, and other assets. Condition – The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed. During our testing of management’s preparation of the SEFA, it was determined that some federal award expenditures were excluded from the original SEFA provided by management. Management subsequently corrected the SEFA to reflect the inclusion of the federal expenditures. In addition, several versions were received from management prior to the final SEFA. Questioned Costs – None. Context – This is a condition identified per review of NGA Center’s compliance with specified requirements. Cause – NGA Center only prepares the SEFA once a year in conjunction with the annual audit. This annual process lends itself to less familiarity with the processes necessary to provide a complete SEFA reporting package and turnover in key personnel historically involved in the SEFA process negatively impacted the process. Effect – Failure to present the SEFA correctly can result in incorrect major program selection and incorrect reporting to federal agencies. The finding identified was not of a magnitude to impact BDO’s selection of major programs. Repeat Finding – This is not a repeat finding. Recommendation - We recommend management continue to focus on training for both preparer and reviewer of the SEFA to ensure the documented policies and procedures can be performed as prescribed to comply with Section §200.510(b). This will ensure that the SEFA provides all relevant information as prescribed. Views of Responsible Officials – NGA Center agrees with the finding and recommendations set forth within and has developed a corrective action plan to address the instances of noncompliance identified and lapses in prescribed internal controls.
2023-005 - Internal Control Over Compliance and Compliance – Reporting (Preparation of the Schedule of Expenditures of Federal Awards) Program- U.S. Department of Energy, National Forum for State and Territorial Chief Executives - HHS OA, Yr 10 and Yr 11, National Forum ALN: 93.528, Award #: 2U98OA09028, Award Year: 09/01/2022 – 09/29/2023 Program- U.S. Department of Health and Human Services, Strengthening Public Health Systems and Services through National Partnerships to Improve and Protect the Nation’s Health ALN: 93.421, Award #: Various, Award Year: 08/01/2018 – 07/31/2023 Criteria – 2 CFR Section §200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section §200.502 Basis for determining Federal awards expended.” The schedule must provide total Federal awards expended for each individual Federal program. In accordance with §200.302 Financial Management, a non-federal entity’s financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. The financial management system of each non-federal entity must provide for the following: (1) Identification, in its accounts, of all federal awards received and expended and the federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in §200.327 Financial Reporting and §200.328 Monitoring and Reporting Program Performance. (3) Records that identify adequately the source and application of funds for federally-funded activities. (4) Effective control over, and accountability for, all funds, property, and other assets. Condition – The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed. During our testing of management’s preparation of the SEFA, it was determined that some federal award expenditures were excluded from the original SEFA provided by management. Management subsequently corrected the SEFA to reflect the inclusion of the federal expenditures. In addition, several versions were received from management prior to the final SEFA. Questioned Costs – None. Context – This is a condition identified per review of NGA Center’s compliance with specified requirements. Cause – NGA Center only prepares the SEFA once a year in conjunction with the annual audit. This annual process lends itself to less familiarity with the processes necessary to provide a complete SEFA reporting package and turnover in key personnel historically involved in the SEFA process negatively impacted the process. Effect – Failure to present the SEFA correctly can result in incorrect major program selection and incorrect reporting to federal agencies. The finding identified was not of a magnitude to impact BDO’s selection of major programs. Repeat Finding – This is not a repeat finding. Recommendation - We recommend management continue to focus on training for both preparer and reviewer of the SEFA to ensure the documented policies and procedures can be performed as prescribed to comply with Section §200.510(b). This will ensure that the SEFA provides all relevant information as prescribed. Views of Responsible Officials – NGA Center agrees with the finding and recommendations set forth within and has developed a corrective action plan to address the instances of noncompliance identified and lapses in prescribed internal controls.
2023-005 - Internal Control Over Compliance and Compliance – Reporting (Preparation of the Schedule of Expenditures of Federal Awards) Program- U.S. Department of Energy, National Forum for State and Territorial Chief Executives - HHS OA, Yr 10 and Yr 11, National Forum ALN: 93.528, Award #: 2U98OA09028, Award Year: 09/01/2022 – 09/29/2023 Program- U.S. Department of Health and Human Services, Strengthening Public Health Systems and Services through National Partnerships to Improve and Protect the Nation’s Health ALN: 93.421, Award #: Various, Award Year: 08/01/2018 – 07/31/2023 Criteria – 2 CFR Section §200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section §200.502 Basis for determining Federal awards expended.” The schedule must provide total Federal awards expended for each individual Federal program. In accordance with §200.302 Financial Management, a non-federal entity’s financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. The financial management system of each non-federal entity must provide for the following: (1) Identification, in its accounts, of all federal awards received and expended and the federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in §200.327 Financial Reporting and §200.328 Monitoring and Reporting Program Performance. (3) Records that identify adequately the source and application of funds for federally-funded activities. (4) Effective control over, and accountability for, all funds, property, and other assets. Condition – The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed. During our testing of management’s preparation of the SEFA, it was determined that some federal award expenditures were excluded from the original SEFA provided by management. Management subsequently corrected the SEFA to reflect the inclusion of the federal expenditures. In addition, several versions were received from management prior to the final SEFA. Questioned Costs – None. Context – This is a condition identified per review of NGA Center’s compliance with specified requirements. Cause – NGA Center only prepares the SEFA once a year in conjunction with the annual audit. This annual process lends itself to less familiarity with the processes necessary to provide a complete SEFA reporting package and turnover in key personnel historically involved in the SEFA process negatively impacted the process. Effect – Failure to present the SEFA correctly can result in incorrect major program selection and incorrect reporting to federal agencies. The finding identified was not of a magnitude to impact BDO’s selection of major programs. Repeat Finding – This is not a repeat finding. Recommendation - We recommend management continue to focus on training for both preparer and reviewer of the SEFA to ensure the documented policies and procedures can be performed as prescribed to comply with Section §200.510(b). This will ensure that the SEFA provides all relevant information as prescribed. Views of Responsible Officials – NGA Center agrees with the finding and recommendations set forth within and has developed a corrective action plan to address the instances of noncompliance identified and lapses in prescribed internal controls.
2023-005 - Internal Control Over Compliance and Compliance – Reporting (Preparation of the Schedule of Expenditures of Federal Awards) Program- U.S. Department of Energy, National Forum for State and Territorial Chief Executives - HHS OA, Yr 10 and Yr 11, National Forum ALN: 93.528, Award #: 2U98OA09028, Award Year: 09/01/2022 – 09/29/2023 Program- U.S. Department of Health and Human Services, Strengthening Public Health Systems and Services through National Partnerships to Improve and Protect the Nation’s Health ALN: 93.421, Award #: Various, Award Year: 08/01/2018 – 07/31/2023 Criteria – 2 CFR Section §200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section §200.502 Basis for determining Federal awards expended.” The schedule must provide total Federal awards expended for each individual Federal program. In accordance with §200.302 Financial Management, a non-federal entity’s financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. The financial management system of each non-federal entity must provide for the following: (1) Identification, in its accounts, of all federal awards received and expended and the federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in §200.327 Financial Reporting and §200.328 Monitoring and Reporting Program Performance. (3) Records that identify adequately the source and application of funds for federally-funded activities. (4) Effective control over, and accountability for, all funds, property, and other assets. Condition – The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed. During our testing of management’s preparation of the SEFA, it was determined that some federal award expenditures were excluded from the original SEFA provided by management. Management subsequently corrected the SEFA to reflect the inclusion of the federal expenditures. In addition, several versions were received from management prior to the final SEFA. Questioned Costs – None. Context – This is a condition identified per review of NGA Center’s compliance with specified requirements. Cause – NGA Center only prepares the SEFA once a year in conjunction with the annual audit. This annual process lends itself to less familiarity with the processes necessary to provide a complete SEFA reporting package and turnover in key personnel historically involved in the SEFA process negatively impacted the process. Effect – Failure to present the SEFA correctly can result in incorrect major program selection and incorrect reporting to federal agencies. The finding identified was not of a magnitude to impact BDO’s selection of major programs. Repeat Finding – This is not a repeat finding. Recommendation - We recommend management continue to focus on training for both preparer and reviewer of the SEFA to ensure the documented policies and procedures can be performed as prescribed to comply with Section §200.510(b). This will ensure that the SEFA provides all relevant information as prescribed. Views of Responsible Officials – NGA Center agrees with the finding and recommendations set forth within and has developed a corrective action plan to address the instances of noncompliance identified and lapses in prescribed internal controls.
MATERIAL WEAKNESSES 2023-001 - Procurement Policy Federal Program Information: Department of Environmental Protection: 66.468 / 66.483 Drinking Water State Revolving Fund Cluster Criteria: The following CFR(s) apply to this finding: 2 CFR section 200.318 through 200.327. Condition: During audit procedures, it was identified that the Royalton Fire District did not have a procurement policy consistent with federal compliance standards. Cause: The District did not adopt a procurement policy consistent with federal regulations. Effect: By not having a compliant federal procurement policy, the District is at an increased risk for making unallowable purchases. Identification of Questioned Costs: None identified. Context: A review was conducted of the Distict’s procurement policy and the policy was not in compliance with Uniform Guidance. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the District adopt a federal procurement policy that is consistent with Uniform Guidance. Views of Responsible Officials and Corrective Action Plan: Client agrees with finding, and the unabridged version of their response can be found in the Corrective Action Plan. Please see the Corrective Action Plan issued by the District.
Section III - Federal Awards Findings and Questioned Costs MATERIAL WEAKNESSES 2023-001 - Procurement Policy Federal Program Information: Department of Environmental Protection: 66.458/66.482 Clean Water State Revolving Funds Cluster 21.027 Coronavirus State Local Fiscal Recovery Funds Criteria: The following CFR(s) apply to this finding: 2 CFR section 200.318 through 200.327. Condition: During audit procedures, it was identified that the Town of Van Buren did not have a procurement policy consistent with federal compliance standards. Cause: The District did not adopt a procurement policy consistent with federal regulations. Effect: By not having a compliant federal procurement policy, the Town is at an increased risk for making unallowable purchases. Identification of Questioned Costs: None identified. Context: A review was conducted of the Town’s procurement policy and the policy was not in compliance with Uniform Guidance. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the Town adopt a federal procurement policy that is consistent with Uniform Guidance. Views of Responsible Officials and Corrective Action Plan: Client agrees with finding, and the unabridged version of their response can be found in the Corrective Action Plan. Please see the Corrective Action Plan issued by the District.
Section III - Federal Awards Findings and Questioned Costs MATERIAL WEAKNESSES 2023-001 - Procurement Policy Federal Program Information: Department of Environmental Protection: 66.458/66.482 Clean Water State Revolving Funds Cluster 21.027 Coronavirus State Local Fiscal Recovery Funds Criteria: The following CFR(s) apply to this finding: 2 CFR section 200.318 through 200.327. Condition: During audit procedures, it was identified that the Town of Van Buren did not have a procurement policy consistent with federal compliance standards. Cause: The District did not adopt a procurement policy consistent with federal regulations. Effect: By not having a compliant federal procurement policy, the Town is at an increased risk for making unallowable purchases. Identification of Questioned Costs: None identified. Context: A review was conducted of the Town’s procurement policy and the policy was not in compliance with Uniform Guidance. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the Town adopt a federal procurement policy that is consistent with Uniform Guidance. Views of Responsible Officials and Corrective Action Plan: Client agrees with finding, and the unabridged version of their response can be found in the Corrective Action Plan. Please see the Corrective Action Plan issued by the District.
Federal Agency: Department of Housing and Urban Development CFDA No.: 14.218 Federal Program: Community Development Block Grants/Entitlement Grants Federal Award Year: 2023 Control Category: Reporting Questioned Costs: $0 Condition For the Community Development Block Grants/Entitlement Grants program, the City did not submit the following reports within the required deadline: Report Type Reporting Period (End Date) Report Submission Deadline Report Submission Date SF-425 Federal Financial Report September 30, 2022 October 30, 2022 March 7, 2023 SF-425 Federal Financial Report December 31, 2022 January 30, 2023 March 7, 2023 SF-425 Federal Financial Report March 31, 2023 April 30, 2023 May 3, 2023 Criteria Pursuant to the Part 4 CDBG – Entitlement Grants Cluster and financial and performance reporting requirements in the cooperative agreement provisions, and 2 CFR 200.327: SF-425 Federal Financial Report: Program award recipients must submit SF 425 reports to HUD quarterly, 30 days after the reporting period end date. Each report must cover all expenditures on the cooperative agreement from the start date of the reporting period to the reporting period end date. The following federal fiscal year quarter reporting period will be used for all quarterly reports, are due to HUD 30 days after the period end dates. Cause The City did not have internal controls in place to ensure that financial and performance reports are filed timely. Effect Delay in filing the reports resulted in non-compliance with the compliance requirements. Questioned Costs There were no questioned costs. Recommendation We recommend that the City strengthen internal controls by implementing procedures to ensure the timely filing of financial and performance reports. Management’s Response Regarding Corrective Action Taken or Planned Management agrees with the finding. In 2023, shortly after management was made aware procedures were put into place to properly oversee the timely submission of the SF-425 financial reports.
FINDING 2023-001 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States; Special Education Preschool Grants; COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-034-PN01, 23611-034-PN01, 22611-034-ARP, 21619-034-PN01; 22619-034-PN01, 23619-034-PN01, 22619-034-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-002. Condition and Context Procurement - Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, the informal procurement method is permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. A total of 23 vendor claims were determined to require small purchase procedures. Of the vendor claims, totaling $113,815, 4 were selected for testing. For the 4 vendor claims tested, the School Corporation did not obtain an adequate number of price or rate quotations nor was its documentation detailing the history of procurement, which must include the reason for the procurement method used. 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. INDIANA STATE BOARD OF ACCOUNTS 18 METROPOLITAN SCHOOL DISTRICT OF LAWRENCE TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Upon inquiry of the School Corporation, it was determined that the School Corporation ensures all service contracts include a provision regarding suspension and debarment. The contracts are reviewed and signed by a knowledgeable member of the School Corporation. A population of eight covered transactions for goods or services that equaled or exceeded $25,000 paid from SPED funds during the audit period was identified. A sample of two transactions, totaling $178,915, was selected for testing. For both transactions, the School Corporation did not verify the vendors' suspension and debarment status prior to payment. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal control in the Federal Government' issued by the Comptroller General of the United States or the "Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . INDIANA STATE BOARD OF ACCOUNTS 19 METROPOLITAN SCHOOL DISTRICT OF LAWRENCE TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) Small purchases– (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to 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, procurement procedures for goods and services were not adhered to, and vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-001 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States; Special Education Preschool Grants; COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-034-PN01, 23611-034-PN01, 22611-034-ARP, 21619-034-PN01; 22619-034-PN01, 23619-034-PN01, 22619-034-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-002. Condition and Context Procurement - Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, the informal procurement method is permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. A total of 23 vendor claims were determined to require small purchase procedures. Of the vendor claims, totaling $113,815, 4 were selected for testing. For the 4 vendor claims tested, the School Corporation did not obtain an adequate number of price or rate quotations nor was its documentation detailing the history of procurement, which must include the reason for the procurement method used. 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. INDIANA STATE BOARD OF ACCOUNTS 18 METROPOLITAN SCHOOL DISTRICT OF LAWRENCE TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Upon inquiry of the School Corporation, it was determined that the School Corporation ensures all service contracts include a provision regarding suspension and debarment. The contracts are reviewed and signed by a knowledgeable member of the School Corporation. A population of eight covered transactions for goods or services that equaled or exceeded $25,000 paid from SPED funds during the audit period was identified. A sample of two transactions, totaling $178,915, was selected for testing. For both transactions, the School Corporation did not verify the vendors' suspension and debarment status prior to payment. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal control in the Federal Government' issued by the Comptroller General of the United States or the "Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . INDIANA STATE BOARD OF ACCOUNTS 19 METROPOLITAN SCHOOL DISTRICT OF LAWRENCE TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) Small purchases– (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to 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, procurement procedures for goods and services were not adhered to, and vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-001 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States; Special Education Preschool Grants; COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-034-PN01, 23611-034-PN01, 22611-034-ARP, 21619-034-PN01; 22619-034-PN01, 23619-034-PN01, 22619-034-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-002. Condition and Context Procurement - Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, the informal procurement method is permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. A total of 23 vendor claims were determined to require small purchase procedures. Of the vendor claims, totaling $113,815, 4 were selected for testing. For the 4 vendor claims tested, the School Corporation did not obtain an adequate number of price or rate quotations nor was its documentation detailing the history of procurement, which must include the reason for the procurement method used. 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. INDIANA STATE BOARD OF ACCOUNTS 18 METROPOLITAN SCHOOL DISTRICT OF LAWRENCE TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Upon inquiry of the School Corporation, it was determined that the School Corporation ensures all service contracts include a provision regarding suspension and debarment. The contracts are reviewed and signed by a knowledgeable member of the School Corporation. A population of eight covered transactions for goods or services that equaled or exceeded $25,000 paid from SPED funds during the audit period was identified. A sample of two transactions, totaling $178,915, was selected for testing. For both transactions, the School Corporation did not verify the vendors' suspension and debarment status prior to payment. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal control in the Federal Government' issued by the Comptroller General of the United States or the "Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . INDIANA STATE BOARD OF ACCOUNTS 19 METROPOLITAN SCHOOL DISTRICT OF LAWRENCE TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) Small purchases– (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to 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, procurement procedures for goods and services were not adhered to, and vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-001 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States; Special Education Preschool Grants; COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-034-PN01, 23611-034-PN01, 22611-034-ARP, 21619-034-PN01; 22619-034-PN01, 23619-034-PN01, 22619-034-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-002. Condition and Context Procurement - Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, the informal procurement method is permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. A total of 23 vendor claims were determined to require small purchase procedures. Of the vendor claims, totaling $113,815, 4 were selected for testing. For the 4 vendor claims tested, the School Corporation did not obtain an adequate number of price or rate quotations nor was its documentation detailing the history of procurement, which must include the reason for the procurement method used. 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. INDIANA STATE BOARD OF ACCOUNTS 18 METROPOLITAN SCHOOL DISTRICT OF LAWRENCE TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Upon inquiry of the School Corporation, it was determined that the School Corporation ensures all service contracts include a provision regarding suspension and debarment. The contracts are reviewed and signed by a knowledgeable member of the School Corporation. A population of eight covered transactions for goods or services that equaled or exceeded $25,000 paid from SPED funds during the audit period was identified. A sample of two transactions, totaling $178,915, was selected for testing. For both transactions, the School Corporation did not verify the vendors' suspension and debarment status prior to payment. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal control in the Federal Government' issued by the Comptroller General of the United States or the "Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . INDIANA STATE BOARD OF ACCOUNTS 19 METROPOLITAN SCHOOL DISTRICT OF LAWRENCE TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) Small purchases– (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to 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, procurement procedures for goods and services were not adhered to, and vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: Special Education Cluster (IDEA) - Procurement Federal Agency: Department of Education Federal Program: Special Education Grants to States Assistance Listings Number: 84.027 Federal Award Number and Year (or Other Identifying Number): H027A190084 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. There were 27 vendors exceeding the small purchase threshold during the audit period. Of those, 5 vendors were selected for testing. For all 5 vendors tested, totaling $299,889, the School Corporation did not obtain price or rate quotes. Documentation detailing the history of procurement, which must include the reason for the procurement method used, selection of the vendor, and the basis for the price, was not available for audit. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 24 MICHIGAN CITY AREA SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to 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, procurement procedures for goods and services were not adhered to for vendors that fell within the small purchase threshold. INDIANA STATE BOARD OF ACCOUNTS 25 MICHIGAN CITY AREA SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are adequate and appropriate procurement procedures for goods and services. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding: Procurement Assistance Listing No. 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds U.S. Department of The Treasury pass through from Jefferson County and Signal Behavioral Health Network Award Year: 2023 Award Number: Not Provided Criteria: In accordance with 2 CFR 200.318, non-Federal entities must have and use documented procurement procedures, consistent with State and local 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 2 CFR 200.317 through 200.327. The Organizations procurement policy requires for Small purchases between $10,000 and $250,000. Competitive price quotes must be obtained to allow for full and open competition. a. A written solicitation including specs will be prepared and prices (might also include quality, delivery, geographical preference) obtained from multiple sources (preferably three or more) either by providing specs to the vendors or researching vendor prices (ex. internet search, vendor pricing list, verbal quotes). b. The price quotes will remain confidential before the award. c. Quotes will be evaluated by the business office and awarded based on price and the factors identified in the original request for quotes. d. Ensure all vendors receive the same information about the products or services and any special need that could affect the price. e. Check vendors for federal disbarment or suspension. Condition: During our procurement testing, we identified that the Organization did not obtain price quotes related to the purchase of $193,378 which fell within the small purchases threshold. Questioned Costs: $193,378 Context: We tested the Organizations one small purchase procurement which occurred during fiscal year 2023 in the amount of $193,978 and noted the above issue. A nonstatistical sampling methodology was used to select the sample. Effect: The Organization was not in compliance with its procurement policies and the Uniform Guidance. Cause: The Organization did not have adequate documentation to support the Organizations procurement decisions. Identification as a repeat finding: Not a repeat finding Recommendation: We recommend that the Organization follow its procurement procedures for the acquisition of property or services as required under a Federal award or sub-award. Views of responsible officials: The Organization agrees with the finding. See separate report for planned corrective actions.
Finding: Procurement Assistance Listing No. 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds U.S. Department of The Treasury pass through from Jefferson County and Signal Behavioral Health Network Award Year: 2023 Award Number: Not Provided Criteria: In accordance with 2 CFR 200.318, non-Federal entities must have and use documented procurement procedures, consistent with State and local 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 2 CFR 200.317 through 200.327. The Organizations procurement policy requires for Small purchases between $10,000 and $250,000. Competitive price quotes must be obtained to allow for full and open competition. a. A written solicitation including specs will be prepared and prices (might also include quality, delivery, geographical preference) obtained from multiple sources (preferably three or more) either by providing specs to the vendors or researching vendor prices (ex. internet search, vendor pricing list, verbal quotes). b. The price quotes will remain confidential before the award. c. Quotes will be evaluated by the business office and awarded based on price and the factors identified in the original request for quotes. d. Ensure all vendors receive the same information about the products or services and any special need that could affect the price. e. Check vendors for federal disbarment or suspension. Condition: During our procurement testing, we identified that the Organization did not obtain price quotes related to the purchase of $193,378 which fell within the small purchases threshold. Questioned Costs: $193,378 Context: We tested the Organizations one small purchase procurement which occurred during fiscal year 2023 in the amount of $193,978 and noted the above issue. A nonstatistical sampling methodology was used to select the sample. Effect: The Organization was not in compliance with its procurement policies and the Uniform Guidance. Cause: The Organization did not have adequate documentation to support the Organizations procurement decisions. Identification as a repeat finding: Not a repeat finding Recommendation: We recommend that the Organization follow its procurement procedures for the acquisition of property or services as required under a Federal award or sub-award. Views of responsible officials: The Organization agrees with the finding. See separate report for planned corrective actions.
Assistance Listings number and name: 14.267 Continuum of Care Program Award number and year: AZ9999U9T002101, February 1, 2022 through June 30, 2023 Federal agency: U.S. Department of Housing and Urban Development Compliance requirement: Procurement Questioned costs: Unknown Condition—Contrary to federal regulations, the Department’s policies and procedures did not include provisions required by the federal regulations, and the Department did not retain documentation to support procurement actions for 2 vendors we tested. Specifically, the Department’s policies and procedures did not require procurement transactions to be documented or conducted in a manner providing full and open competition. Further, the Department did not include items required by federal regulations such as contracting with small and minority businesses, women’s business enterprises, veteran-owned businesses, and labor surplus area firms; domestic preferences for procurements; procurement of recovered materials; and required federal contract provisions. Further, the Department paid the 2 vendors we tested $257,165 for administrative support services during fiscal year 2023 without retaining procurement action documentation such as requests for proposals, contracts, or other documents demonstrating the Department’s compliance with federal procurement requirements. Effect—The Department’s policies and procedures not complying with federal regulations and not maintaining documentation of its procurement actions increased the Department’s risk of not: • Receiving the most advantageous prices for the goods and services purchased with federal monies. • Considering eligible small and minority businesses, women's business enterprises, veteran-owned businesses, and labor surplus area firms as potential vendors. • Giving preference to procure goods, products, and materials produced in the United States. • Considering purchasing products or services that can be reused, refurbished, or recycled. Finally, the Department is at risk that this finding applies to other federal programs it administers. Cause—The Department did not establish and maintain effective internal control over the program’s procurement requirements that provided reasonable assurance that it was managing the program’s awards in compliance with federal regulations. Department management reported that because the Department does not have to comply with State procurement requirements, they did not think about and consider federal regulations when developing written procurement policies and procedures and procuring program services for federal awards.1 Further, Department management reported they have no record of when the Department awarded the administrative service contracts because the contracts are at least 15 years old, and the records are either not accessible in storage or were destroyed. Criteria—Federal regulations require the Department to follow the same policies and procedures it uses for nonfederal procurements and to retain all records related to a federal program, including procurement action documentation, for a period of 3 years from the date the program’s final report was submitted to the federal awarding agency or pass-through grantor (2 CFR §§ 200.317 and 200.334). Federal regulations also require the Department to comply with procurement standards for contracting with small and minority businesses, women’s business enterprises, veteran-owned businesses, and labor surplus area firms; domestic preferences for procurements; and procurement of recovered materials; and ensure that every purchase order or contract includes required federal contract provisions (2 CFR §§200.321, 200.322, 200.323, and 200.327). Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Establish and maintain effective internal control over the program’s procurement requirements by updating its written policies and procedures to: a. Retain procurement action documentation for a period of 3 years from the date the program’s final report was submitted to the federal awarding agency. b. Require full and open competition using requests for competitively bid proposals. Alternatively, document each sole source procurement only after conducting a good-faith search for available sources and concluding there is only a single source and include it in the contract file. c. Document compliance with procurement standards for contracting with small and minority businesses, women’s business enterprises, veteran-owned businesses, and labor surplus area firms; domestic preferences for procurements; and procurement of recovered materials. d. Ensure that every purchase order or contract includes required federal contract provisions. 2. Retain procurement action documentation when procuring property and services using federal funds in accordance with federal records retention requirements, ensuring compliance with federal procurement requirements. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 The Department is exempt from following the State’s procurement code (Arizona Revised Statutes §41-3953[D]).
Assistance Listings number and name: 14.267 Continuum of Care Program Award number and year: AZ9999U9T002101, February 1, 2022 through June 30, 2023 Federal agency: U.S. Department of Housing and Urban Development Compliance requirement: Procurement Questioned costs: Unknown Condition—Contrary to federal regulations, the Department’s policies and procedures did not include provisions required by the federal regulations, and the Department did not retain documentation to support procurement actions for 2 vendors we tested. Specifically, the Department’s policies and procedures did not require procurement transactions to be documented or conducted in a manner providing full and open competition. Further, the Department did not include items required by federal regulations such as contracting with small and minority businesses, women’s business enterprises, veteran-owned businesses, and labor surplus area firms; domestic preferences for procurements; procurement of recovered materials; and required federal contract provisions. Further, the Department paid the 2 vendors we tested $257,165 for administrative support services during fiscal year 2023 without retaining procurement action documentation such as requests for proposals, contracts, or other documents demonstrating the Department’s compliance with federal procurement requirements. Effect—The Department’s policies and procedures not complying with federal regulations and not maintaining documentation of its procurement actions increased the Department’s risk of not: • Receiving the most advantageous prices for the goods and services purchased with federal monies. • Considering eligible small and minority businesses, women's business enterprises, veteran-owned businesses, and labor surplus area firms as potential vendors. • Giving preference to procure goods, products, and materials produced in the United States. • Considering purchasing products or services that can be reused, refurbished, or recycled. Finally, the Department is at risk that this finding applies to other federal programs it administers. Cause—The Department did not establish and maintain effective internal control over the program’s procurement requirements that provided reasonable assurance that it was managing the program’s awards in compliance with federal regulations. Department management reported that because the Department does not have to comply with State procurement requirements, they did not think about and consider federal regulations when developing written procurement policies and procedures and procuring program services for federal awards.1 Further, Department management reported they have no record of when the Department awarded the administrative service contracts because the contracts are at least 15 years old, and the records are either not accessible in storage or were destroyed. Criteria—Federal regulations require the Department to follow the same policies and procedures it uses for nonfederal procurements and to retain all records related to a federal program, including procurement action documentation, for a period of 3 years from the date the program’s final report was submitted to the federal awarding agency or pass-through grantor (2 CFR §§ 200.317 and 200.334). Federal regulations also require the Department to comply with procurement standards for contracting with small and minority businesses, women’s business enterprises, veteran-owned businesses, and labor surplus area firms; domestic preferences for procurements; and procurement of recovered materials; and ensure that every purchase order or contract includes required federal contract provisions (2 CFR §§200.321, 200.322, 200.323, and 200.327). Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal program is being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Establish and maintain effective internal control over the program’s procurement requirements by updating its written policies and procedures to: a. Retain procurement action documentation for a period of 3 years from the date the program’s final report was submitted to the federal awarding agency. b. Require full and open competition using requests for competitively bid proposals. Alternatively, document each sole source procurement only after conducting a good-faith search for available sources and concluding there is only a single source and include it in the contract file. c. Document compliance with procurement standards for contracting with small and minority businesses, women’s business enterprises, veteran-owned businesses, and labor surplus area firms; domestic preferences for procurements; and procurement of recovered materials. d. Ensure that every purchase order or contract includes required federal contract provisions. 2. Retain procurement action documentation when procuring property and services using federal funds in accordance with federal records retention requirements, ensuring compliance with federal procurement requirements. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 The Department is exempt from following the State’s procurement code (Arizona Revised Statutes §41-3953[D]).
NONCOMPLIANCE WITH PROCUREMENT, SUSPENSION & DEBARMENT REQUIREMENTS, CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS, AL No. 21.027 Criteria: Per section 13 of Treasury’s Final Rule FAQs and 2 CFR 200.214, counties must comply with the procurement standards set forth in 2 CFR 200.318, through 2 CFR 200.327, when using their SLFRF award funds to procure goods and services to carry out the objectives of their SLFRF award. In addition, 2 CFR 200.214, prohibits recipients from using SLFRF funds to enter into subawards and contracts with parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs. Condition: The county did not verify that program recipients/participants were not suspended, debarred, or otherwise excluded from participation in the program. Cause: The county does not have procurement policies and procedures in place that allow it to comply with procurement standards outlined in the Uniform Guidance. Effect: Non-compliance with program terms and conditions. Questioned Costs: None Recommendation: Management should develop procedures that will provide reasonable assurance that procurement of goods and services are made in compliance with applicable federal regulations and other procurement requirements specific to a federal award or subaward, and that no subaward, contract, or agreement for purchase of goods or services is made with any suspended or debarred party. Views of responsible officials and planned corrective action: The government agrees with this finding and will adhere to the attached corrective action plan.
Federal Program Information: Funding Agency: Department of the Treasury Title: Coronavirus State and Local Fiscal Recovery Fund Program Assistance Listing Number: 21.027 Compliance Requirement: Procurement Award Year: July 1, 2022 to June 30, 2023 Condition: During our testing of compliance over the Procurement requirements we noted the following: From review of 2 of the vendors paid with the Coronavirus State and Local Fiscal Recovery Fund Program that were paid over $60,000 during the year, there was no evidence that the City went through the proper required procurement process to select the vendors. Criteria: Per 2 CFR sections 200.318 through 200.327, all procurement functions, including but not limited to preparation of specifications, solicitation of sources, qualification or disqualification of sources, preparation and award of contract and contract administration must be done for the vendors used for the federal expenditures based off the City’s procurement policies and procedures. Effect: The City violated its established procurement code and may not have obtained the best price for the goods and services received during the year for the Coronavirus State and Local Fiscal Recovery Fund Program. Cause: There was management override and lack of proper training in CPO and accounts payable positions, and therefore, the process was not properly followed during the fiscal year. Auditors’ Recommendations: We recommend the City implement policies and procedures as soon as possible to ensure compliance with procurement requirements pertain to each procurement that occurs during the fiscal year and no payments are made through direct voucher. Agency’s Response: Since taking office in fiscal year 2024, the current Finance Director has implemented a Standard Operating Procedure (SOP) in alignment with the Procurement Policy adopted in 2022 to ensure compliance with the State Procurement Code, internal controls, and the proper segregation of duties in procurement. This SOP outlines the specific roles and responsibilities of the Certified Procurement Officer (CPO), Finance Director, City Manager, and City Council when applicable in the procurement process. In addition, a procurement workflow has been created to be utilized by the (CPO) to ensure compliance with the City of Espanola’s procurement policy, the State Procurement Code, and appropriate checks and balances at varying thresholds. The (CPO) is responsible for ensuring all policies and state procurement laws are followed throughout the process. Additionally, all documentation from initiation to the issuance of a Purchase Order (PO) is retained electronically in a complete packet for record-keeping and audit purposes. In order to address direct payment voucher controls, the City has restricted the use of direct payment vouchers for high-volume purchases. All procurements must follow the purchase order process, unless an exception is authorized in accordance with policy. The finance department has also implemented issuing procurement violations to any department head or staff who authorizes a purchase in the absence of an approved purchase order, which aligns with the 2022 Adopted Procurement Policy. By enforcing these measures, the City ensures procurement policy compliance, transparency, and financial accountability, thereby addressing the audit findings and preventing future violations. Responsible Parties: The Director of Finance. Timeline: June 30, 2025
FINDING 2023-006 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 24 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context A School Nutrition Cooperative (Co-ops, Education Service Center, Group Purchasing Organization, etc.) that would like to be classified as a School Food Authority (SFA) Cooperative must complete a questionnaire and submit it to the Indiana Department of Education (IDOE). Once a questionnaire is received, the IDOE will review the answers to determine a Cooperative's classification. Only Cooperatives that submit the questionnaire and receive an SFA-only Cooperative classification from the IDOE in writing, will be considered an SFA only Cooperative for the purposes of the procurement process and procurement reviews. When the value of goods or services exceeds the simplified acquisition threshold, the proper purchasing method would be the bidding process, unless the purchase meets certain other qualifications. Federal regulations allow for informal procurement methods when the value of the procurement for goods 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 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. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. Two vendors were identified as falling within the small purchase threshold. Both vendors were selected for testing. Supporting documentation to show that an adequate number of price or rate quotations were obtained to ensure full and open competition could not be provided for audit. The lack of internal controls and noncompliance were systemic issues throughout the audit. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . INDIANA STATE BOARD OF ACCOUNTS 25 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to 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, procurement procedures for goods and services were not adhered to. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services. INDIANA STATE BOARD OF ACCOUNTS 26 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-006 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 24 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context A School Nutrition Cooperative (Co-ops, Education Service Center, Group Purchasing Organization, etc.) that would like to be classified as a School Food Authority (SFA) Cooperative must complete a questionnaire and submit it to the Indiana Department of Education (IDOE). Once a questionnaire is received, the IDOE will review the answers to determine a Cooperative's classification. Only Cooperatives that submit the questionnaire and receive an SFA-only Cooperative classification from the IDOE in writing, will be considered an SFA only Cooperative for the purposes of the procurement process and procurement reviews. When the value of goods or services exceeds the simplified acquisition threshold, the proper purchasing method would be the bidding process, unless the purchase meets certain other qualifications. Federal regulations allow for informal procurement methods when the value of the procurement for goods 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 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. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. Two vendors were identified as falling within the small purchase threshold. Both vendors were selected for testing. Supporting documentation to show that an adequate number of price or rate quotations were obtained to ensure full and open competition could not be provided for audit. The lack of internal controls and noncompliance were systemic issues throughout the audit. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . INDIANA STATE BOARD OF ACCOUNTS 25 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to 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, procurement procedures for goods and services were not adhered to. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services. INDIANA STATE BOARD OF ACCOUNTS 26 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-006 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 24 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context A School Nutrition Cooperative (Co-ops, Education Service Center, Group Purchasing Organization, etc.) that would like to be classified as a School Food Authority (SFA) Cooperative must complete a questionnaire and submit it to the Indiana Department of Education (IDOE). Once a questionnaire is received, the IDOE will review the answers to determine a Cooperative's classification. Only Cooperatives that submit the questionnaire and receive an SFA-only Cooperative classification from the IDOE in writing, will be considered an SFA only Cooperative for the purposes of the procurement process and procurement reviews. When the value of goods or services exceeds the simplified acquisition threshold, the proper purchasing method would be the bidding process, unless the purchase meets certain other qualifications. Federal regulations allow for informal procurement methods when the value of the procurement for goods 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 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. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. Two vendors were identified as falling within the small purchase threshold. Both vendors were selected for testing. Supporting documentation to show that an adequate number of price or rate quotations were obtained to ensure full and open competition could not be provided for audit. The lack of internal controls and noncompliance were systemic issues throughout the audit. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . INDIANA STATE BOARD OF ACCOUNTS 25 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to 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, procurement procedures for goods and services were not adhered to. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services. INDIANA STATE BOARD OF ACCOUNTS 26 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-006 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 24 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context A School Nutrition Cooperative (Co-ops, Education Service Center, Group Purchasing Organization, etc.) that would like to be classified as a School Food Authority (SFA) Cooperative must complete a questionnaire and submit it to the Indiana Department of Education (IDOE). Once a questionnaire is received, the IDOE will review the answers to determine a Cooperative's classification. Only Cooperatives that submit the questionnaire and receive an SFA-only Cooperative classification from the IDOE in writing, will be considered an SFA only Cooperative for the purposes of the procurement process and procurement reviews. When the value of goods or services exceeds the simplified acquisition threshold, the proper purchasing method would be the bidding process, unless the purchase meets certain other qualifications. Federal regulations allow for informal procurement methods when the value of the procurement for goods 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 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. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. Two vendors were identified as falling within the small purchase threshold. Both vendors were selected for testing. Supporting documentation to show that an adequate number of price or rate quotations were obtained to ensure full and open competition could not be provided for audit. The lack of internal controls and noncompliance were systemic issues throughout the audit. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . INDIANA STATE BOARD OF ACCOUNTS 25 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to 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, procurement procedures for goods and services were not adhered to. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services. INDIANA STATE BOARD OF ACCOUNTS 26 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-006 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2022, FY2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 24 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context A School Nutrition Cooperative (Co-ops, Education Service Center, Group Purchasing Organization, etc.) that would like to be classified as a School Food Authority (SFA) Cooperative must complete a questionnaire and submit it to the Indiana Department of Education (IDOE). Once a questionnaire is received, the IDOE will review the answers to determine a Cooperative's classification. Only Cooperatives that submit the questionnaire and receive an SFA-only Cooperative classification from the IDOE in writing, will be considered an SFA only Cooperative for the purposes of the procurement process and procurement reviews. When the value of goods or services exceeds the simplified acquisition threshold, the proper purchasing method would be the bidding process, unless the purchase meets certain other qualifications. Federal regulations allow for informal procurement methods when the value of the procurement for goods 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 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. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. Two vendors were identified as falling within the small purchase threshold. Both vendors were selected for testing. Supporting documentation to show that an adequate number of price or rate quotations were obtained to ensure full and open competition could not be provided for audit. The lack of internal controls and noncompliance were systemic issues throughout the audit. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . INDIANA STATE BOARD OF ACCOUNTS 25 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use document procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to 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, procurement procedures for goods and services were not adhered to. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services. INDIANA STATE BOARD OF ACCOUNTS 26 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2023-002 Improve Documentation and Controls Over Procurement Federal Program(s) Information Federal Agency: U.S. Department of the Treasury Cluster/Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds AL Number(s): 21.027 Award Year: 2023 Compliance Requirement: Procurement Type of Finding Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement Per 2 CFR 200.318–200.327, non-federal entities must use their 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 set forth in the Uniform Guidance. In some cases, the Uniform Guidance may establish stricter requirements for procurement, including the need for full and open competition, documentation of procurement history, and specific justifications for sole source or exempt procurements. Entities must comply with the stricter requirements when procuring services. Condition and Context During testing of procurement transactions, the Town was unable to provide documentation supporting procurement for one selected vendor for a design project. The project proceeded with an existing provider for the Town engaged on other projects rather than following the policies and procedures for soliciting competitive sealed bids or proposals for the specific project under the grant. The Procurement Manager relied on an exemption for engineering services under Massachusetts procurement law, which in this case is less restrictive than Uniform Guidance requirements. As a result, the Town did not comply with the federal procurement standards applicable to this transaction. Cause The Town’s internal controls over procurement did not ensure that federal requirements under Uniform Guidance were followed when state and federal rules differed. The Procurement Manager applied state-level exemptions rather than adhering to more restrictive federal standards. Effect or Potential Effect The absence of procurement documentation and use of state exemptions rather than federal requirements increase the risk of non-compliance and may result in unallowable costs. Questioned costs reported as a result of this transaction are $110,901. TOWN OF NORWOOD, MASSACHUSETTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) FOR THE YEAR ENDED JUNE 30, 2023 13 SECTION III - FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS (CONTINUED) 2023-002 Improve Documentation and Controls Over Procurement (Continued) Recommendation The Town strengthen its internal controls over procurement to ensure compliance with Uniform Guidance requirements, regardless of state law exemptions. The Town should ensure adequate documentation is retained for all federally funded procurements, and that procurement staff are trained on the distinction between federal and state procurement requirements. Views of Responsible Officials Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.
2023-002 Improve Documentation and Controls Over Procurement Federal Program(s) Information Federal Agency: U.S. Department of the Treasury Cluster/Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds AL Number(s): 21.027 Award Year: 2023 Compliance Requirement: Procurement Type of Finding Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement Per 2 CFR 200.318–200.327, non-federal entities must use their 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 set forth in the Uniform Guidance. In some cases, the Uniform Guidance may establish stricter requirements for procurement, including the need for full and open competition, documentation of procurement history, and specific justifications for sole source or exempt procurements. Entities must comply with the stricter requirements when procuring services. Condition and Context During testing of procurement transactions, the Town was unable to provide documentation supporting procurement for one selected vendor for a design project. The project proceeded with an existing provider for the Town engaged on other projects rather than following the policies and procedures for soliciting competitive sealed bids or proposals for the specific project under the grant. The Procurement Manager relied on an exemption for engineering services under Massachusetts procurement law, which in this case is less restrictive than Uniform Guidance requirements. As a result, the Town did not comply with the federal procurement standards applicable to this transaction. Cause The Town’s internal controls over procurement did not ensure that federal requirements under Uniform Guidance were followed when state and federal rules differed. The Procurement Manager applied state-level exemptions rather than adhering to more restrictive federal standards. Effect or Potential Effect The absence of procurement documentation and use of state exemptions rather than federal requirements increase the risk of non-compliance and may result in unallowable costs. Questioned costs reported as a result of this transaction are $110,901. TOWN OF NORWOOD, MASSACHUSETTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) FOR THE YEAR ENDED JUNE 30, 2023 13 SECTION III - FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS (CONTINUED) 2023-002 Improve Documentation and Controls Over Procurement (Continued) Recommendation The Town strengthen its internal controls over procurement to ensure compliance with Uniform Guidance requirements, regardless of state law exemptions. The Town should ensure adequate documentation is retained for all federally funded procurements, and that procurement staff are trained on the distinction between federal and state procurement requirements. Views of Responsible Officials Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.
FINDING NO: 2023-109 (prior year 2022-090) STATE AGENCY: State of Oklahoma and Office of Management and Enterprise Services FEDERAL AGENCY: Multiple ALN: Multiple FEDERAL PROGRAM NAME: Multiple FEDERAL AWARD NUMBER: Multiple FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Procurement and Suspension and Debarment QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.317 Procurements by states, says in part, “When procuring property and services under a Federal award, a State must follow the same policies and procedures it uses for procurements from its non-Federal funds. The State will … ensure that every purchase order or other contract includes any clauses required by § 200.327. 2 CFR § 200.404 Reasonable costs, states in part, “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to … : (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.” 74 O.S. §85.5 Powers and Duties of State Purchasing Director, states in part, “H. 1. The State Purchasing Director may develop and test new contracting policies, procedures and innovations that hold potential for making state procurement more effective and efficient and identify, and make recommendations to the Legislature of, any appropriate changes in law. Such development and testing, proof of concept, pilot project or other similar test shall not be considered an acquisition subject to the Oklahoma Central Purchasing Act. 2. The State Purchasing Director is authorized to explore and investigate cost savings in energy, resource usage and maintenance contracts and to identify and negotiate contract solutions including, but not limited to, pilot projects to achieve cost savings for this state.” Condition and Context: While performing federal compliance testing of all major programs for SFY2022 Single Audit, we were made aware that Office of Management and Enterprise Services (OMES) created a pilot program (starting in SFY 2019/2020) wherein vendors were put on Statewide Contract, thus no longer requiring them to competitively bid their services. These pilot programs are known as Rolling Request for Proposal (RFP) or Rolling Solicitations. In SFY2022, we noted certain non-IT consulting services (SW0133 Statewide Contracts) and Deliverable Based IT Service (SW1050 Statewide Contracts) vendors were added to Statewide Contract pilot program and are now receiving federal funds through this process. In SFY2023, OMES added two additional Statewide Contract pilot programs, SW1025 Information Technology Staff Augmentation Services and SW0132 Non-IT Temporary Employment Services. Vendors under this contract category will also be receiving federal funding. Further, there are no written policies and procedures for any of the Statewide Contracting pilot programs (Rolling RFP’s) to describe how these contracts are to be executed to meet both federal and state law. Since there were no written policies and procedures, we were unable to determine how OMES conducted their evaluation process relevant to the scope of services and contract price, to ensure vendors are properly vetted. Lastly, no recommendations have been made to the Legislature on how the Statewide Contract pilot programs has helped state procurement become more effective and efficient for the State of Oklahoma as required by law. As a result, the longer the pilot programs remain open without recommendations to the Legislature, entities on Statewide Contract pilot programs are allowed to charge what they feel are appropriate rates per their federal contracts, without any competitive or vetting process in place. Cause: The OMES does not have adequate controls in place, including policies and procedures, to ensure federal grant contracts are properly executed. Effect: The OMES is not complying with 2 CFR § 200.317 Procurements by states since the agency has no policies and procedures in place for the Statewide Contracting pilot programs. As a result, federal contracts awarded under the Statewide Contracting pilot programs, do not appear to meet State of Oklahoma competitive bidding requirements. Also, contracts with vendors may not contain the applicable provisions required by 2 CFR § 200.327. Lastly, under the existing Statewide Contract pilot programs, OMES can receive increased federal contract fees because vendors are not compelled to charge reasonable rates per 2 CFR § 200.404. Recommendation: We recommend the OMES develop and implement policies and procedures for the Statewide Contract pilot programs to ensure all federal contracts are properly executed. Further, we recommend OMES provide justification on how vendors/consultants put on the Statewide Contract pilot programs are exempt from competitive bidding requirements. Lastly, we recommend the OMES work in a timely manner to either bring the Statewide Contract pilot programs before the legislature to explain the benefits to the state and what should be written into law or eliminate the program. Views of Responsible Official(s) Contact Person: Amanda Otis Anticipated Completion Date: Sine Die Corrective Action Planned: Management does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of the report. Auditor Response: Based on the corrective action plan provided by management, the procedures provided were not adequate, or timely policies and procedures to explain how the Statewide Contracting pilot programs (Rolling RFP’s) are meeting the competitive bidding requirements per Title 74 O.S. § 85.7. As a result, our finding stands that management does not have adequate policies and procedures to meet 2 CFR § 200.317 Procurements by states for federal contracting. Further, the Statewide Contracting pilot programs lack detailed policies and procedures to show that federal grant contracts are being awarded to the lowest and best, or best value, bidder or bidders per Title 74 O.S. § 85.7.A.7.B.
FINDING NO: 2023-109 (prior year 2022-090) STATE AGENCY: State of Oklahoma and Office of Management and Enterprise Services FEDERAL AGENCY: Multiple ALN: Multiple FEDERAL PROGRAM NAME: Multiple FEDERAL AWARD NUMBER: Multiple FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Procurement and Suspension and Debarment QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.317 Procurements by states, says in part, “When procuring property and services under a Federal award, a State must follow the same policies and procedures it uses for procurements from its non-Federal funds. The State will … ensure that every purchase order or other contract includes any clauses required by § 200.327. 2 CFR § 200.404 Reasonable costs, states in part, “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to … : (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.” 74 O.S. §85.5 Powers and Duties of State Purchasing Director, states in part, “H. 1. The State Purchasing Director may develop and test new contracting policies, procedures and innovations that hold potential for making state procurement more effective and efficient and identify, and make recommendations to the Legislature of, any appropriate changes in law. Such development and testing, proof of concept, pilot project or other similar test shall not be considered an acquisition subject to the Oklahoma Central Purchasing Act. 2. The State Purchasing Director is authorized to explore and investigate cost savings in energy, resource usage and maintenance contracts and to identify and negotiate contract solutions including, but not limited to, pilot projects to achieve cost savings for this state.” Condition and Context: While performing federal compliance testing of all major programs for SFY2022 Single Audit, we were made aware that Office of Management and Enterprise Services (OMES) created a pilot program (starting in SFY 2019/2020) wherein vendors were put on Statewide Contract, thus no longer requiring them to competitively bid their services. These pilot programs are known as Rolling Request for Proposal (RFP) or Rolling Solicitations. In SFY2022, we noted certain non-IT consulting services (SW0133 Statewide Contracts) and Deliverable Based IT Service (SW1050 Statewide Contracts) vendors were added to Statewide Contract pilot program and are now receiving federal funds through this process. In SFY2023, OMES added two additional Statewide Contract pilot programs, SW1025 Information Technology Staff Augmentation Services and SW0132 Non-IT Temporary Employment Services. Vendors under this contract category will also be receiving federal funding. Further, there are no written policies and procedures for any of the Statewide Contracting pilot programs (Rolling RFP’s) to describe how these contracts are to be executed to meet both federal and state law. Since there were no written policies and procedures, we were unable to determine how OMES conducted their evaluation process relevant to the scope of services and contract price, to ensure vendors are properly vetted. Lastly, no recommendations have been made to the Legislature on how the Statewide Contract pilot programs has helped state procurement become more effective and efficient for the State of Oklahoma as required by law. As a result, the longer the pilot programs remain open without recommendations to the Legislature, entities on Statewide Contract pilot programs are allowed to charge what they feel are appropriate rates per their federal contracts, without any competitive or vetting process in place. Cause: The OMES does not have adequate controls in place, including policies and procedures, to ensure federal grant contracts are properly executed. Effect: The OMES is not complying with 2 CFR § 200.317 Procurements by states since the agency has no policies and procedures in place for the Statewide Contracting pilot programs. As a result, federal contracts awarded under the Statewide Contracting pilot programs, do not appear to meet State of Oklahoma competitive bidding requirements. Also, contracts with vendors may not contain the applicable provisions required by 2 CFR § 200.327. Lastly, under the existing Statewide Contract pilot programs, OMES can receive increased federal contract fees because vendors are not compelled to charge reasonable rates per 2 CFR § 200.404. Recommendation: We recommend the OMES develop and implement policies and procedures for the Statewide Contract pilot programs to ensure all federal contracts are properly executed. Further, we recommend OMES provide justification on how vendors/consultants put on the Statewide Contract pilot programs are exempt from competitive bidding requirements. Lastly, we recommend the OMES work in a timely manner to either bring the Statewide Contract pilot programs before the legislature to explain the benefits to the state and what should be written into law or eliminate the program. Views of Responsible Official(s) Contact Person: Amanda Otis Anticipated Completion Date: Sine Die Corrective Action Planned: Management does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of the report. Auditor Response: Based on the corrective action plan provided by management, the procedures provided were not adequate, or timely policies and procedures to explain how the Statewide Contracting pilot programs (Rolling RFP’s) are meeting the competitive bidding requirements per Title 74 O.S. § 85.7. As a result, our finding stands that management does not have adequate policies and procedures to meet 2 CFR § 200.317 Procurements by states for federal contracting. Further, the Statewide Contracting pilot programs lack detailed policies and procedures to show that federal grant contracts are being awarded to the lowest and best, or best value, bidder or bidders per Title 74 O.S. § 85.7.A.7.B.
FINDING NO: 2023-109 (prior year 2022-090) STATE AGENCY: State of Oklahoma and Office of Management and Enterprise Services FEDERAL AGENCY: Multiple ALN: Multiple FEDERAL PROGRAM NAME: Multiple FEDERAL AWARD NUMBER: Multiple FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Procurement and Suspension and Debarment QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.317 Procurements by states, says in part, “When procuring property and services under a Federal award, a State must follow the same policies and procedures it uses for procurements from its non-Federal funds. The State will … ensure that every purchase order or other contract includes any clauses required by § 200.327. 2 CFR § 200.404 Reasonable costs, states in part, “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to … : (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.” 74 O.S. §85.5 Powers and Duties of State Purchasing Director, states in part, “H. 1. The State Purchasing Director may develop and test new contracting policies, procedures and innovations that hold potential for making state procurement more effective and efficient and identify, and make recommendations to the Legislature of, any appropriate changes in law. Such development and testing, proof of concept, pilot project or other similar test shall not be considered an acquisition subject to the Oklahoma Central Purchasing Act. 2. The State Purchasing Director is authorized to explore and investigate cost savings in energy, resource usage and maintenance contracts and to identify and negotiate contract solutions including, but not limited to, pilot projects to achieve cost savings for this state.” Condition and Context: While performing federal compliance testing of all major programs for SFY2022 Single Audit, we were made aware that Office of Management and Enterprise Services (OMES) created a pilot program (starting in SFY 2019/2020) wherein vendors were put on Statewide Contract, thus no longer requiring them to competitively bid their services. These pilot programs are known as Rolling Request for Proposal (RFP) or Rolling Solicitations. In SFY2022, we noted certain non-IT consulting services (SW0133 Statewide Contracts) and Deliverable Based IT Service (SW1050 Statewide Contracts) vendors were added to Statewide Contract pilot program and are now receiving federal funds through this process. In SFY2023, OMES added two additional Statewide Contract pilot programs, SW1025 Information Technology Staff Augmentation Services and SW0132 Non-IT Temporary Employment Services. Vendors under this contract category will also be receiving federal funding. Further, there are no written policies and procedures for any of the Statewide Contracting pilot programs (Rolling RFP’s) to describe how these contracts are to be executed to meet both federal and state law. Since there were no written policies and procedures, we were unable to determine how OMES conducted their evaluation process relevant to the scope of services and contract price, to ensure vendors are properly vetted. Lastly, no recommendations have been made to the Legislature on how the Statewide Contract pilot programs has helped state procurement become more effective and efficient for the State of Oklahoma as required by law. As a result, the longer the pilot programs remain open without recommendations to the Legislature, entities on Statewide Contract pilot programs are allowed to charge what they feel are appropriate rates per their federal contracts, without any competitive or vetting process in place. Cause: The OMES does not have adequate controls in place, including policies and procedures, to ensure federal grant contracts are properly executed. Effect: The OMES is not complying with 2 CFR § 200.317 Procurements by states since the agency has no policies and procedures in place for the Statewide Contracting pilot programs. As a result, federal contracts awarded under the Statewide Contracting pilot programs, do not appear to meet State of Oklahoma competitive bidding requirements. Also, contracts with vendors may not contain the applicable provisions required by 2 CFR § 200.327. Lastly, under the existing Statewide Contract pilot programs, OMES can receive increased federal contract fees because vendors are not compelled to charge reasonable rates per 2 CFR § 200.404. Recommendation: We recommend the OMES develop and implement policies and procedures for the Statewide Contract pilot programs to ensure all federal contracts are properly executed. Further, we recommend OMES provide justification on how vendors/consultants put on the Statewide Contract pilot programs are exempt from competitive bidding requirements. Lastly, we recommend the OMES work in a timely manner to either bring the Statewide Contract pilot programs before the legislature to explain the benefits to the state and what should be written into law or eliminate the program. Views of Responsible Official(s) Contact Person: Amanda Otis Anticipated Completion Date: Sine Die Corrective Action Planned: Management does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of the report. Auditor Response: Based on the corrective action plan provided by management, the procedures provided were not adequate, or timely policies and procedures to explain how the Statewide Contracting pilot programs (Rolling RFP’s) are meeting the competitive bidding requirements per Title 74 O.S. § 85.7. As a result, our finding stands that management does not have adequate policies and procedures to meet 2 CFR § 200.317 Procurements by states for federal contracting. Further, the Statewide Contracting pilot programs lack detailed policies and procedures to show that federal grant contracts are being awarded to the lowest and best, or best value, bidder or bidders per Title 74 O.S. § 85.7.A.7.B.
FINDING NO: 2023-109 (prior year 2022-090) STATE AGENCY: State of Oklahoma and Office of Management and Enterprise Services FEDERAL AGENCY: Multiple ALN: Multiple FEDERAL PROGRAM NAME: Multiple FEDERAL AWARD NUMBER: Multiple FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Procurement and Suspension and Debarment QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.317 Procurements by states, says in part, “When procuring property and services under a Federal award, a State must follow the same policies and procedures it uses for procurements from its non-Federal funds. The State will … ensure that every purchase order or other contract includes any clauses required by § 200.327. 2 CFR § 200.404 Reasonable costs, states in part, “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to … : (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.” 74 O.S. §85.5 Powers and Duties of State Purchasing Director, states in part, “H. 1. The State Purchasing Director may develop and test new contracting policies, procedures and innovations that hold potential for making state procurement more effective and efficient and identify, and make recommendations to the Legislature of, any appropriate changes in law. Such development and testing, proof of concept, pilot project or other similar test shall not be considered an acquisition subject to the Oklahoma Central Purchasing Act. 2. The State Purchasing Director is authorized to explore and investigate cost savings in energy, resource usage and maintenance contracts and to identify and negotiate contract solutions including, but not limited to, pilot projects to achieve cost savings for this state.” Condition and Context: While performing federal compliance testing of all major programs for SFY2022 Single Audit, we were made aware that Office of Management and Enterprise Services (OMES) created a pilot program (starting in SFY 2019/2020) wherein vendors were put on Statewide Contract, thus no longer requiring them to competitively bid their services. These pilot programs are known as Rolling Request for Proposal (RFP) or Rolling Solicitations. In SFY2022, we noted certain non-IT consulting services (SW0133 Statewide Contracts) and Deliverable Based IT Service (SW1050 Statewide Contracts) vendors were added to Statewide Contract pilot program and are now receiving federal funds through this process. In SFY2023, OMES added two additional Statewide Contract pilot programs, SW1025 Information Technology Staff Augmentation Services and SW0132 Non-IT Temporary Employment Services. Vendors under this contract category will also be receiving federal funding. Further, there are no written policies and procedures for any of the Statewide Contracting pilot programs (Rolling RFP’s) to describe how these contracts are to be executed to meet both federal and state law. Since there were no written policies and procedures, we were unable to determine how OMES conducted their evaluation process relevant to the scope of services and contract price, to ensure vendors are properly vetted. Lastly, no recommendations have been made to the Legislature on how the Statewide Contract pilot programs has helped state procurement become more effective and efficient for the State of Oklahoma as required by law. As a result, the longer the pilot programs remain open without recommendations to the Legislature, entities on Statewide Contract pilot programs are allowed to charge what they feel are appropriate rates per their federal contracts, without any competitive or vetting process in place. Cause: The OMES does not have adequate controls in place, including policies and procedures, to ensure federal grant contracts are properly executed. Effect: The OMES is not complying with 2 CFR § 200.317 Procurements by states since the agency has no policies and procedures in place for the Statewide Contracting pilot programs. As a result, federal contracts awarded under the Statewide Contracting pilot programs, do not appear to meet State of Oklahoma competitive bidding requirements. Also, contracts with vendors may not contain the applicable provisions required by 2 CFR § 200.327. Lastly, under the existing Statewide Contract pilot programs, OMES can receive increased federal contract fees because vendors are not compelled to charge reasonable rates per 2 CFR § 200.404. Recommendation: We recommend the OMES develop and implement policies and procedures for the Statewide Contract pilot programs to ensure all federal contracts are properly executed. Further, we recommend OMES provide justification on how vendors/consultants put on the Statewide Contract pilot programs are exempt from competitive bidding requirements. Lastly, we recommend the OMES work in a timely manner to either bring the Statewide Contract pilot programs before the legislature to explain the benefits to the state and what should be written into law or eliminate the program. Views of Responsible Official(s) Contact Person: Amanda Otis Anticipated Completion Date: Sine Die Corrective Action Planned: Management does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of the report. Auditor Response: Based on the corrective action plan provided by management, the procedures provided were not adequate, or timely policies and procedures to explain how the Statewide Contracting pilot programs (Rolling RFP’s) are meeting the competitive bidding requirements per Title 74 O.S. § 85.7. As a result, our finding stands that management does not have adequate policies and procedures to meet 2 CFR § 200.317 Procurements by states for federal contracting. Further, the Statewide Contracting pilot programs lack detailed policies and procedures to show that federal grant contracts are being awarded to the lowest and best, or best value, bidder or bidders per Title 74 O.S. § 85.7.A.7.B.
FINDING NO: 2023-109 (prior year 2022-090) STATE AGENCY: State of Oklahoma and Office of Management and Enterprise Services FEDERAL AGENCY: Multiple ALN: Multiple FEDERAL PROGRAM NAME: Multiple FEDERAL AWARD NUMBER: Multiple FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Procurement and Suspension and Debarment QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.317 Procurements by states, says in part, “When procuring property and services under a Federal award, a State must follow the same policies and procedures it uses for procurements from its non-Federal funds. The State will … ensure that every purchase order or other contract includes any clauses required by § 200.327. 2 CFR § 200.404 Reasonable costs, states in part, “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to … : (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.” 74 O.S. §85.5 Powers and Duties of State Purchasing Director, states in part, “H. 1. The State Purchasing Director may develop and test new contracting policies, procedures and innovations that hold potential for making state procurement more effective and efficient and identify, and make recommendations to the Legislature of, any appropriate changes in law. Such development and testing, proof of concept, pilot project or other similar test shall not be considered an acquisition subject to the Oklahoma Central Purchasing Act. 2. The State Purchasing Director is authorized to explore and investigate cost savings in energy, resource usage and maintenance contracts and to identify and negotiate contract solutions including, but not limited to, pilot projects to achieve cost savings for this state.” Condition and Context: While performing federal compliance testing of all major programs for SFY2022 Single Audit, we were made aware that Office of Management and Enterprise Services (OMES) created a pilot program (starting in SFY 2019/2020) wherein vendors were put on Statewide Contract, thus no longer requiring them to competitively bid their services. These pilot programs are known as Rolling Request for Proposal (RFP) or Rolling Solicitations. In SFY2022, we noted certain non-IT consulting services (SW0133 Statewide Contracts) and Deliverable Based IT Service (SW1050 Statewide Contracts) vendors were added to Statewide Contract pilot program and are now receiving federal funds through this process. In SFY2023, OMES added two additional Statewide Contract pilot programs, SW1025 Information Technology Staff Augmentation Services and SW0132 Non-IT Temporary Employment Services. Vendors under this contract category will also be receiving federal funding. Further, there are no written policies and procedures for any of the Statewide Contracting pilot programs (Rolling RFP’s) to describe how these contracts are to be executed to meet both federal and state law. Since there were no written policies and procedures, we were unable to determine how OMES conducted their evaluation process relevant to the scope of services and contract price, to ensure vendors are properly vetted. Lastly, no recommendations have been made to the Legislature on how the Statewide Contract pilot programs has helped state procurement become more effective and efficient for the State of Oklahoma as required by law. As a result, the longer the pilot programs remain open without recommendations to the Legislature, entities on Statewide Contract pilot programs are allowed to charge what they feel are appropriate rates per their federal contracts, without any competitive or vetting process in place. Cause: The OMES does not have adequate controls in place, including policies and procedures, to ensure federal grant contracts are properly executed. Effect: The OMES is not complying with 2 CFR § 200.317 Procurements by states since the agency has no policies and procedures in place for the Statewide Contracting pilot programs. As a result, federal contracts awarded under the Statewide Contracting pilot programs, do not appear to meet State of Oklahoma competitive bidding requirements. Also, contracts with vendors may not contain the applicable provisions required by 2 CFR § 200.327. Lastly, under the existing Statewide Contract pilot programs, OMES can receive increased federal contract fees because vendors are not compelled to charge reasonable rates per 2 CFR § 200.404. Recommendation: We recommend the OMES develop and implement policies and procedures for the Statewide Contract pilot programs to ensure all federal contracts are properly executed. Further, we recommend OMES provide justification on how vendors/consultants put on the Statewide Contract pilot programs are exempt from competitive bidding requirements. Lastly, we recommend the OMES work in a timely manner to either bring the Statewide Contract pilot programs before the legislature to explain the benefits to the state and what should be written into law or eliminate the program. Views of Responsible Official(s) Contact Person: Amanda Otis Anticipated Completion Date: Sine Die Corrective Action Planned: Management does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of the report. Auditor Response: Based on the corrective action plan provided by management, the procedures provided were not adequate, or timely policies and procedures to explain how the Statewide Contracting pilot programs (Rolling RFP’s) are meeting the competitive bidding requirements per Title 74 O.S. § 85.7. As a result, our finding stands that management does not have adequate policies and procedures to meet 2 CFR § 200.317 Procurements by states for federal contracting. Further, the Statewide Contracting pilot programs lack detailed policies and procedures to show that federal grant contracts are being awarded to the lowest and best, or best value, bidder or bidders per Title 74 O.S. § 85.7.A.7.B.
FINDING NO: 2023-109 (prior year 2022-090) STATE AGENCY: State of Oklahoma and Office of Management and Enterprise Services FEDERAL AGENCY: Multiple ALN: Multiple FEDERAL PROGRAM NAME: Multiple FEDERAL AWARD NUMBER: Multiple FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Procurement and Suspension and Debarment QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.317 Procurements by states, says in part, “When procuring property and services under a Federal award, a State must follow the same policies and procedures it uses for procurements from its non-Federal funds. The State will … ensure that every purchase order or other contract includes any clauses required by § 200.327. 2 CFR § 200.404 Reasonable costs, states in part, “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to … : (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.” 74 O.S. §85.5 Powers and Duties of State Purchasing Director, states in part, “H. 1. The State Purchasing Director may develop and test new contracting policies, procedures and innovations that hold potential for making state procurement more effective and efficient and identify, and make recommendations to the Legislature of, any appropriate changes in law. Such development and testing, proof of concept, pilot project or other similar test shall not be considered an acquisition subject to the Oklahoma Central Purchasing Act. 2. The State Purchasing Director is authorized to explore and investigate cost savings in energy, resource usage and maintenance contracts and to identify and negotiate contract solutions including, but not limited to, pilot projects to achieve cost savings for this state.” Condition and Context: While performing federal compliance testing of all major programs for SFY2022 Single Audit, we were made aware that Office of Management and Enterprise Services (OMES) created a pilot program (starting in SFY 2019/2020) wherein vendors were put on Statewide Contract, thus no longer requiring them to competitively bid their services. These pilot programs are known as Rolling Request for Proposal (RFP) or Rolling Solicitations. In SFY2022, we noted certain non-IT consulting services (SW0133 Statewide Contracts) and Deliverable Based IT Service (SW1050 Statewide Contracts) vendors were added to Statewide Contract pilot program and are now receiving federal funds through this process. In SFY2023, OMES added two additional Statewide Contract pilot programs, SW1025 Information Technology Staff Augmentation Services and SW0132 Non-IT Temporary Employment Services. Vendors under this contract category will also be receiving federal funding. Further, there are no written policies and procedures for any of the Statewide Contracting pilot programs (Rolling RFP’s) to describe how these contracts are to be executed to meet both federal and state law. Since there were no written policies and procedures, we were unable to determine how OMES conducted their evaluation process relevant to the scope of services and contract price, to ensure vendors are properly vetted. Lastly, no recommendations have been made to the Legislature on how the Statewide Contract pilot programs has helped state procurement become more effective and efficient for the State of Oklahoma as required by law. As a result, the longer the pilot programs remain open without recommendations to the Legislature, entities on Statewide Contract pilot programs are allowed to charge what they feel are appropriate rates per their federal contracts, without any competitive or vetting process in place. Cause: The OMES does not have adequate controls in place, including policies and procedures, to ensure federal grant contracts are properly executed. Effect: The OMES is not complying with 2 CFR § 200.317 Procurements by states since the agency has no policies and procedures in place for the Statewide Contracting pilot programs. As a result, federal contracts awarded under the Statewide Contracting pilot programs, do not appear to meet State of Oklahoma competitive bidding requirements. Also, contracts with vendors may not contain the applicable provisions required by 2 CFR § 200.327. Lastly, under the existing Statewide Contract pilot programs, OMES can receive increased federal contract fees because vendors are not compelled to charge reasonable rates per 2 CFR § 200.404. Recommendation: We recommend the OMES develop and implement policies and procedures for the Statewide Contract pilot programs to ensure all federal contracts are properly executed. Further, we recommend OMES provide justification on how vendors/consultants put on the Statewide Contract pilot programs are exempt from competitive bidding requirements. Lastly, we recommend the OMES work in a timely manner to either bring the Statewide Contract pilot programs before the legislature to explain the benefits to the state and what should be written into law or eliminate the program. Views of Responsible Official(s) Contact Person: Amanda Otis Anticipated Completion Date: Sine Die Corrective Action Planned: Management does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of the report. Auditor Response: Based on the corrective action plan provided by management, the procedures provided were not adequate, or timely policies and procedures to explain how the Statewide Contracting pilot programs (Rolling RFP’s) are meeting the competitive bidding requirements per Title 74 O.S. § 85.7. As a result, our finding stands that management does not have adequate policies and procedures to meet 2 CFR § 200.317 Procurements by states for federal contracting. Further, the Statewide Contracting pilot programs lack detailed policies and procedures to show that federal grant contracts are being awarded to the lowest and best, or best value, bidder or bidders per Title 74 O.S. § 85.7.A.7.B.
FINDING NO: 2023-109 (prior year 2022-090) STATE AGENCY: State of Oklahoma and Office of Management and Enterprise Services FEDERAL AGENCY: Multiple ALN: Multiple FEDERAL PROGRAM NAME: Multiple FEDERAL AWARD NUMBER: Multiple FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Procurement and Suspension and Debarment QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.317 Procurements by states, says in part, “When procuring property and services under a Federal award, a State must follow the same policies and procedures it uses for procurements from its non-Federal funds. The State will … ensure that every purchase order or other contract includes any clauses required by § 200.327. 2 CFR § 200.404 Reasonable costs, states in part, “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to … : (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.” 74 O.S. §85.5 Powers and Duties of State Purchasing Director, states in part, “H. 1. The State Purchasing Director may develop and test new contracting policies, procedures and innovations that hold potential for making state procurement more effective and efficient and identify, and make recommendations to the Legislature of, any appropriate changes in law. Such development and testing, proof of concept, pilot project or other similar test shall not be considered an acquisition subject to the Oklahoma Central Purchasing Act. 2. The State Purchasing Director is authorized to explore and investigate cost savings in energy, resource usage and maintenance contracts and to identify and negotiate contract solutions including, but not limited to, pilot projects to achieve cost savings for this state.” Condition and Context: While performing federal compliance testing of all major programs for SFY2022 Single Audit, we were made aware that Office of Management and Enterprise Services (OMES) created a pilot program (starting in SFY 2019/2020) wherein vendors were put on Statewide Contract, thus no longer requiring them to competitively bid their services. These pilot programs are known as Rolling Request for Proposal (RFP) or Rolling Solicitations. In SFY2022, we noted certain non-IT consulting services (SW0133 Statewide Contracts) and Deliverable Based IT Service (SW1050 Statewide Contracts) vendors were added to Statewide Contract pilot program and are now receiving federal funds through this process. In SFY2023, OMES added two additional Statewide Contract pilot programs, SW1025 Information Technology Staff Augmentation Services and SW0132 Non-IT Temporary Employment Services. Vendors under this contract category will also be receiving federal funding. Further, there are no written policies and procedures for any of the Statewide Contracting pilot programs (Rolling RFP’s) to describe how these contracts are to be executed to meet both federal and state law. Since there were no written policies and procedures, we were unable to determine how OMES conducted their evaluation process relevant to the scope of services and contract price, to ensure vendors are properly vetted. Lastly, no recommendations have been made to the Legislature on how the Statewide Contract pilot programs has helped state procurement become more effective and efficient for the State of Oklahoma as required by law. As a result, the longer the pilot programs remain open without recommendations to the Legislature, entities on Statewide Contract pilot programs are allowed to charge what they feel are appropriate rates per their federal contracts, without any competitive or vetting process in place. Cause: The OMES does not have adequate controls in place, including policies and procedures, to ensure federal grant contracts are properly executed. Effect: The OMES is not complying with 2 CFR § 200.317 Procurements by states since the agency has no policies and procedures in place for the Statewide Contracting pilot programs. As a result, federal contracts awarded under the Statewide Contracting pilot programs, do not appear to meet State of Oklahoma competitive bidding requirements. Also, contracts with vendors may not contain the applicable provisions required by 2 CFR § 200.327. Lastly, under the existing Statewide Contract pilot programs, OMES can receive increased federal contract fees because vendors are not compelled to charge reasonable rates per 2 CFR § 200.404. Recommendation: We recommend the OMES develop and implement policies and procedures for the Statewide Contract pilot programs to ensure all federal contracts are properly executed. Further, we recommend OMES provide justification on how vendors/consultants put on the Statewide Contract pilot programs are exempt from competitive bidding requirements. Lastly, we recommend the OMES work in a timely manner to either bring the Statewide Contract pilot programs before the legislature to explain the benefits to the state and what should be written into law or eliminate the program. Views of Responsible Official(s) Contact Person: Amanda Otis Anticipated Completion Date: Sine Die Corrective Action Planned: Management does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of the report. Auditor Response: Based on the corrective action plan provided by management, the procedures provided were not adequate, or timely policies and procedures to explain how the Statewide Contracting pilot programs (Rolling RFP’s) are meeting the competitive bidding requirements per Title 74 O.S. § 85.7. As a result, our finding stands that management does not have adequate policies and procedures to meet 2 CFR § 200.317 Procurements by states for federal contracting. Further, the Statewide Contracting pilot programs lack detailed policies and procedures to show that federal grant contracts are being awarded to the lowest and best, or best value, bidder or bidders per Title 74 O.S. § 85.7.A.7.B.
FINDING NO: 2023-109 (prior year 2022-090) STATE AGENCY: State of Oklahoma and Office of Management and Enterprise Services FEDERAL AGENCY: Multiple ALN: Multiple FEDERAL PROGRAM NAME: Multiple FEDERAL AWARD NUMBER: Multiple FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Procurement and Suspension and Debarment QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.317 Procurements by states, says in part, “When procuring property and services under a Federal award, a State must follow the same policies and procedures it uses for procurements from its non-Federal funds. The State will … ensure that every purchase order or other contract includes any clauses required by § 200.327. 2 CFR § 200.404 Reasonable costs, states in part, “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to … : (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.” 74 O.S. §85.5 Powers and Duties of State Purchasing Director, states in part, “H. 1. The State Purchasing Director may develop and test new contracting policies, procedures and innovations that hold potential for making state procurement more effective and efficient and identify, and make recommendations to the Legislature of, any appropriate changes in law. Such development and testing, proof of concept, pilot project or other similar test shall not be considered an acquisition subject to the Oklahoma Central Purchasing Act. 2. The State Purchasing Director is authorized to explore and investigate cost savings in energy, resource usage and maintenance contracts and to identify and negotiate contract solutions including, but not limited to, pilot projects to achieve cost savings for this state.” Condition and Context: While performing federal compliance testing of all major programs for SFY2022 Single Audit, we were made aware that Office of Management and Enterprise Services (OMES) created a pilot program (starting in SFY 2019/2020) wherein vendors were put on Statewide Contract, thus no longer requiring them to competitively bid their services. These pilot programs are known as Rolling Request for Proposal (RFP) or Rolling Solicitations. In SFY2022, we noted certain non-IT consulting services (SW0133 Statewide Contracts) and Deliverable Based IT Service (SW1050 Statewide Contracts) vendors were added to Statewide Contract pilot program and are now receiving federal funds through this process. In SFY2023, OMES added two additional Statewide Contract pilot programs, SW1025 Information Technology Staff Augmentation Services and SW0132 Non-IT Temporary Employment Services. Vendors under this contract category will also be receiving federal funding. Further, there are no written policies and procedures for any of the Statewide Contracting pilot programs (Rolling RFP’s) to describe how these contracts are to be executed to meet both federal and state law. Since there were no written policies and procedures, we were unable to determine how OMES conducted their evaluation process relevant to the scope of services and contract price, to ensure vendors are properly vetted. Lastly, no recommendations have been made to the Legislature on how the Statewide Contract pilot programs has helped state procurement become more effective and efficient for the State of Oklahoma as required by law. As a result, the longer the pilot programs remain open without recommendations to the Legislature, entities on Statewide Contract pilot programs are allowed to charge what they feel are appropriate rates per their federal contracts, without any competitive or vetting process in place. Cause: The OMES does not have adequate controls in place, including policies and procedures, to ensure federal grant contracts are properly executed. Effect: The OMES is not complying with 2 CFR § 200.317 Procurements by states since the agency has no policies and procedures in place for the Statewide Contracting pilot programs. As a result, federal contracts awarded under the Statewide Contracting pilot programs, do not appear to meet State of Oklahoma competitive bidding requirements. Also, contracts with vendors may not contain the applicable provisions required by 2 CFR § 200.327. Lastly, under the existing Statewide Contract pilot programs, OMES can receive increased federal contract fees because vendors are not compelled to charge reasonable rates per 2 CFR § 200.404. Recommendation: We recommend the OMES develop and implement policies and procedures for the Statewide Contract pilot programs to ensure all federal contracts are properly executed. Further, we recommend OMES provide justification on how vendors/consultants put on the Statewide Contract pilot programs are exempt from competitive bidding requirements. Lastly, we recommend the OMES work in a timely manner to either bring the Statewide Contract pilot programs before the legislature to explain the benefits to the state and what should be written into law or eliminate the program. Views of Responsible Official(s) Contact Person: Amanda Otis Anticipated Completion Date: Sine Die Corrective Action Planned: Management does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of the report. Auditor Response: Based on the corrective action plan provided by management, the procedures provided were not adequate, or timely policies and procedures to explain how the Statewide Contracting pilot programs (Rolling RFP’s) are meeting the competitive bidding requirements per Title 74 O.S. § 85.7. As a result, our finding stands that management does not have adequate policies and procedures to meet 2 CFR § 200.317 Procurements by states for federal contracting. Further, the Statewide Contracting pilot programs lack detailed policies and procedures to show that federal grant contracts are being awarded to the lowest and best, or best value, bidder or bidders per Title 74 O.S. § 85.7.A.7.B.
FINDING NO: 2023-109 (prior year 2022-090) STATE AGENCY: State of Oklahoma and Office of Management and Enterprise Services FEDERAL AGENCY: Multiple ALN: Multiple FEDERAL PROGRAM NAME: Multiple FEDERAL AWARD NUMBER: Multiple FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Procurement and Suspension and Debarment QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.317 Procurements by states, says in part, “When procuring property and services under a Federal award, a State must follow the same policies and procedures it uses for procurements from its non-Federal funds. The State will … ensure that every purchase order or other contract includes any clauses required by § 200.327. 2 CFR § 200.404 Reasonable costs, states in part, “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to … : (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost.” 74 O.S. §85.5 Powers and Duties of State Purchasing Director, states in part, “H. 1. The State Purchasing Director may develop and test new contracting policies, procedures and innovations that hold potential for making state procurement more effective and efficient and identify, and make recommendations to the Legislature of, any appropriate changes in law. Such development and testing, proof of concept, pilot project or other similar test shall not be considered an acquisition subject to the Oklahoma Central Purchasing Act. 2. The State Purchasing Director is authorized to explore and investigate cost savings in energy, resource usage and maintenance contracts and to identify and negotiate contract solutions including, but not limited to, pilot projects to achieve cost savings for this state.” Condition and Context: While performing federal compliance testing of all major programs for SFY2022 Single Audit, we were made aware that Office of Management and Enterprise Services (OMES) created a pilot program (starting in SFY 2019/2020) wherein vendors were put on Statewide Contract, thus no longer requiring them to competitively bid their services. These pilot programs are known as Rolling Request for Proposal (RFP) or Rolling Solicitations. In SFY2022, we noted certain non-IT consulting services (SW0133 Statewide Contracts) and Deliverable Based IT Service (SW1050 Statewide Contracts) vendors were added to Statewide Contract pilot program and are now receiving federal funds through this process. In SFY2023, OMES added two additional Statewide Contract pilot programs, SW1025 Information Technology Staff Augmentation Services and SW0132 Non-IT Temporary Employment Services. Vendors under this contract category will also be receiving federal funding. Further, there are no written policies and procedures for any of the Statewide Contracting pilot programs (Rolling RFP’s) to describe how these contracts are to be executed to meet both federal and state law. Since there were no written policies and procedures, we were unable to determine how OMES conducted their evaluation process relevant to the scope of services and contract price, to ensure vendors are properly vetted. Lastly, no recommendations have been made to the Legislature on how the Statewide Contract pilot programs has helped state procurement become more effective and efficient for the State of Oklahoma as required by law. As a result, the longer the pilot programs remain open without recommendations to the Legislature, entities on Statewide Contract pilot programs are allowed to charge what they feel are appropriate rates per their federal contracts, without any competitive or vetting process in place. Cause: The OMES does not have adequate controls in place, including policies and procedures, to ensure federal grant contracts are properly executed. Effect: The OMES is not complying with 2 CFR § 200.317 Procurements by states since the agency has no policies and procedures in place for the Statewide Contracting pilot programs. As a result, federal contracts awarded under the Statewide Contracting pilot programs, do not appear to meet State of Oklahoma competitive bidding requirements. Also, contracts with vendors may not contain the applicable provisions required by 2 CFR § 200.327. Lastly, under the existing Statewide Contract pilot programs, OMES can receive increased federal contract fees because vendors are not compelled to charge reasonable rates per 2 CFR § 200.404. Recommendation: We recommend the OMES develop and implement policies and procedures for the Statewide Contract pilot programs to ensure all federal contracts are properly executed. Further, we recommend OMES provide justification on how vendors/consultants put on the Statewide Contract pilot programs are exempt from competitive bidding requirements. Lastly, we recommend the OMES work in a timely manner to either bring the Statewide Contract pilot programs before the legislature to explain the benefits to the state and what should be written into law or eliminate the program. Views of Responsible Official(s) Contact Person: Amanda Otis Anticipated Completion Date: Sine Die Corrective Action Planned: Management does not agree with the finding. Please see the corrective action plan located in the corrective action plan section of the report. Auditor Response: Based on the corrective action plan provided by management, the procedures provided were not adequate, or timely policies and procedures to explain how the Statewide Contracting pilot programs (Rolling RFP’s) are meeting the competitive bidding requirements per Title 74 O.S. § 85.7. As a result, our finding stands that management does not have adequate policies and procedures to meet 2 CFR § 200.317 Procurements by states for federal contracting. Further, the Statewide Contracting pilot programs lack detailed policies and procedures to show that federal grant contracts are being awarded to the lowest and best, or best value, bidder or bidders per Title 74 O.S. § 85.7.A.7.B.